Coty to be investigated over $1 billion IPO
The flotation saw Coty sell 57.1 million shares at a cost of $17.50 each. Although the initial offering got off to a slow start, the flotation did eventually meet its targets.
However, lawyers at Wites Kapetan say they are announcing their investigation on the back of the company’s poor performance following the flotation, which they say has jeopardized the investments made by shareholders.
Poor performance since flotation
They cite that performance of Coty’s fourth quarter results, for the period ending June 30, 2013, which fell short of both company forecasts and analysts’ expectations.
Specifically, the law firm refers to Coty’s September 17th press release, which outlines a number of performance issues within the company that may indicate irregularity.
The press release stated: “over the past few months the company has seen a deceleration of market growth in the U.S. and Europe, triggering significant destocking activity, particularly by U.S. mass retailers.”
Coty predicts slowing results for start of fiscal 2014
The company added to this statement by forecasting that a marginal decline for the first quarter of fiscal 2014, all of which ultimately led to Coty’s common stock price declining by 3.75% to close at $15.64 on the date the financial statement was made.
Wites & Kaptan is now calling for investors who may have bought any of the Coty stock and who believe that they have legal recourse following the company’s actions.
Although Coty has been growing revenues in double-digit figures in recent years, in the past few quarters Coty’s financial results have softened, mainly on account of its lack of exposure to emerging markets, particularly in the Asia Pacific region, fuelling speculation that the business needs to make major acquisition to ensure future growth.
Big on fragrance, room for further investment in skin care
The company is largely known for its fragrance portfolio, and is currently ranked as the second largest fragrance player in the world, with brands such as adidas, Calvin Klein and Playboy.
It has been expanding into the skin care segment in recent years, but it is in the emerging markets, where skin care sales have been fast expanding that its portfolio is most lacking.
In the skin care market it has a considerable exposure to the mass market, but in contrast its fragrance portfolio is more focused on the prestige market.
Its portfolio structure gives experts good reason to believe that the IPO may add to an already considerable war chest which could be used to invest in a business with considerable exposure in the emerging markets, and particularly in the premium skin care segment.