Euromonitor: Coty needs to develop a more focussed strategy

By Chris BARKER

- Last updated on GMT

Euromonitor: Coty needs to develop a more focussed strategy

Related tags: Coty, Strategy

Euromonitor analyst Oru Mohiuddin has called Coty's fourth quarter results “better, but definitely not positive” and suggested that the company needs to develop a more focused strategy.

She pointed out faults in the company’s planning such as attempting to expand its business too quickly and acquiring companies without integrating them properly into strategic planning.

Mohiuddin also noted that Coty had failed to develop sufficiently in-depth coverage of specific beauty areas, which would allow it to compete with rivals like L’Oreal and Estee Lauder

Coty recently posted higher-than-expected results for the fourth quarter of its fiscal year, with net revenues increasing by two percent like-for-like and operating income increasing by eight percent.

Not a top-performing company

Mohiuddin says that Coty is spreading its energies over too many areas without first developing a long-term strategy, which is preventing it from becoming a top-performing company.

She commented: “Coty has tried to grow too fast, with no proper, common thread to suggest that they are taking a specific path. They have been acquiring companies here and there, with nothing to suggest that these acquisitions had strategic planning behind them.”

As a solution, Mohiuddin suggested that Coty could be more focused in its goals.

She said: “Color cosmetics is an area it could focus on. It needs more in-depth coverage and R&D in specific areas."

"The key to success in the current market is to focus on core categories and invest in added values.”

Emerging markets

Coty's results this year were boosted by increasing sales in emerging markets, especially Asia.

However, the Euromonitor analyst noted that expanding into emerging markets presented problems for cosmetics companies because of fierce competition.

Mohiuddin commented: “Coty can’t expand into China because L’Oreal is already a very strong presence there. They might do better to invest in the African countries.”

“There is a wide space for the development of color cosmetics - African women are fond of using them. They can then go and establish a very strong presence there before L’Oreal does it.”​    

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