KKR-Backed Wella Aims for IPO as Haircare Market Recovers

(Bloomberg) -- Wella Co., the cosmetics maker owned by KKR & Co. and Coty Inc., plans an eventual initial public offering as demand from beauty salons for professional haircare products recovers.

“That's our ambition,” Wella Chief Executive Officer Annie Young-Scrivner said during an interview in Paris Monday. She sees a potential listing in four years, probably in New York.

Wella was spun off from Coty in 2020, when KKR became a majority investor.

Revenue was hit hard during the start of the pandemic due to forced closures and has recovered strongly as economies reopened. Sales increased 24% in 2021, a similar rate to that of L'Oreal's professional products division.

Wella sales accelerated even more in January amid the popularity of products such as Color Fresh Mask, which offers temporary hair coloring in shades ranging from mint green to lilac frost, the CEO said.

Wella has four manufacturing plants worldwide, in Mexico, Thailand, Germany and Russia. The Russian factory produces the Londa professional line. Regarding the recent sanctions taken on Russia and the ruble's steep depreciation against foreign currencies, Young-Scrivner said Wella is accustomed to managing major inflation pressures since it has operations in Argentina, Brazil and Turkey. Russia and Ukraine represent less than 5% of total revenue.

Young-Scrivner, who was named to lead Wella in October 2020, forecast that haircare will undergo a boom similar to that of skincare.

Hair Boom

“If you look way back when people had two, three skincare items, now it's very specialized. That's going to happen with hair,” she said.

Wella's biggest market is Europe, Middle East and Africa, representing 43% of sales, while Asia has been “very under-focused,” a shortcoming that represents a “huge opportunity,” she said. The Americas are Wella's fastest-growing region.

The company is on track to reach around $3 billion in sales in the 12 months through June. It also owns nail polish brand OPI, which represents less than 10% of total sales.

Wella increased prices by an average of 4% last year amid the rise in production costs and Young-Scrivner expects a similar increase this year as energy costs continue to soar. A shortage of components is also affecting the supply of straighteners sold by its ghd (good hair day) brand, a styler sold at high-end department stores such as Harrods starting at 139 pounds ($186).

Wella, based in Geneva, has about 6,000 employees, 1,100 of whom were hired in the past two years, she said. Nearly half of the leadership team are led by women, including Chief Financial Officer Virginie Costa. The group is present across 100 countries.