This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Coty's Global Reach Should Give IPO Price a Makeover

NEW YORK (TheStreet) -- The year 2013 was full of initial price offerings in a range of industries. Many of those in the technology and medical fields performed well and saw great price increases on their first day of public trading. Coty (COTY - Get Report), a fragrance and cosmetic company, did not see the expected first-day trading boost. Now it has shares trading near all-time lows six months later.

Coty is the consumer product company behind brands like OPI, Rimmell, Sally Hansen, philosophy, and Chloe. The company also licenses perfumes with brands like Adidas, Playboy, Calvin Klein, and Marc Jacobs. The company was the number two fragrance company and number six color cosmetics company in the world at the time of its IPO. The company competes against rivals L'Oreal, Elizabeth Arden (RDEN) and Revlon (REV).

I was bullish on Coty prior to the IPO and remain even more bullish now. The recent excitement comes from several international deals that gives Coty a better handle on distribution and brand power in emerging markets. The deals also further one of the IPO themes Coty gave: to "diversify our geographic presence into new and emerging markets."

On Dec. 23, Coty announced a joint venture with Chalhoub Group and Jashanmal. The new venture, called Coty Distribution Emirates, gives Coty better control of its brands and distribution in one of its most exciting region. Chalhoub has been a partner with Coty since 1995 and is one of the leading Middle East companies. It has a presence in 14 countries and over 500 retail outlets.

The Middle East has been a focus for the company and is one of its best-performing geographical regions. The region saw double-digit growth in the fourth quarter. It was again cited as one of the top performers for the company's Europe, Middle East and Africa geographic segment in the first quarter. All told, EMEA was the top geographic region for Coty in fiscal 2013, with net revenues of $2.2 billion, compared to $1.9 billion for the Americas region. If this new joint venture can keep up the double-digit pace, the Middle East region should continue to be one of the key growth drivers going forward.

Another recent international deal saw Coty create a subsidiary in South Africa. A new agreement with Indigo Brands will see Coty's new unit cover 14 countries. This unit also gives Coty greater control of its brands' marketing, pricing and advertising.

Earlier this week, Coty bought Lena White, the independent distributor of OPI Brands in the United Kingdom for the last 30 years. In 2010, Coty acquired OPI for around $1 billion to boost its color cosmetics market and better compete with L'Oreal, owner of the Essie Cosmetics brand.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
COTY $30.40 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs