The beauty conglomerate's new four year plan will cost US$600m as it attempts to boost its profit margins
Coty, the global conglomerate behind Rimmel London and Marc Jacobs fragrance, has announced a US$3bn writedown in brand value.
The announcement was made amid its four year restructuring plan in an effort to slow declining sales and improve its operating margin.
The beauty heavyweight has suffered turbulent sales since its $12.5bn acquisition of P&G’s beauty brands three years ago.
Its latest results in the three months ended March 2019 revealed a 10.4% revenue slip to $1.99bn.
To implement its turnaround plan, Coty expects to spend $600m between 2020 to 2023, in addition to a further $160m in other sales boosting programmes.
However, its woes have not gone unnoticed by investors as its shares have plummeted 13.5% to $11.5 per share.
“Our turnaround plan will enable us to build a better business in the coming four years, while we gradually prepare for growth,” said Pierre Laubies, Coty’s CEO.
He added it intends to “simplify” its operations and focus its investments on fewer brands globally.
Laubies also laid out the firm’s financial priorities “to improve profitability and deleverage”.
Meanwhile, according to the plan, it intends to move its executive team from New York to Amsterdam, effective 1 January.
Commenting on its financial outlook Laubies added: “We are confident in this plan and the results of our actions to date support our belief that we can deliver our objectives.”
However, its initial objectives for 2020 are to slow its decline in net revenues, adjust operating income from 5% to 10% and moderate cash flow improvement.