The company is exploring options, including a spin-off or sale, for its consumer beauty business amid shifting consumer trends and macroeconomic headwinds.
Coty is conducting a review of its consumer beauty business, which could result in the sale or spin-off of the unit, the cosmetics giant announced on Tuesday.
Shares rose a mere 0.5% in early premarket trading.
The unit under review includes brands such as CoverGirl, Rimmel, Sally Hansen, and Max Factor, as well as the Brazil business, which comprises local Brazilian brands, according to Coty.
Simultaneously, the company will initiate organizational changes to closely integrate its other two units, Prestige Beauty and Mass Fragrance businesses, which account for 69% of the company’s total sales.
The development comes as the company faces pressure in its business, due to changing consumer trends and macroeconomic headwinds, with particular weakness in its mass-market beauty business. Sales of the unit declined 12% last quarter.
“This next phase of our transformation is about clarity and focus,” CEO Sue Nabi said in a statement. “By more closely integrating all our fragrance and scenting brands, we unlock the full power of our scale.”
In the prestige beauty segment, Coty will continue to steadily grow its cosmetics and skincare businesses, adding that it is “committed to growing its prestige portfolio through blockbuster launches and brand elevation.”
On Stocktwits, the retail sentiment for Coty stock shifted to ‘neutral’ from ‘bearish’ the previous day.
Coty shares are down 42.4% year-to-date, and currently trade around a five-year low.
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