Coty to sell majority stake in beauty brands amid coronavirus
KKR to acquire majority stake in Coty's Wella, Clairol and OPI in $4.3 billion deal
Coty Inc. said Monday that private-equity firm KKR & Co. is buying a majority stake in its professional beauty and retail hair businesses as the cosmetics company experiences a sales decline during the novel coronavirus pandemic.
Makeup sales decline amid coronavirus.
KKR & Co. is investing $750 million in the company and will buy its hair care brands Wella, Clairo and ghd brands, along with nail polish maker OPI. Coty said it would earn around $3 billion in cash from the divestment. The brands will be converted to stand-alone companies and KKR will have a 60 percent stake.
The news comes as consumers opt for low-maintenance skincare and beauty routines with stay-at-home orders still in place in many parts of the country amid the COVID-19 pandemic. And with unemployment spiking as a result of the virus, Americans are only buying essential goods, and makeup isn't a high priority for most.
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Total beauty sales declined by 58 percent in the week ending March 28 -- shortly after stay-at-home mandates were put in place in most parts of the country -- versus the prior year, according to NPD data. However, products such as nail care, hair color, body oils and home scents experienced sales growth, with some in double-digits, according to the report, suggesting that more consumers are buying beauty products online as stores are closed.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| COTY | COTY INC. | 7.65 | +0.26 | +3.52% |
The trend toward natural skincare and beauty products was apparent even before the coronavirus pandemic and industry experts predict that it will continue to grow.
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“Clean beauty, which is already an important trend to watch, will be amplified as consumers re-interpret what safety means to them,” Larissa Jensen, a beauty industry analyst for NPD Group, wrote.