By Jaewon Kang and Kimberly Chin 

Cosmetics giant Coty Inc. announced a new chief executive and switched its chairman, as the company struggles with weak sales and indigestion from buying dozens of Procter & Gamble Co.'s beauty brands.

Coty, whose products include OPI nail polish and CoverGirl makeup, said on Monday that CEO Camillo Pane had resigned, effective immediately. Mr. Pane, 48 years old, who took over right after the P&G deal closed in 2016, will be succeeded by Pierre Laubies, 62, another consumer-goods veteran.

The company's share price is down 50% so far this year and about half of where it was when it went public in 2013, missing out on a broad stock market rally.

The company's biggest investor is JAB Holding Co., a European investment firm that has run Coty since buying the castoff perfume business from Pfizer Inc. in 1992. JAB is known for deal making but Coty has choked on its biggest deal, the $12 billion purchase of P&G beauty brands.

The merger gave Coty more than 40 brands from P&G like CoverGirl, Max Factor and Clairol to compete better against other conglomerates, but the acquisition has weighed down the New York company. Some of the former P&G brands were in worse condition than Coty anticipated when it agreed to buy them and suffered further as consumers shifted away from mass-market brands sold in drugstores.

Last week, Coty reported sales fell 9.2% in its fiscal first quarter, dragged down by disruptions in the company's supply chain and a 21% decline in its consumer beauty business, which includes CoverGirl and Clairol. But Mr. Pane on Wednesday defended its performance, saying: "If I look at Coty now and if I look at Coty before the merger, it's been a big upgrade."

In addition to changing its CEO, Coty said Monday it was switching its chairman. One senior JAB partner, Bart Becht, is stepping aside as Coty's chairman and being succeeded by another JAB partner, Peter Harf. The duo have overseen investments in several consumer companies, including Lysol maker Reckitt Benckiser, Panera Bread and the maker of Keurig machines. Mr. Becht will remain on Coty's board.

Like Mr. Pane before him, the new Coty CEO is also from JAB's stable. Mr. Laubies most recently served as the CEO of Jacobs Douwe Egberts, a coffee and beverages company created in 2014 when Mondelez International Inc. combined its coffee business with a European coffee company controlled by JAB.

Coty, which houses everything from OPI nail polish to Gucci perfume, has historically relied on acquisitions to boost its size and reach. But the company is struggling to keep up as the beauty sector continues to become more crowded and competitive, largely due to the emergence of indie brands.

While many of its competitors have sought to gain more exposure to these prestige names, Coty is still largely a maker of mass-beauty items that represent more than 40% of sales.

More executive change is to come, as Coty is searching for a new chief financial officer.

Mr. Laubies will serve as a Coty director, effective Wednesday. Coty also appointed Erhard Schoewel, another former Reckitt executive, as lead independent director.

Write to Jaewon Kang at jaewon.kang@wsj.com and Kimberly Chin at kimberly.chin@wsj.com

 

(END) Dow Jones Newswires

November 12, 2018 12:58 ET (17:58 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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