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Struggling CoverGirl parent Coty extends stock plunge after announcing a major restructuring (COTY)

Cindy Ord/Getty Images for COVERGIRL

  • Shares of Coty, the multinational beauty giant that owns brands like Rimmel and CoverGirl, fell early Tuesday and extended their crash from the session prior. 
  • The company said it would restructure its operations and write down around $3 billion in assets.
  • Before the stock's Monday plunge, the stock had fallen 60% in the last four years.
  • Track Coty shares here in real time.

Shares of Coty, the multinational beauty conglomerate that owns cosmetics and personal care brands like Rimmel, Clairol and CoverGirl, fell 3% early Tuesday and extended their 14% plunge the session prior. 

The beleagured company said it would restructure its operations and write down around $3 billion in assets, prompting investors to dump the stock. Prior to Monday's decline, the stock had fallen 60% in four years.

Coty has fallen under pressure amid consumers' shifting beauty preferences in recent years.

That's come with a management shakeup in the past year. Coty replaced its former CEO, Camillo Pane, with Pierre Laubies late last year and added two independent directors to its board. It also named a new chairman of the board.

"We will focus our strategic effort and investments on fewer brands globally while simplifying our operations and organization," Laubies said Monday in a statement. "At the same time, we will make our cultural transformation agenda a key building block of our plan."

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The announcement ushered in a round of Wall Street analysts chopped their earnings estimates and price targets on Coty. Citi cut its target to $10, implying another 14% drop, and downgraded the stock to "sell." 

"Though our downgrade is a little late, as COTY fell 14% today we may be wrong if JAB steps in," Wendy Nicholson and Beth Kite, the firm's analysts, wrote in a note to clients.

The analysts were referring to JAB Holdings, the privately held German conglomerate and Coty's largest shareholder, which has sought a majority stake in Coty in recent months. 

Coty said its plan would unfold over the next four years, and would go into effect by January 1, 2020.

Joe Lachky, an analyst at Wells Fargo, called the 2023 targets "ambitious, especially considering COTY's recent execution challenges." He lowered his 2019 and 2020 earnings-per-share estimates to $0.64 and $0.68 per share.

Lachky added: "Looking forward, we believe COTY remains a long-term turnaround story and we note turnarounds never happen in a straight line." 

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