Burberry Sells Agent To Coty Coty Group

According to the world clothing shoes and hats net, Britain

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In the past 5 years, Group PLC (BRBY.L) Boboli has taken the lead in collecting and placing the agency for the beauty business.

Since April 1, 2013, it has only been 4 years since its own beauty business. Burberry Group PLC Boboli will return to the agency mode.

The cosmetology giant Coty Inc. (NYSE:COTY) Coty group has won the Burberry Group PLC Bo Bailey's long-term global exclusive beauty product proxy with 130 million pounds, plus 50 million pounds to purchase inventory.

Burberry Group PLC Boboli will maintain creative leadership over all products such as My Burberry and Mr Burberry, while Coty Inc. Coty will handle production, distribution and other matters, and the paction will take effect in October 1, 2017.

Although luxury group's proxy or strengthening control of non core products has become a trend in recent years, especially since 2017, the high-end eyeglasses industry has been rapidly integrated, but Burberry Group PLC Boboli's decentralization is not surprising.

As a single brand luxury group, Burberry Group PLC Boboli dried beauty products can not produce scale advantage, but the investment in supply chain and distribution network construction has lower profit margins, and has also distracted the group's attention in clothing and handbag accessories business.

In contrast, the French luxury group Kering SA (KER.PA) Kai Yun group from the Safilo Group SpA (SFL.L) Xia Fei Nuo and other agents group to recover Gucci, Gucci and other major companies.

The authorized self built glasses business can give full play to the synergy and promote the profit growth, and the group can pull more than 10 private brands to the outside customers at the same time.

In March of this year, Compagnie Financi re Richemont SA (CFR.S), the peak group, handed the Cartier Cartire brand to Kering Eyewear as a part of the paction. Richemont, the peak group, also bought a stake of 20%.

It is reported that the Cartier Cartire brand eyeglasses business, which was run by the Richemont SA group, also had a lot of pressure on the group.

RBC Capital Markets LLC plus capital market analyst Rogerio Fujimori pointed out that Burberry Group PLC Bo Bailey finally realized that in the cosmetics field competition is extremely fierce and there are Chanel Chanel and Christian Dior Dior and other large competitors in the background of their own internal beauty business needs to face many challenges.

Exane BNP Paribas SA (BNP.PA), a luxury analyst at Paris Bank of France, Luca Solca also said: "we never liked the idea of direct management of Cosmetology by Burberry". He pointed out that the group is only a "dwarf" in the field of the industry giants, and has never had enough scale to operate the global express business quickly. Therefore, he welcomes the decision of the Burberry Group PLC bolberry to cooperate with the world's first agent, the group of cooperation.

UBS AG (UBSN.VX) UBS analyst Helen Brand believes that the paction is a positive factor for the stock price, because the beauty department has been dragging down group performance and wasting management time.

In 2013, Burberry Group PLC Boboli, still led by former CEO Angela Ahrendts, paid 144 million pounds to the Interparfums SA (IPAR.PA) to recover the perfume business, hoping to develop to the height of Chanel Chanel and Christian Dior Dior. However, the business which had recorded the authorized income of 2500-3000 million a year has been converted into self tax and can only contribute less than 10 million pounds of pre tax profit.

In order to enhance the brand image, the group also cut down two channel sales, but it led to 2017 sharp decline in the beauty department revenue in the first half of fiscal year by 17%.

According to the world clothing and shoe net, the Burberry Group PLC Boboli perfume and cosmetics in fiscal year 2016 achieved a total of 202 million 500 thousand pounds, accounting for only 8% of the group's total revenue of 2 billion 514 million 700 thousand, representing a 9.6% increase compared with 184 million 800 thousand in the 2015 fiscal year, while the Burberry bolberry perfume business, which was part of Interparfums SA in 2011, recorded a revenue of 221 million 700 thousand euros.

In the 2016 fiscal year, Burberry Group PLC Bobo Li's cosmetics sales doubled, accounting for 8%. The group has said it expects to increase its share to 15% by strengthening cosmetics supply and marketing efforts this year.

The group's overall revenue can only be narrowly tied in fiscal year 2015, pre tax profits fell by 6.5% to 415 million 600 thousand pounds, profitability continued to shrink for two consecutive years, cosmetic business in the 2015 and 2016 fiscal year, the amortization of intangible assets increased operating expenses by 14 million 900 thousand pounds, 2017 in the first half of fiscal year, this expenditure increased to 26 million 100 thousand pounds.

In January, John Smith, who was appointed chief executive officer of Burberry Group PLC Boboli, but still serves as executive director, also revealed that the group had shelved plans to launch skin care products.

Burberry Group PLC Bobo Li's cosmetics sales are growing at a high speed.

Selling beauty business will undoubtedly boost the profitability of Burberry Group PLC boboley.

In February of this year, the Groupe Bruxelles Lambert SA, the investment organization of Belgium's richest Albert Fr re, disclosed the acquisition of Burberry Group PLC Boboli 2.95% shares last year, although the relationship between the re and Bernard Arnott, chairman and chief executive officer of the company, has been a multi-year commercial partnership.

But more reasonable inference is that Albert Fr re seeks to drive Burberry Group PLC boboley's profit growth to make a profit.

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Facing the slowdown of global luxury market in recent years, especially the change of luxury market climate in Greater China market, Burberry Group PLC Boboli is streamlining its business, cutting costs and restructuring management to drive growth.

Christopher Bailey, chief executive officer of chief executive officer, will pfer CEO to CEO CEO Gobbetti later this year.

Julie Brown, chief operating officer and chief financial officer of Burberry Group PLC, pointed out that the goal of repositioning and repositioning beauty business has been successfully completed in the past 4 years, and now the cooperation with Coty Inc. Coty will not only accelerate the future growth of the business, but also be very attractive. Once the cash payment of Coty Inc. is received in October, the asset allocation will be assessed and authorized income will also be paid from October.

Julie Brown also revealed that many cosmetics groups were involved in the competition for their agency.

Coty Inc. Cody Group expects the paction to be completed in the 2017 quarter of the financial year.

As the largest perfume group in the world, the group also owns the perfume agency rights of Kering SA, its brand Gucci Gucci, Bottega Veneta Bao butterfly, Balencaiga parensee and Alexander McQueen. In recent years, the group has been buying and selling. After spending $14 billion 500 million to buy more than 40 cosmetic perfume brands of Procter&Gamble Co. (NYSE:PG) Procter & Gamble group, it has spent 1 billion yuan on the acquisition of Brazil's personal care and cosmetics business.

Burberry boblie will be another flagship perfume brand after Calvin Klein, Gucci Gucci, Hugo Boss Hugo BOS and Coty Inc. Cody group. It can also make up for the loss of Dolce&Gabbana dubbana's Shiseido Packing Co. Ltd.

John Smith pointed out that the deal was "unusual" because the Coty Inc. Coty group gave Burberry Group PLC Bob all control over the consumer level, including brand image, product packaging, advertising spokesmen and marketing point marketing.

Coty Inc. Camillo Pane, chief executive of Coty group, said that the addition of Burberry boboley allowed the group to focus more on the development of the high-end perfume market, while celebrity perfume was also part of the market and brand mix.

Burberry Group PLC Boboli expects the group to generate a one-time cash expenditure of 30 million pounds, but it will affect the adjusted pre tax profit in April 1st from the beginning of fiscal year 2018 to be neutral, and it will promote profit growth in the 2019 fiscal year.

The shares of Burberry Group PLC (BRBY.L) and Coty Inc. (NYSE:COTY) in April 3rd were not encouraged by the heavy deal. The former narrowed 0.82% to 1738 pence, while the latter fell 2.15% to 17.74 dollars.

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