Coty’s (COTY) Kylie Cosmetics Relaunch to Fortify Business

Coty Inc. COTY is focused on making strategic alliances to fortify its business. Keeping this in mind, the company unveiled the relaunch of Kylie Cosmetics, now formulated using clean and vegan ingredients with a revamped packaging. Although the new products are made using clean ingredients, the items still have high performance and pigment along with long-lasting color. The items do not contain parabens, gluten, animal oils or any other potentially harmful substances.

Notably, customers can shop the launch in-stores across specific retail partners like Harrods and Selfridges in the United Kingdom, Mecca in Australia as well as Douglas in Europe. In the United States, management will relaunch Kylie Cosmetics through the new offering across Ulta Beauty ULTA stores during August. The launch will be made available on a new direct-to-consumer (DTC) website, which is scheduled to go live on Jul 15, 2021. Markedly, the website will feature Kylie Skin and Kylie Cosmetics items together and will serve as an avenue for new product and collection launches.

We note that Coty and Kylie Jenner unveiled their long-term alliance in January 2020, aimed at further building upon Kylie’s beauty business, which includes Kylie Skin and Kylie Cosmetics. In its last earnings call, management highlighted that Kylie Skin witnessed solid launches in both Russia and France in the brick-and-mortar side. Kylie Jenner is an iconic personality, who has built the world’s most-followed beauty brand. Clearly, Coty’s constant efforts to enhance its ties with the brand bode well.

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Strategic Partnerships: A Key Driver

Coty has made several strategic partnerships to enhance its brand portfolio. On Mar 3, 2021, the company signed a letter of intent to partner with LanzaTech — a pioneer in producing next-generation green and sustainable ingredients. This partnership is aimed at introducing sustainable ethanol produced from captured-carbon emissions into Coty’s fragrance offerings. Further, the company acquired 20% stake in Kim Kardashian West’s businessin January 2021. The deal helps Coty and Kim Kardashian West focus on fresh beauty categories along with expanding their worldwide presence beyond the current line of products.

What Else is Working Favorably for Coty?

While Coty is seeing soft sales since the past few quarters due to coronavirus-led concerns like soft traffic as well as a disrupted travel retail network, the company’s e-commerce business has been performing impressively. In third-quarter fiscal 2021, the company’s e-commerce sales surged nearly 38%, with strength in all regions and channels. Also, Coty’s luxury e-commerce sales increased more than 20%, while its year-to-date penetration is pegged at mid 20% level.

Coty is focused on its core strategies, which includes stabilizing Consumer Beauty make-up brands and mass fragrances; accelerating luxury fragrances and setting up Coty as a core player in prestige make-up; establishing a skincare portfolio in prestige and mass channels; strengthening e-commerce and DTC capabilities; growing presence in China via Prestige and certain Consumer Beauty brands; as well as setting Coty as an industry leader in sustainability.

Shares of this Zacks Rank #3 (Hold) have rallied 32.7% so far this year compared with the industry’s growth of 18.2%.

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