Coty's largest shareholder bids for control; Chinese spending up 8.5 per cent over Lunar New Year; Global electric shaver market to reach US$17.7 billion fueled by women and younger men; and investment fund takes majority stake in Trussardi.
Coty's largest shareholder bids for control
Coty's share price soared on the news that JAB Holdings, the beauty titan's largest shareholder, is poised to make a tender offer valued at US$1.75 billion for 150 million of its shares. The global investment company, owned by Germany's billionaire Reimann family, has been investing in Coty for more than 30 years and also owns Krispy Kreme Doughnuts, Pret A Manger, the international sandwich shop chain, and Jacobs Douwe Egberts, the maker of Moccona coffee.
With assets totaling US$25.6 billion, JAB has invested billions of dollars in the food and beverage category over the past three years and reduced its stake in Reckitt Benckiser, whose stable of best-selling personal care brands includes Veet and Scholl. The privately-held company once had ambitions to become a leading luxury player before selling shoemaker Jimmy Choo to Michael Kors for US$1.2 billion and a majority share in Bally, the Swiss luxury fashion house, to Chinese investment group, Shandong Ruyi, in early 2018.
JAB Holdings already owns 40 per cent of Coty's shares and the tender offer will raise its stake to 60 per cent. Coty's latest quarterly results saw its luxury division out-perform mass market brands such as Rimmel London, COVERGIRL and Max Factor. There's several major pluses to JAB taking over majority control, including a stronger management structure to turn around the beauty multinational's recent performance and the ability for Coty to use its own stock to pay for future acquisitions.
Chinese spending up 8.5 per cent over Lunar New Year
Major multinationals such as LVMH, Estée Lauder and L'Oréal posted record results for 2018 because of the strength of the Chinese luxury market. The seven day national holiday for the Chinese Lunar New Year, which ended on February 10, has become a hot spot for Australian and international brands and retailers. According to China's Ministry of Commerce and National Statistics Bureau, overall retail and restaurant spending for the period within China reached US$148.96 billion.
In any other country growth of 8.5 per cent would be viewed as spectacular. But luxury tracker, Jing Daily, reported that the spending growth to welcome in the Year of the Pig was the lowest since 2005 and a dip into single figures by contrast to last year's sales surge of 10.2 per cent. With so many luxury players increasingly dependent on continued growth in China, a quiver of fear has shot down corporate spines. But analysts are saying that the dip in growth over the lunar new year isn't a solid indication of an overall slowdown in luxury goods consumption.
There was plenty of good news. Shenwan Hongyuan, the Chinese investment management company, reports that Chinese shoppers were still spending up big in shopping and outlet centres and Shanghai's retail complexes enjoyed a 20 per cent lift in sales over the lunar new year. Online giant JD.com experienced high demand for luxury watches, jewellery, fashions and shoes. Tencent, the Internet, entertainment and AI behemoth, revealed that consumers aged 30 to 40 years accounted for 40 per cent of this year's holiday sales, followed by 20 to 24 year olds.
Global electric shaver market to reach US$17.7 billion fueled by women and younger men
Historically, the two major drivers stoking electric shaver sales were mums buying for their teenage sons and Christmas gifting. Not anymore, according to a new report from Transparency Market Research. Younger men and women are driving demand for personal care electronic appliances because of advances in technology and ease-of-use. The global electric shaver market is expected to reach US$17.7 billion over the next five years, predicts the researcher.
Three multinationals dominate worldwide sales - P&G through Braun, Philips and Spectrum Brands, the owner of Remington - with a 68.6 per cent global market share. The fierce competition between the big three and the arrival of smaller players is boosting sales and attracting new consumers through the launch of less expensive models, notes the report.
Investment fund takes majority stake in Trussardi
Trussardi is one of Italy's storied fashion houses. Founded in 1911 by glovemaker Dante Trussardi, the century-old business has diversified into jeans, eyewear, sporting goods, tableware and fragrances. Most Australians know the brand through its fragrances such as Donna and Uomo, distributed in Australia by Escentials Brands.
Even though Trussardi is sold in 47 countries through 160 standalone stores in Europe and Asia and 1800 retail doors, business has slumped in recent years. In 2018, the company generated sales of US$169.4 million and was struggling with significant losses. QuattroR, an Italian investment fund that specialises in helping Italian brands in financial difficulties, has acquired a 60 per cent share in Trussardi.
Tomaso Trussardi, the great-grandson of the founder and his mother, Maria Luisa Gavezzani, retain the minority share. QuattroR's investment will allow the company to implement a five year recovery plan and continue international expansion. Tomaso Trussardi will serve as the president of the board of directors and is the last family member to retain an active role.
Snippets from the Wires
- Queensland has been a strong focus for multi-million dollar retail upgrades over the past few years. Sunshine Plaza, the largest regional shopping centre on the Sunshine Coast, has undergone a $448 million expansion and its grand opening is scheduled for March 28th. Mecca and Endota Spa are two key players among the 100 speciality stores and the centre also hosts the first David Jones store on the Sunshine Coast.
- As we reported recently, Shiseido is gearing up for further expansion in Europe and Asia. The Japanese giant has reported a record-breaking result for 2018 with net sales up 8.8 per cent to 1.094 trillion yen (US$$9.86 billion). Sales in China surged 32.3 per cent and travel retail sales were up 40 per cent.
- The cannabis steamroller has been unstoppable since the beginning of the year. Luxury department store Barneys will open a cannabis and wellness lifestyle shop in its Beverly Hills flagship store in March. Beauty and personal care will be only part of the mix, alongside jewellery, homewares and luxury rolling papers from Devambez.
- Older shoppers still have the numbers in travel retail reveals a new report from Swiss research agency m1nd-set. Only in China do Millennials skim past the over-40s in rates of purchase at 52 per cent. The percentage drops to 35% and 30% for Japanese and Russian travellers and plummets dramatically to 23 per cent, 22 per cent, 20 per cent and 11 per cent, respectively, for British, French, Brazilian, German and American travel retail shoppers.
