Coty's (COTY) Sale of Lacoste Fragrance License Bodes Well
Coty Inc. COTY announced the sale of the Lacoste fragrance license back to the latter in a mutual deal. This will help Coty focus on its biggest fragrance licenses alongside speeding up its deleveraging plan via the sale proceeds.
Lacoste men’s fragrances garnered a premium+ market position under Coty’s management over the last six years. The brand is now set to renew its approach and fuel growth. Hence, the exit from this licensing deal is likely to be beneficial for Coty and Lacoste.
Coty Focuses on Growth via Alliances & Buyouts
Coty has made several strategic partnerships to enhance its brand portfolio. On Nov 18, 2021, Coty signed a licensing agreement with Orveda — an ultra-premium skincare brand made in France.
Prior to this, Coty entered into a multi-channel agreement with Perfect Corp. — a well-known beauty tech solutions provider. On Mar 3, 2021, the company signed a letter of intent to partner with LanzaTech — a pioneer in producing next-generation green and sustainable ingredients.
Moreover, COTY’s buyout of the iconic Burberry brand has been yielding favorably. This acquisition has been supporting growth in the Prestige segment. Additionally, the company’s buyout of Procter & Gamble Company’s global fine fragrances, salon professional, cosmetics and retail hair color businesses, along with select hair styling brands (the P&G Beauty Business) in 2016, has been noteworthy.
What’s More?
Coty has been benefiting from its focus on six strategic pillars aimed at sustainable growth. These include stabilizing Consumer Beauty make-up brands and mass fragrances, accelerating luxury fragrances and setting up Coty as a core player in prestige make-up.
The strategic priorities also include establishing a skincare portfolio in prestige and mass channels, strengthening e-commerce and Direct-to-Consumer capabilities, growing its presence in China via Prestige and certain Consumer Beauty brands and setting Coty as an industry leader in sustainability.
On its last earnings call, management stated that it continues to witness solid demand growth in almost all markets, especially Prestige fragrances. This is because Coty is maintaining impressive launch activity across the Prestige and Consumer Beauty segments.
Shares of this Zacks Rank #3 (Hold) company have rallied 12.6% in the past three months against the industry’s decline of 3.4%.
Looking for Consumer Staple Stocks? Check These
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The Chef's Warehouse, which distributes specialty food products, currently sports a Zacks Rank #1 (Strong Buy). The Chef's Warehouse has a trailing four-quarter earnings surprise of 93.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CHEF’s current financial-year sales suggests an increase of 46.5% from the year-ago reported number, while earnings indicate significant growth.
Conagra Brands, which operates as a consumer-packaged goods food company, currently carries a Zacks Rank of 2 (Buy). CAG has a trailing four-quarter earnings surprise of 1.8%, on average.
The Zacks Consensus Estimate for Conagra Brands’ current financial-year sales and earnings suggests growth of 5.2% and 3.4%, respectively, from the corresponding year-ago reported figures.
McCormick, a manufacturer, marketer and distributor of spices, seasoning mixes and condiments, currently carries a Zacks Rank #2. MKC delivered an earnings surprise of 6.2% in the last reported quarter.
The Zacks Consensus Estimate for McCormick’s current financial-year sales suggests growth of 1.8% from the year-ago reported figure.
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