PZ Cussons is divesting its flagship brand, St. Tropez, as part of a broader strategic overhaul aimed at reducing debt and enhancing returns amid challenging market conditions. The British beauty and personal care firm announced in its third-quarter trading update on Wednesday its intention to offload St. Tropez and other assets to streamline its portfolio.
This move aligns with its strategy to concentrate resources where the company can excel and generate the most value for shareholders. Since its acquisition in 2010 for 62.4 million pounds, St. Tropez has experienced substantial growth, establishing itself as a leading player in the premium self-tanning market in the United States.
PZ Cussons is additionally divesting a cluster of infrastructure and assets in Africa to mitigate risk and optimize shareholder value. The company stated that proceeds from these sales will be initially allocated towards bolstering organic growth initiatives and further reducing gross debt.
CEO Myers stated the company’s intention to prioritize branded products for infants, alongside beauty and hygiene offerings. He pointed to the recent acquisition of Childs Farm, a producer of toiletries for babies with sensitive skin, as an illustration of this focus. Myers identified the UK, Australia, New Zealand, and Indonesia as the primary markets of interest for PZ Cussons.
Despite achieving nine consecutive quarters of comparable revenue growth and successfully revitalizing its U.K. personal care segment, PZ Cussons faced challenges at the beginning of the fiscal year. The company was adversely affected by currency devaluation in Nigeria, a market that contributes approximately 35 percent of revenues and 22 percent of net assets.
The company announced on Wednesday that third-quarter revenue increased by 6.4 percent on a like-for-like basis. However, revenue declined by 23.7 percent when reported in exchange rates, largely due to the devaluation of the Nigerian Naira, which was, on average, 60 percent lower compared to the same period last year.
Volume increased by 0.2 percent, which was a positive contrast to the 4.9 percent decline experienced in the first half, attributed to better performance from the U.K. brands. Excluding Africa, like-for-like revenue decreased by 2.9 percent, indicating an improvement compared to the first-half decline of 3.9 percent.
