Coty ($Coty) will appoint its fourth CEO, who will be replaced again in less than four years as it tries to restore sluggish sales and reduce its heavy debt burden.
According to people familiar with the matter, Mr. Cotty’s current chairman, Peter harf, will be chief executive as soon as Monday. This will put the fate of the company directly in the hands of its largest shareholder, jab Holding Co., as Haff is one of the two managing partners of jab holding.
Haff’s appointment came as a surprise only in February when the company announced that Pierre Denis, its director and former Jimmy Choo head of fashion brands, would take over as CEO.
It is reported that Haff is a major shareholder of Coty and has been involved in the operation of the company since 1990. As part of his new role, Haff will oversee a new executive committee with chief financial officer Pierre Andre terisse and chief transformation officer Gordon von bretten, people familiar with the situation said.
The turmoil in the leadership has highlighted the increasingly severe challenges faced by Cotti. At the end of March, Cotti tried to get rid of over $8 billion in debt and failed to compete with Est e Lauder Cos and L’OREAL L’Or a L in cosmetics and perfume industry. At the end of March,
In 2016, Coty purchased $12 billion from P & G（ PG.US ）Acquired dozens of beauty brands. But last year, as consumers increasingly favor high-end and niche beauty brands, P & G’s sales continued to weaken, and the company wrote down $3 billion in P & G’s business.
Since then, Mr. Koti has been working to reduce new businesses and products, trying to shrink by selling assets and paying off debts, a strategy Mr. Haff supports. In an interview with the media last November, Mr. Haff said the company’s poor performance was due to trying to do too many things at once.
Public health events, however, have undermined the strategy, with Coty’s sales plummeting in a tight economy. The company’s latest quarterly results in May showed that sales of similar products in the consumer beauty business fell by 17%, while sales in the luxury sector fell by 26%, and sales in the professional beauty sector fell by 14%.
Coty wants to implement change faster because it aims to cut costs by 25% over the next three years. Revenue growth is expected to come in part from additional investment plans for high-end and social media driven brands such as Kylie Jenner’s cosmetics start-up. In November, Coty bought 51% of Kylie cosmotics, a celebrity brand backed by 178 million instagram fans, for $600 million to take advantage of its fan base.
According to people familiar with the matter, Coty has also targeted investments in skin care products that are more profitable than make-up and core popular beauty brands, including Rimmel and Covergirl, to increase sales by expanding its online and offline stores.
In May, Coty and KKR & Co（ KKR.US ）A deal was struck to raise much-needed cash and help ease investors’ concerns about its prospects. Coty said at the time that the move would help consolidate its balance sheet and achieve long-term growth.
Under the agreement, Coty will receive $750 million in direct cash injection from the sale of convertible preferred shares with a 9% interest rate to KKR and an additional $250 million from the subsequent issuance of similar securities to KKR. These transactions give KKR the right to two board seats. KKR also held exclusive negotiations to acquire 60% of Coty’s professional beauty and hair care retail business for about $3 billion.
But since the deal was announced, Coty’s share price has fallen more than 54 per cent, in part because of the high cost of interest rates it faces under the deal.
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