St. Tropez owner abandons sale as bosses back turnaround after US slump
PZ Cussons is instead backing a turnaround for the brand in its key US market via a strategy-shake-up and a deal with a local partner.
The soapmaker, which also owns the Imperial Leather and Sanctuary Spa brands, put St. Tropez up for sale in April last year as part of efforts to streamline operations after a prolonged struggle with foreign exchange headwinds and high debts.
PZ Cussons wants to radically boost returns for shareholders, cut debt, streamline its operations and bolster its bottom line.
But St. Tropez has weighed further on the group this year, with US demand for the tanning solution falling by a double-digit percentage in the first half.
St Tropez, purchased by PZ Cussons for £62.5million in 2010, was popular with celebrities, including reality television star Kim Kardashian and American model Ashley Graham, and is sold across 28 countries, according to the brand's website.
But the brand's deterioration means the group now expects to record a non-cash impairment for the year.
PZ Cussons told investors on Thursday the auction process had yielded 'a number of offers' for St. Tropez 'against a backdrop of a challenging performance for the business' and a 'wider contraction of valuation multiples across the beauty category'.
But the group has opted to retain St. Tropez and 'set a new strategic direction for the brand' after bosses explored 'a number of alternative business models' to 'create more value for shareholders'.
PZ Cussons said it will partner with US group Emerson, which will provide provide customer management, logistics services and 'brand activation in the US' via a dedicated team selling to key US retailers
It added: 'The board is confident that this partnership will return St. Tropez to growth in the US, combining Emerson's distribution reach and brand activation capabilities, with the brand equity of St. Tropez.
'The move will help address the challenge of our sub-scale operations in the US, as identified previously, as well as further learnings gleaned over recent months.
'We look forward to strengthening retailer relationships as we work in partnership with Emerson to build the brand.'
Boss Jonathan Myers said: 'Today we are setting a new direction for St. Tropez with a renewed operating model built around a focused and incentivised team, a re-set of our 'go to market' capabilities in the US and proven group operations in our other markets.
'With these changes, we are confident in the future of the brand as part of the PZ Cussons portfolio.'
PZ Cussons shares were down 3.3 per cent by late morning at 72.8p, taking losses to almost 30 per cent over the last 12 months.
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