THE WHAT? Coty has announced a number of initiatives designed to safeguard its key stakeholders as well as provide for business continuity and opportunity.
THE DETAILS The company has recommended to the Board that shareholders be given the option to take their quarterly dividend in kind for the next two quarters and its largest shareholder, JAB, has notified Coty that it has decided to fully repay the loan it used to finance the tender offer in 2019.
The US beauty giant has set up a global response team and is taking appropriate measures in all countries in which it operates to keep employees, customers, consumers and partners safe. It is also shifting production in order to start to manufacture and supply hand sanitizer to medical and emergency services.
From a sales perspective, business focus is centred on the open channels and markets, in particular e-commerce, which includes activations on Amazon and the launch of Kylie skin care in Europe as well as prepping for an increase in demand once restrictions are lifted, starting in Asia.
With revenues expected to decline 20 percent in the third quarter of fiscal 2020, the company has withdrawn its financial guidance for the full year and is taking measures to protect cash flow.
Pierre-André Terisse, Chief Operating Officer and Chief Financial Officer of Coty, stated, “The work performed by Coty over the past 18 months has been incredibly helpful given the current exceptional circumstances, not only because our brands have been improved, but also because we have considerably strengthened our cost and financial structures. To further strengthen it, we will propose to the Board of Directors, to increase from 50 percent to 100 percent the option for shareholders to receive their $0.125 quarterly dividend in kind for the coming two quarters. Having faced several financial crises in my career, I know they always contain opportunities as well, and we will look to seize them and accelerate our transformation for the benefit of our stakeholders.”
THE WHY? Coty’s approach is interesting – and quite the departure from rival European businesses who have very much focused on philanthropic initiatives, rather than admit to using the crisis as an opportunity for growth – albeit in the future.