Burberry Will Return To Agency Mode To Sell Agent To Coty.

Britain Luxury group In the past 5 years, Burberry Group PLC (BRBY.L), Bo Bo Li, has taken the lead in the collection and distribution of the beauty agency's business dealership, and has made a waking up for luxury peers: don't ask for trouble.

Since April 1, 2013, it has only been 4 years since its own beauty business. Burberry Group PLC Boboli will return to the agency mode. Global beauty giant Coty Inc. NYSE:COTY (NYSE:COTY) Coty group wins Burberry Group PLC PLC Bob's global exclusive beauty product at 130 million pounds. Dealership Plus 50 million pounds for inventory. Burberry Group PLC Boboli will maintain creative leadership over all products such as My Burberry and Mr Burberry, while Coty Inc. Coty will handle production, distribution and other matters, and the transaction will take effect in October 1, 2017.

Although luxury group's proxy or strengthening control of non core products has become a trend in recent years, especially since 2017, the high-end eyeglasses industry has been rapidly integrated. However, it is not surprising that Burberry Group PLC Bo Bo Boli again. As a single brand luxury group, Burberry Group PLC Bob Bolley beauty products can not produce scale advantage, but the investment in supply chain and distribution network construction has lower profit margins, and has also distracted the group's attention in clothing and handbag accessories business.

In contrast, the French luxury group Kering SA (KER.PA) Kai Yun group from the Safilo Group SpA (SFL.L) Xia Fei Nuo and other agents group to recall Gucci, Gucci, and other major brands of the licensing of self built glasses business, it can give full play to the synergy, to promote profit growth, and the group in the development of its nearly 10 private brands at the same time can better pull external customers. In March of this year, Compagnie Financi re Richemont SA (CFR.S), the peak group, handed the Cartier Cartire brand to Kering Eyewear as a part of the transaction. Richemont, the peak group, also bought a stake of 20%. It is reported that the Cartier Cartire brand eyewear business, which was run by Richemont SA, the group, has also had a lot of pressure on the group.

RBC Capital Markets LLC plus King capital market analyst Rogerio Fujimori pointed out Burberry Group PLC, Bo Bo Li finally realized that in the field of cosmetics competition is extremely fierce and the existence of Chanel Chanel and Christian Dior, Dior, and other large competitors in the background of their own internal beauty business needs to face many challenges.

Exane BNP Paribas SA (BNP.PA), a luxury analyst at Paris Bank of France, Luca Solca also said: "we never liked the idea of direct management of beauty business by Burberry." he pointed out that the group is only a "dwarf" in the field of industry giants. It has never had enough scale to operate the global express business quickly. Therefore, he welcomed the decision of the Burberry Group PLC bolberry to cooperate with the world's first agent, the COSCO Group.

UBS AG (UBSN.VX) UBS analyst Helen Brand believes that the transaction is a positive factor for the stock price, because the beauty department has been dragging down group performance and wasting management time.

In 2013, Burberry Group PLC Boboli, headed by former CEO Angela Ahrendts, paid 144 million pounds to the Interparfums SA IPAR.PA (IPAR.PA) to recover the perfume business, hoping to develop to the height of Chanel Chanel and Christian Dior Dior, but this previously recorded 2500-3000 million authorized revenue business can only contribute less than 10 million pounds of pre tax profit after self employment. In order to enhance the brand image, the group also cut down two channel sales, but it led to 2017 sharp decline in the beauty department revenue in the first half of fiscal year by 17%.

Data show that in the 2016 fiscal year, Burberry Group PLC Bob's perfume and cosmetics together achieved a total of 202 million 500 thousand pounds, accounting for only 8% of the group's total revenue of 2 billion 514 million 700 thousand, representing a 9.6% increase compared with 184 million 800 thousand in the 2015 fiscal year, while the Burberry Bob perfume business under Interparfums SA in 2011 recorded a revenue of 221 million 700 thousand euros.

In the 2016 fiscal year, Burberry Group PLC Bob Bailey's cosmetics sales doubled, accounting for 8%. The group said it hoped to increase its share to 15% by strengthening cosmetics supply and marketing efforts this year. The group's overall revenue can only be narrowly tied in fiscal year 2015, pre tax profits fell by 6.5% to 415 million 600 thousand pounds, profitability continued to shrink for two consecutive years, cosmetic business in the 2015 and 2016 fiscal year, the amortization of intangible assets increased operating expenses by 14 million 900 thousand pounds, 2017 in the first half of fiscal year, this expenditure increased to 26 million 100 thousand pounds.

In January, John Smith, Burberry Group PLC, chief executive officer of Boboli, but still serves as executive director, also revealed that the group had shelved plans to launch skin care products.

Burberry Group PLC Bobo Li's cosmetics sales are growing at a high speed.

Selling beauty business will undoubtedly boost the profitability of Burberry Group PLC boboley. In February of this year, Belgium's richest Albert Fr re Groupe Bruxelles Lambert SA (hereinafter referred to as GBL) disclosed the acquisition of Burberry Group PLC Boboli 2.95% shares last year. Although the company has been a partner for many years, Bernard Arnott, chairman and chief executive officer of Lu Wei mohum group, is a daydream. But more reasonable inference is that Albert Fr re seeks to drive Burberry Group PLC boboley's profit growth to make a profit.

Facing the slowdown in the global luxury market in recent years, especially in the Greater China market, the Burberry Group PLC Bob is streamlining its business, cutting costs and restructuring management to drive growth. The chief creative officer, Christopher Bailey, who will be chief executive officer, will transfer CEO duties to Celine CEO Gobbetti Marco later this year.

Burberry Group PLC Bo Bo Li, chief operating officer and chief financial officer Julie Brown pointed out that the past 4 years have successfully completed the goal of re controlling and repositioning the beauty business. Now, cooperation with Coty Inc. Cody group will not only accelerate the future growth of the business, but this transaction is also "very attractive". Once the cash payment of Coty Inc. Cox group is received in October, it will assess its asset allocation, and authorized income will also be paid from October. Julie Brown also revealed that many cosmetics groups were involved in the competition for their agency.

Coty Inc. Cody Group expects the transaction to be completed in the 2017 quarter of the financial year. As the largest perfume group in the world, the group also owns the perfume agency rights of Kering SA Gucci, Gucci Gucci, Bottega Veneta Bao butterfly, Balencaiga parensee and Alexander McQueen. In recent years, the group has been buying and selling. After spending $14 billion 500 million to acquire more than 40 beauty perfume brands of Procter & Gamble (Procter & Gamble) Procter & Gamble group, it has spent 1 billion yuan on personal care and cosmetics business in Brazil. Burberry boblie will be another flagship perfume brand after Calvin Klein, Gucci Gucci and Hugo Boss Hugo Cox after Coty Inc. Cody group. It can also make up for the loss of Dolce & Gabbana dujibana away from the Procter & amp; the Procter & Gamble group's packaged transaction, and only goes to the loss of Shiseido company.

John Smith points out that the transaction is "unusual" because Coty Inc. Coty group gives Burberry Group PLC, Bob, all control rights at the consumer level, including brand image, product packaging, Advertising Spokesperson and sales point marketing.

Coty Inc. Camillo Pane, chief executive of Coty group, said. Burberry Boboley joined the group to focus more on the development of the advanced perfume market, while celebrity perfume is also part of the market and brand mix.

Burberry Group PLC, Bob Bailey, expects the group to generate a one-time cash expenditure of 30 million pounds, but it will have a neutral effect on adjusted pre tax profits from the 2018 fiscal year beginning in April 1st, and will boost earnings growth in the 2019 fiscal year.

The shares of Burberry Group PLC (BRBY.L) and Coty Inc. (NYSE:COTY) 4 on 3 may not be encouraged by the heavy transaction. The former narrowed 0.82% to 1738 pence, while the latter fell 2.15% to $17.74.

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