Coty Inc., the company behind celebrity fragrances such as Beyoncé Parfums and OPI nail polishes, began trading Thursday on the New York Stock Exchange.
While "Coty" isn't a household name, its products are. In addition to Beyoncé's fragrance line, the company, with $4.6 billion in annual revenue, also sells Madonna's Truth or Dare perfume, Philosophy shower gel and Rimmel cosmetics. In the past year, it launched the Fame fragrance from Lady Gaga and signed licenses to distribute perfumes by Katy Perry and develop new scents bearing the singer's name, regulatory filings show.
All the shares sold in the IPO were by Coty's owners, including Joh A. Benckiser GmbH, which manages the investments of the Reimanns, one of Germany's wealthiest families. And though the company is now public, Joh A. Benckiser GmbH and two other Coty owners will still control it via their ownership of a majority of voting shares. Coty shares priced last night at $17.50 each and initially traded down 42 cents, or 2.4% at 10:13 a.m. in New York. Coty raised more than $1 billion in the offering.
Coty isn't using the IPO proceeds to expand — alas, dashed hopes for an animal meme collection including a Grumpy Cat cologne. That's probably a good idea since the company has a mixed record of mergers and acquisitions, taking charges on the about $1 billion purchase of Philosophy and close to $400 million deal for China's TJoy in the last fiscal year.
Still, investors looking to get in on what Coty claims is a $282 billion global market in fragrances, color cosmetics, and skin and body care, according to its S-1 filing, may find the deal appealing. This would be a good place for a pun about the deal smelling good or getting a coat of polish, but we're going to refrain. Instead, here are some facts from Coty's S-1.
All 11 executive officers and 10 board members listed in the filing are men.
The youngest is 47. Ironic, considering the customer base for celebrity fragrances, OPI nail polish, and Rimmel mascara.
Lady Gaga Fame is supposedly "the first-ever black eau de parfum."
The fragrance "contains a proprietary new technology that causes it to become invisible once airborne," Coty said in the filing.
Hiring Heidi Klum for Astor mascara and Kate Moss for Rimmel isn't cheap.
Overall, Coty's advertising and promotional costs were $1.09 billion for the year ended June 30 — nearly 25% of its sales! That includes celebrity endorsements, sampling, gift-with-purchase programs, blog partnerships and web campaigns, according to the filing.
Wal-Mart accounted for about 7% of sales for fiscal 2012 — which would be about $322 million.
All those stars performing at Wal-Mart's annual shareholder meeting...it doesn't seem quite so crazy anymore.
Its first celebrity fragrance was Glow by JLo in 2002.
It brought in $87 million in sales during its first year and set off a string of other partnerships. Fragrances made up about half of Coty's business for the fiscal year ended June 30, 2012.
Coty maintains six research and development centers, located in the U.S., Monaco, Switzerland, and China.
The company claims its "past innovations" include first using vanilla as a standalone fragrance, introducing Sally Hansen self-adhesive nail polish strips, and a Rimmel mascara that "helps support natural lash growth." R&D accounted for almost 1% of sales for the past three years, and Coty employed 250 people in the department.
About 70% of its sales come from 10 "power brands."
Calvin Klein, Adidas, Chloé, Davidoff, Marc Jacobs, OPI, philosophy, Playboy, Rimmel, and Sally Hansen.
Sales of Chloé fragrances have surged 1,184% in the four years through June 2012.
