We are a leading global beauty company. Founded in Paris in 1904, we are a
pure play beauty company with a portfolio of well-known brands that compete
in the four segments in which we operate: Fragrances, Color Cosmetics, Skin
& Body Care and, we acquired the personal care and beauty business of Hypermarcas
S.A. (the “Brazil Acquisition”), which additionally represents a
separate segment. We hold the #2 global position in fragrances, the #4 global
position in color cosmetics and have a strong regional presence in skin &
body care.
We have transformed into a multi-segment beauty company with market leading
positions in both North America and Europe through new product offerings, diversified
sales channels and our global growth strategy. Today, our business has a diversified
revenue base that generated net revenues in fiscal 2016 of 46%, 36%, 16% and
2% from Fragrances, Color Cosmetics, Skin & Body Care and Brazil Acquisition,
respectively.
In addition, we acquired the personal care and beauty business of Hypermarcas
S.A. (the “Brazil Acquisition”). This acquisition additionally represents
a separate segment. We believe these two transactions, combined with organic
growth, will help us to achieve our strategic vision to be a new global leader
and challenger in the beauty industry.
Our top 10 brands, which we refer to as our “power brands”, generated
70% of our net revenues and comprise the following globally recognized brands:
adidas, Calvin Klein, Chloé, Davidoff, Marc Jacobs, OPI, philosophy,
Playboy, Rimmel and Sally Hansen. Our brands compete in all key distribution
channels across both prestige and mass markets and in over 130 countries and
territories. Following the Transactions, we expect to re-evaluate our approach
to power brands.
We target organic growth through our focus on supporting and expanding global
brands while consistently developing and seeking to acquire new brands and licenses.
Brand innovation and new product development are critical components of our
success.
Our “power brands”, each of which we describe in further detail
below, are at the core of our accomplishments. We invest aggressively behind
current and prospective power brands, which are our largest brands and those
that we believe to have the greatest global potential, to enhance our scale
in the three beauty segments in which we compete.
•adidas. adidas is one of the biggest licensed brands in the global mass
skin & body care market and maintains a significant presence in deodorants
and shower gels. Our adidas products for both men and women blend distinctive
brand identity (through each fragrance and product design) and aspirations of
performance to appeal to a broad range of consumers. Successful new product
launches have contributed to adidas’ net revenues.
•Calvin Klein. Calvin Klein is our largest brand by net revenues and
one of the largest fragrance brands by net revenues in the world. It holds strong
positions in most developed markets, including the U.S., the United Kingdom
(the “U.K.”), Germany and Spain, and in emerging markets, such as
China and the Middle East. The brand is also sold in the travel retail sales
channel, including duty-free shops. The brand reaches a diverse consumer base
through several strong product lines, including ck one, Eternity and euphoria.
•Chloé. Chloé is a top women’s fragrance in the global
prestige market. Chloé’s largest markets are travel retail, Italy,
the U.S., France, Germany and Spain. Notable launches for the brand include
Chloé Signature, Chloé Love Story and See by Chloé.
•DAVIDOFF. DAVIDOFF is the #10 men’s fragrance brand in the worldwide
prestige market. Cool Water, DAVIDOFF’s most successful line, is the #2
men’s fragrance brand in the German prestige market and the #9 men’s
prestige fragrance brand in the world. It has been one of the world’s
leading prestige men’s fragrances since 2006.
DAVIDOFF Cool Water has joined forces with the National Geographic Society
to support its Pristine Seas mission. This initiative aims to raise awareness
about the importance of protecting the ocean.
•Marc Jacobs. Marc Jacobs is an iconic fragrance brand, with Daisy Marc
Jacobs, Daisy Dream Marc Jacobs, Marc Jacobs Lola, Dot Marc Jacobs and the successful
launch of Marc Jacobs Decadence in fall 2015. During fiscal 2016, Marc Jacobs
Decadence won the Fragrance Foundation “Prestige Fragrance of the Year”
award. The brand has been particularly successful in certain Asian markets,
including China, and is a top ranking brand in global travel retail.
•OPI. OPI is the global leader in professional nail care. With a portfolio
of approximately 300 creatively-named unique shades, OPI links fashion and entertainment
with color cosmetics. OPI regularly creates limited-edition collections with
celebrities and entertainment franchises to promote the brand, including collaborations
with Gwen Stefani, Miss Piggy, the Muppets and Hello Kitty. OPI is sold through
salons, travel retail and traditional retailers. OPI also markets nail gels,
nail care products and nail accessories through salons. OPI is sold in over
100 countries and territories.
•philosophy. philosophy enjoys a strong market position in skin &
body care in the U.S. prestige market and leverages multiple distribution channels,
including direct television sales and e-commerce. philosophy’s miracle
worker line was one of the most successful skin care launches in the U.S. prestige
market the year it was launched. Building on the brand’s existing skin
care franchises, philosophy’s key launches in fiscal 2016 included Ultimate
Miracle Worker Multi-Rejuvenating Cream Broad Spectrum SPF 30 and the lightweight
breathable oxygen infused Take a Deep Breath collection of skin care and skin
color.
•Playboy. Playboy has become a strong mass market brand with established
positions in Europe. Playboy offers a variety of deodorant, shower gel and fragrance
products in both men and women markets.
•Rimmel. The Rimmel brand comprises a broad line of color cosmetics products
covering the entire range of women’s color cosmetics, including eye, face,
lip and nail products. Rimmel is sold in drugstores and other mass distribution
channels. Rimmel is the #3 color cosmetics brand in the European retail mass
market. Rimmel has been represented for more than ten years by Kate Moss, who
has also developed and promoted her own signature line of Rimmel lipsticks.
Most recently, the brand is also represented by model and actress Cara Delevingne,
supermodel Georgia May Jagger, and international music star Rita Ora.
•Sally Hansen. Sally Hansen is the #1 nail care brand in North America.
We believe that Sally Hansen has the most diversified and successful line of
nail products in North America. Products in our Sally Hansen line include nail
care products, nail color lacquers and nail and beauty implements and are sold
in drugstores and other mass retailers. We also sell a broad range of depilatory
and wax products through our Sally Hansen brand. In fiscal 2015, we launched
Sally Hansen Miracle Gel for at-home gel manicures. Miracle Gel holds the #1
position in nail color in the U.S. and has won 48 industry awards to date, including
the Nielsen 2016 Breakthrough Innovation Award for Miracle Gel. Although Sally
Hansen is currently primarily a North American brand, it continues to expand
its presence in Europe, Asia and South America by focusing on nail products.
Miracle Gel, which has experienced steady growth since launch, has enabled Sally
Hansen to grow net revenues in the North American and European markets.