CoverGirl Was a '90s Darling. Its Comeback Hinges on Modern Influencers. -- WSJ

By Natasha Khan

CoverGirl was built on decades of glossy magazine ads featuring stars like Christie Brinkley, Tyra Banks, Taylor Swift and Rihanna. With sales sliding for drugstore makeup brands, its growth hinges on thousands of social-media influencers.

Sue Nabi, chief executive of beauty giant Coty, has turned around the fortunes of CoverGirl over the past four years, propelling the brand back to growth after it fell into decline. Now Nabi's strategy is being tested as sales growth slows across the U.S. mass-market cosmetics industry and competition increases -- particularly from rival e.l.f. Beauty.

"I want to be the most agile among beauty giants," Nabi said in an interview.

In New York, Miami and other cities, Coty has TikTok content-development studios where influencers shoot videos. Its influencer lineup includes makeup artist Karen Sarahi Gonzalez, known as Iluvsarahi, who has nearly seven million Instagram followers, and Lexie Learmann, who posts about fitness, food and beauty products and has more than a million Instagram followers. Coty is also expanding its digital sales with the help of a multidisciplinary team that Nabi likened to a startup.

Re-energizing makeup sales is important for Coty, whose stock has fallen 42% in 2024, hitting lows not seen for two years. Like others in the beauty industry, Coty has been hurt by a slowdown in makeup sales in the U.S. and China. Sales for Coty's consumer beauty unit -- where CoverGirl is the biggest brand -- flattened in the latest quarter.

CoverGirl's market share is holding steady, while rival legacy brands L'Oréal Paris and Maybelline are losing ground, according to Evercore ISI analysts. One reason, the analysts said, is that sales of makeup are declining in drugstores but growing on Amazon, where CoverGirl is gaining share.

Austen Tosone, a 30-year-old beauty influencer, first connected with Coty after she posted a TikTok video reviewing CoverGirl's Simply Ageless Skin Perfector Essence Foundation. She bought the product after seeing it in other influencers' videos.

"I've been influenced," she wrote in her February post. She said she had been seeing the skin tint "ALLLL over my feed and I finally caved."

Tosone, a former magazine editor, has about 17,000 followers on Instagram. Coty invited her to create more videos in its studio in the Empire State Building in Manhattan -- a thrill for Tosone, who usually films in her Hoboken, N.J., apartment.

"I'm surprised more brands don't do this," she said.

Reviving a faded legacy

CoverGirl was introduced in the early 1960s by Noxzema as a medicated foundation to conceal blemishes. The brand soon began positioning itself as "clean makeup," with a natural, girl-next-door look.

CoverGirl was acquired in 1989 by Procter & Gamble, which introduced the brand's famous tagline, "Easy, breezy, beautiful." Magazine ads helped propel the careers of rising stars like Banks.

When social media exploded in the 2010s, however, mainstream brands lost ground to indie labels. In 2015, P&G said it would unload CoverGirl and dozens of other brands in a sale to Coty.

In the summer of 2020, when beauty sales cratered in the pandemic, Coty brought in a new chief executive. Nabi had co-founded Orveda, an upscale French beauty brand, after years at L'Oréal, where she had boosted sales for Lancôme. Nabi assessed CoverGirl and concluded that the former trendsetter was now a follower. She directed Coty's consumer beauty team, which oversees the company's mass-markets labels, to think about what was at the core of CoverGirl's identity.

Thousands of influencers

Nabi's goal for CoverGirl was to become a trendsetter again. She increased advertising and marketing spending for the brand. And she instructed her marketing team to recruit thousands of influencers. On Instagram and TikTok, they posted videos demonstrating and endorsing CoverGirl products.

CoverGirl relaunched in 2021 with a new marketing campaign invoking the brand's roots as a clean beauty brand. In the cosmetics industry today, "clean beauty" -- a growing segment of the industry -- refers to products that don't contain ingredients such as parabens or sulfates. CoverGirl introduced a "clean" mascara and a suite of new skin care products. In the 2022 fiscal year, organic sales for Coty's consumer beauty unit grew 8%. The following year, they grew 11%.

CoverGirl brought on country music star Kelsea Ballerini, who collaborated with CoverGirl on a line of liquid glitter eye shadows and appears in video testimonials on Instagram and TikTok. She has more than four million followers on Instagram. The brand has also courted a host of so-called micro- or nanoinfluencers -- people with much smaller audiences -- by sending them free products.

Tosone, a micro-influencer, said she feels a strong connection to CoverGirl. When she was in middle school in the suburbs of New Jersey, CoverGirl's single eye shadow was the first beauty product she bought. Now she receives a steady stream of free samples.

"I am excited to continue working with them since they make products I truly love," she said.

Write to Natasha Khan at natasha.khan@wsj.com

(END) Dow Jones Newswires

November 17, 2024 05:30 ET (10:30 GMT)

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