Coty Inc. on Monday announced the resignation of CEO Camillo Pane "for family reasons" and the appointment of Pierre Laubies to replace him (and take a spot on the board), effective immediately. In a board shakeup, the company is also adding two new independent members with commercial and financial experience, as well as making some internal changes, with Peter Harf taking over as chairman from Bart Becht, and Erhard Schoewel named lead independent director, according to a company press release.
The moves follow the company's disappointing first quarter performance, which Pane, who has been overseeing the integration of brands since its 2015 acquisition of Procter & Gamble's cosmetics arm, had blamed on worse-than-expected supply chain disruptions, according to a conference call transcript from Seeking Alpha.
Laubies has operational and financial experience in the consumer packaged goods industry from his time at Mars and global coffee company Jacobs Douwe Egberts (JDE), where he was CEO until recently.
Already facing disruption and fierce competition in the beauty segment, Coty has also had to contend with the integration of CPG giant P&G's beauty business.
Pane last week sought to assure analysts that the supply chain issues and merger integration were both well on their way to being solved, but also warned that the company didn't expect "to fully recover the Q1 financial impact in the balance of fiscal 2019." That led rating agency S&P to downgrade the company in light of its ongoing difficulties with the P&G integration and both internal and external supply issues, according to a note emailed to Retail Dive.
Laubies' experience integrating JDE's acquisition of Mondelez's coffee business could help smooth out the bumps in the road faced by Coty. But the company's problem isn't just logistical, according to GlobalData Retail Managing Director Neil Saunders. "One of the main issues is that the brands Coty bought from P&G were already in a state of decline and Coty has struggled to turn these around," he told Retail Dive in an email. "A lot of the brands also have heavy exposure to drugstores and the dynamics in that channel have not been favorable."
During the 12 months ended Sept. 22, overall health and beauty care sales rose 2% in dollar growth and 0.2% growth in units sold in the U.S., but health and beauty care has seen unit volume declines of 1% at grocery stores and 2% at drugstores, according to a beauty trends report from Nielsen. Coty's CoverGirl brand has sought to rise above any lackluster association with drugstore beauty with a tie-up with retail concept Story last year and more recently its own location in Times Square, but consumers have shifted much of their attention to online and specialty players.
"Over the past few years, drugstores have lost both customer and market share in beauty products as shoppers have migrated to online channels and specialists like Ulta and Sephora," Saunders said. "These new growth channels are not ones to which Coty's brands have all that much of a profile. Many of the beauty brands that Coty owns feel tired and uninspiring. Consumers are shunning these for more exciting offers — even within drugstores, brands like No7 (which Walgreens owns through Boots) are taking share."