Coty (COTY), the consumer beauty and fragrance company whose portfolio includes such brands as Calvin Klein, Marc Jacobs, Adidas, Sally Hansen and Philosophy, is seeing its shares slip Thursday in its debut on the New York Stock Exchange.
The stock is trading down 1% as the broader U.S. market sees a bit of green following a three-day dive amid global volatility and Fed-tightening concerns.
The Coty IPO, the third largest of the year thus far, priced on Wednesday at $17.50 a share, in the middle of its expected range of $16.50 to $18.50. It raised just under $1 billion in proceeds, giving the company a market value of more than $6 billion. Coty is the first U.S. consumer-products retailer to go public this year. The only other U.S. retailer to debut in the first half of 2013 has been grocery operator Fairway (FWM), whose shares, at $23, are up 74% from their April offer price.
[See related: Pricey Fairway IPO Leads Pickup in Consumer Offerings]
With the May Conference Board Consumer Confidence survey hitting its highest levels since before the financial crisis, Coty's push into the public market may seem to be coming at the right time. The company delayed its IPO in 2012 as some companies in the same space, including Avon (which Coty launched a failed bid to acquire for $10.7 billion last year) and Estee Lauder (EL), were struggling. Yet amid the recent global equities selloff, rising bond yields, Fed-action speculation and a job-market recovery that has been just moderate, the consumer may not be back quite yet (and as Yahoo! Finance senior editor Michael Santoli wrote in May, consumers may not be "confident" as much as they are simply "less peeved").
According to its web site, Coty maintains the #2 position globally in fragrances, while sitting at #6 in color cosmetics in the 130 countries in which it does business. The company's prospectus touches on concerns regarding the recession-plagued European market, noting that "continuing or worsening recessionary environments in Europe and elsewhere could affect the demand for our products and may result in longer sales cycles, slower acceptance of new products and increased competition for sales."
Coty not only boasts recognizable beauty brands but has also teamed up in fragrance partnerships with red-carpet-strolling celebs such as Jennifer Lopez, Beyonce, Lady Gaga, Heidi Klum and Katy Perry. The company, headquartered in New York City, was founded in Paris by Francois Coty at the turn of the 20th Century.
Other high-profile retailers that have recently filed to go public include housewares seller The Container Store and teen-focused jewelry and accessories chain Claire's.
Coty won't receive any proceeds from this week's IPO, as existing shareholders were behind the sale; 46.6 million shares were offered by German-based holding company Joh. A Benckiser, which owns more than 8o% of the company. Private equity firms Rhone and Berkshire Partners, which each own around 7% of Coty, offered the 13.5 million additional shares. Remaining shares owned by the three will be converted to class B status, entitling them to 10 votes each per share in comparison with the one vote offered by class A shares. Only class A shares were made available to the public.
According to its prospectus, Coty saw net revenue of $4.6 billion in fiscal year 2012, with a $210 million operating loss and $536 million in adjusted operating income. More than half of these sales came from fragrances, while 31% were attributed to cosmetics and 16% from their skin and body care products, per the filing. Coty's last acquisition was China skin-care company TJoy; Coty shelled out $400 million in a push for expansion in Asia.
With the first half of the year just two weeks from coming to a close, the IPO market as a whole has seen plenty of activity. In the U.S., 79 offerings have priced, up 14.5% from last year, according to Renaissance Capital. The average return on offer price has been 19%, says Renaissance. Still, proceeds raised, at $18.3 billion, are down 34% from last year at this time. The financial sector has seen the most IPOs priced in the first half of this year, at 24.
Just this week we also saw the debut of data-management company Gigamon, Inc. (GIMO), whose shares soared 50% to close at $28.47 on Wednesday, after pricing at $19 a share. Shares in midday trade on Thursday are down 4%.
[See related: Small IPOs Point to Rising Investor Confidence]
Based on returns, manufacturing company ExOne (XONE), which has been a player in the burgeoning 3D printing space, is the clear IPO winner year to date, with shares up 172% from their offering price of $18. Health care company Stemline Therapeutics (STML) comes in at No. 2, with its shares up 86% from their $10 offer price. Tableau Software (DATA) has seen an 80% rise from its $31 offer price, and investment management firm Artisan Partners (APAM) is up 75% from its $30 debut. Fairway's 74% rise from its $13 sale rounds out the top 5 so far for 2013.
As far as bottom dwellers go, tech company Professional Diversity Network (IPDN) has lost the most in 2013, with a negative return of 43% from its offer price of $8 a share. Kalobios Pharmaceuticals (KBIO) has lost 38% from its offer, also at $8. Health Insurance Innovations (HIIQ) has seen 28% shaved from its $14 pricing. Medical diagnostic company LipoScience Inc. (LPDX) is down 25% from its $9 offer price, and Marin Software (MRIN) has seen a loss of 23% from its $14 sale.
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