5 Reasons to Get a Whiff of Coty’s IPO

Why the beauty company’s public offering is a beautiful thing

     

Bring up a name like Sally Hansen to any stodgy guy on Wall Street, and I’m guessing the reaction would be something along the lines of “Don’t know, don’t care.” But Sally Hansen — a nail polish brand, for those who don’t know — is a household name to many consumers and just one of countless popular brands owned by fragrance and cosmetics maker Coty.

Coty, by the way, just announced a $700 million IPO. Maybe that will get the attention of the old guys on Wall Street. It definitely should.

star trophy 5 Reasons to Get a Whiff of Coty’s IPO
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While IPOs still might be getting a bad rap from the Facebook (NASDAQ:FB) fiasco, Coty is looking strong. Here are five simple reasons you shouldn’t let this IPO pass under your nose. To start, the company is …

Everywhere

Just browse through some of its brands, and you’ll recognize products you see all the time: Rimmel cosmetics, OPI nail polish, Adidas fragrances, Calvin Klein cologne. Plus, enough celebrities have a fragrance line owned by Coty that laundry-listing them all would make you feel like you’re reading TMZ, not InvestorPlace.

I think you get the point. The company has its hands in every cookie jar, unlike a competitor like Revlon (NYSE:REV) that simply makes Revlon products. Boooring.

Coty can thus attract consumers from every demographic. And it’s not just a diversity of products, but a diversity of products that each has a mass market and that are all …

Established

Coty has been around for more than 100 years, since François Coty started it in 1904. That incumbency also is comforting since it isn’t selling a new, hot technology (like, oh, I don’t know … Facebook) that could be in today and out tomorrow.

No, Coty keeps it simple. People need to spray on something to smell good, put on something to make their faces pretty and fancy up their nails to look presentable — demand for such products probably won’t dry up anytime soon.

Plus, Coty isn’t trapped in brick-and-mortar or relying on a gimmick like now-struggling Avon (NYSE:AVP) did with its door-to-door salesladies. It stays on the manufacturing end of it all. Even as retailing habits shift to buying more online, the company will continue to connect with customers by supplying online retail sites.

But at the same time, Coty also keeps …

Expanding

Don’t confuse established with stagnant, because Coty is never sitting still.

Here are a few numbers: Last year, Coty did $4.1 billion in sales — an 18% increase from $3.48 billion in 2010 — and for 2012, it expects to grow sales at least 10% year-over-year to a minimum of $4.5 billion, according to Reuters.

Coty also made a recent attempt to buy Avon — scratch that, two attempts. And that was coming off a busy 2010 that saw four acquisitions — Dr. Scheller Cosmetics, philosophy, OPI and TJoy — in a span of two months.

Diversity like Coty’s doesn’t happen overnight, though. Those purchases were on top of the countless others in the past century, including that of Del Labs and the global fragrance business of multinational giant Unilever (NYSE:UL).

 
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