Coty's Turnaround Plans Evidence Rocky Path to Recovery; Lowering FVE, but Shares Not a Bargain
No-moat Coty's shares fell around 14% after management detailed its plans to turn around its languishing consumer beauty segment (42% of sales) and announced that it expects an impairment charge of about $3 billion in fiscal 2019 in conjunction with its restructuring initiatives. We view management's fiscal 2023 targets of 14%-16% operating margin (versus an adjusted operating margin slightly below 11% in fiscal 2018), around $1 billion in free cash flow (versus our pre-announcement estimate for...Coty and its subsidiaries are a beauty company. The company manufactures, markets, sells and distributes beauty products, including fragrances, color cosmetics, hair care products and skin and body related products. The company is organized into three divisions, which is also its operating and reportable segments: Consumer Beauty, Luxury and Professional Beauty. Consumer Beauty is primarily focused on color cosmetics, retail hair coloring and styling products, body care and mass fragrances. Luxury is primarily focused on fragrances, skincare and cosmetics. Professional Beauty is primarily focused on hair and nail care products for salon personnel.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
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