Celebrity brands can be risky. How does Coty address that risk?
We have to have the ability to measure things quickly. The life cycle of new fragrance initiatives is much shorter now than it has been historically. Some older fragrances are not nearly as popular as they once were. In other cases, there are institutions — like Jovan — that people still buy. Our portfolio or “house” of Jennifer Lopez has been around for only five years. Obviously, its longevity will depend on [Lopez's] commercial fortunes and her activities. So we need better information, and quicker access to it, to react. If something is going extremely well, we want to have an early-warning system to say, OK, let’s keep feeding it. Conversely, if something is not doing well, we want to have a similar system that says we need to rethink thisÂÂÂ . I view [daily sales] as the general pulse of orders taken in, and orders shipped, to make sure the supply chain is reasonably current.
Coty grew by 38 percent year-over-year in 2006. What accounted for that?
The [Unilever] acquisition represented a large portion of that growth. We’ve been growing, I’d say, 5 to 7 percent organically. Coty is an amalgamation of acquisitions and licenses — a little here, a little there, and some homegrown brands.
Will the fragrance division drive corporate growth going forward?
We hope growth comes from all arenas, but fragrances should not remain 65 percent [of the portfolio]. It will remain our number one, but as a percentage, I would anticipate that cosmetics and skin care will grow faster. About 15 percent of the portfolio is cosmetics, 15 percent toiletries, and 5 percent other — which includes skin care.
Coty was a private company at its inception in 1904, and is again a privately-held entity. Does that make it easier to work toward longer-term financial goals?
We look at [growth] annually. But we also try to manage cash flow quarterly because the more cash you get in sooner, the better your interest expense. So we put pressure on our divisions to do the right thing quarterly, but we are not bound by it. We have a motto that feeds on growth: “Faster, further, freer.” That means employees are free to make decisions, further enhance their careers, and do it at a very fast paceÂÂÂ . So I don’t know if you’d call us a big small company or a small big company.
What is your favorite men’s fragrance?
It’s interesting — my personal favorite wasn’t too commercially successful. It is Echo, by Davidoff — a very elegant fragrance in a very classy bottle. The lack of commercial success was mostly attributable to the house under which the product was marketedÂÂÂ [a brand] without a sufficient level of awareness or marketing. (Davidoff is an affluent-lifestyle brand primarily associated with premium cigars and smoking accessories.) In any event, I love the product and frequently wear it.