Coty: COTY Exits SKKN by Kim Partnership With Stake Sale to SKIMS

In This Article: Coty Inc. COTY has announced the sale of its 20% stake in SKKN by Kim to SKIMS, marking the end of its partnership with Kim Kardashian's beauty brand. With this transaction, SKIMS will integrate the beauty and lifestyle ventures under a unified brand. The divestment aligns with Coty's broader strategy to streamline its portfolio, invest in innovation and strengthen financial position through deleveraging efforts. Coty's Strategic Rationale Behind the Sale Coty's decision to divest from SKKN reflects its ongoing efforts to evaluate and optimize diverse brand portfolio. By refining its focus, Coty aims to drive growth across key categories, including prestige and mass beauty, fragrance and skincare. The proceeds from the sale will support Coty's deleveraging strategy while also fueling innovation across its broader brand portfolio. Coty initially invested in Kim Kardashian's beauty business in 2020, completing the transaction in 2021. Over the years, the company has leveraged its extensive R&D capabilities, global distribution network and expertise in both prestige and mass-market beauty. While exiting SKKN, Coty remains a key player in the celebrity beauty space, maintaining its majority stake and perpetual license in Kylie Cosmetics, a brand that has grown 1.5x in the past two years under Coty's leadership. What More Should Investors Know About COTY? This Zacks Rank #3 (Hold) company continues to solidify its leadership in the fragrance industry, strengthening presence across both prestige and mass-market segments. In the first half of fiscal 2025, the company's prestige fragrance portfolio achieved high-single-digit sell-out growth, despite challenges in markets like China and travel retail. COTY's cosmetics brands are gaining momentum, bolstered by strong social media advocacy and an increasingly agile innovation strategy. It is actively pursuing growth opportunities across various categories, distribution channels and global markets. In line with its commitment to sustainability, the company is also reaching new ESG milestones, while working toward establishing itself as an industry leader in responsible beauty practices. Coty is advancing its "All In to Win" transformation program, focusing on cost reduction, margin expansion and revenue growth. Recent operational streamlining efforts have strengthened cash flow, positioning the company for future investments and market expansion. Coty's Challenges and Market Headwinds Despite its strategic efforts, Coty continues to face challenges in the Chinese mainland and Asia Travel Retail markets, where weak demand persists. Retailers are further adjusting their orders, adding pressure to the market. Coty has also been managing higher advertising and consumer promotions (A&CP) spending. In the second quarter of fiscal 2025, A&CP expenses remained in the high 20% range, reflecting a year-over-year increase. With these costs expected to remain elevated, ineffective management could further strain margins and profitability in the coming quarters. COTY's shares have lost 6.2% in the past month compared with the industry's decline of 1.3%. Zacks Investment Research Image Source: Zacks Investment Research Final Thoughts on COTY With the sale of SKKN stake, Coty is reinforcing its focus on core brands and long-term strategic vision. The company remains committed to driving sustainable growth, expanding its presence in key global markets and delivering innovative beauty solutions that align with evolving consumer demands. By refining brand portfolio, investing in innovation and progressing deleveraging strategy, Coty is positioning itself for continued success in an increasingly competitive beauty landscape. Stocks to Consider Nu Skin Enterprises, Inc. NUS engages in the development and distribution of various beauty and wellness products worldwide. NUS currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here . The Zacks Consensus Estimate for Nu Skin Enterprises' current financial-year earnings indicates growth of 17.9% from prior-year reported levels. NUS delivered a trailing four-quarter earnings surprise of 38.6%, on average. United Natural Foods, Inc. UNFI distributes natural, organic, specialty, produce and conventional grocery and non-food products in the United States and Canada. It currently carries a Zacks Rank of 2 (Buy). UNFI delivered a trailing four-quarter earnings surprise of 408.7%, on average. The consensus estimate for United Natural Foods' current financial-year sales and earnings implies growth of 1.9% and 485.7%, respectively, from the year-ago figures. Post Holdings, Inc. POST operates as a consumer-packaged goods holding company in the United States and internationally. It currently carries a Zacks Rank of 2. POST delivered a trailing four-quarter earnings surprise of 22.3%, on average. The Zacks Consensus Estimate for Post Holdings' current fiscal-year sales and earnings indicates growth of 0.3% and 2.2%, respectively, from the prior-year levels. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report United Natural Foods, Inc. (UNFI) : Free Stock Analysis Report Nu Skin Enterprises, Inc. (NUS) : Free Stock Analysis Report Coty (COTY) : Free Stock Analysis Report Post Holdings, Inc. (POST) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research Zacks Investment Research