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Coty Redefines COVERGIRL Brand to Boost Makeup Standards

Zacks

In an effort to enhance makeup standards and give a unique touch to beauty, Coty Inc. COTY recently decided to reinvent its iconic makeup brand — COVERGIRL. The reinvention of this brand satisfies the vision of “I Am What I Make Up”, with an opportunity of expressing oneself and personal transformation.

The COVERGIRL multifaceted redefinition covers all areas of the brand, with packaging, designing, in-store look, tagline and logo. Also, this focuses on the outer appearance of the products, including tone and feel, across all communications, that begins with a long-form film — Made in the Mirror — and continues its roll-out for the balance of 2017 and into 2018.

On the part of its customers, this redesigning of the brand will help them reveal their unique personalities with a new makeup version. In fact, with this latest invention, COVERGIRL brand rejoices its diversity and genuineness, simultaneously avoiding impractical and idealized standards.

In fact, the film, Made in the Mirror, featuring six known personalities as COVERGIRLs, is likely to inspire women and help understand the new parameters of beauty. Going forward, Coty will provide a new definition to beauty with its redesigned products, and, in turn, better serve consumers.

Being one of the leading beauty companies in the world, we believe this action is much required by Coty for the moment. The company has been witnessing persistent weakness in its Consumer Beauty division for quite some time, unlike the Luxury and Professional Beauty segments. Evidently, Consumer Beauty declined 10% organically, reflecting continued pressure on COVERGIRL, Clairol, and Sally Hansen, during fourth-quarter fiscal 2017.

In fact, the company’s earnings have lagged the Zacks Consensus Estimate in three of the trailing four quarters, with an average miss of 27.7%. In the reported quarter, operating income declined due to higher marketing spending and interest expense. The quarter also witnessed higher investments to support acquisitions. Furthermore, mounting competitive pressure and changing consumer preferences have been hurting Coty’s growth. Unfavorable currency impacts also remain major deterrent for the company.

Consequently, this Zacks Rank #4 (Sell) company’s shares have declined 8.2% year to date, as against the industry’s gain of 6.8%.



Though Coty has been making strategic acquisitions and new brand licenses to enhance its portfolio and improve performance, this will take time. Further, we expect COVERGIRL’s transformation to boost Coty’s top line and overall profitability.

Looking for Promising Stocks? Bet on these

Better-ranked stocks in the broader Consumer Staples sector include The Estee Lauder Companies Inc. EL, The Boston Beer Company, Inc. SAM and Lifeway Foods, Inc. LWAY, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Estee Lauder has a long-term earnings growth rate of 12%. Also, the company’s earnings have outpaced the Zacks Consensus Estimate in each of the trailing four quarters, by an average of 13.7%.

Boston Beer has delivered an average positive earnings surprise of 50% in the last four quarters.

Lifeway Foods pulled off an outstanding positive earnings surprise of 500% in the last reported quarter.

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