What does Coty beauty shakeup mean for Covergirl, OPI?

Beauty giant Coty announced on Monday it's interested in the divestiture of its professional beauty business, including brands like OPI, Wella and Clairol.

Coty is the parent company of popular brands including Covergirl and Sally Hansen. The company has been trying to complete a turnaround after declining revenue. Now brands under its professional business umbrella could have new ownership.

"[M]oving forward the Company will focus more intently on its fragrance, cosmetics and skin care businesses," Coty said in a statement.

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COTY COTY INC. 9.93 +0.07 +0.66%

Shares of Coty jumped slightly after the market opened.

"Today's announcement accelerates this transformation and will help reposition Coty as a more focused and agile company, deleverage our balance sheet, and improve our ability to invest in areas with the greatest growth potential," Coty CEO Pierre Laubies said in a statement.

The company anticipates selling its professional beauty business and using the money to reduce its debts and put cash back in the pockets of shareholders.

Coty said its professional beauty business and associated hair brands are expected to generate net revenues of more than $2.5 billion in fiscal year 2019.

Credit Suisse is working with Coty in the strategic review of the business, which could be completed by the summer of 2020.


Fragrances and cosmetics are a big part of Coty's business, and it licenses brands including Calvin Klein and Gucci for its fragrance portfolio.