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Li & Fung To Distribute Coty Brands in China

June 3, 2014

Deal includes Adidas, Rimmel and Playboy.

Coty Inc. and Li & Fung have entered into an agreement in which Li & Fung will distribute some of Coty's power brands in China, including Adidas, Rimmel and Playboy. The agreement goes into effect July 1.

This agreement with Li & Fung represents a shift in Coty's go-to-market strategy for brands sold through the mass distribution channel in China, by allowing Coty to leverage Li & Fung's broad distribution network in that channel. Coty will oversee development, production, marketing and brand building activities, while profiting from the strong go-to-market capabilities of Li & Fung.  At this juncture, Coty will also discontinue the TJoy brand to focus on the international power brands that have more growth potential in China. This distribution agreement is consistent with Coty's previously announced intent to reorganize Coty's mass business in China, with the objective of bringing significant benefits to the profitability of Coty China and to the overall skin and body care segment.

"We expect our partnership with Li & Fung to accelerate the expansion of some of our international brands in the mass channel, strengthening Coty's position in this fast growing market," said Michele Scannavini, CEO, Coty Inc.  "Li & Fung is a valued business partner, and we look forward to a long term and successful partnership in China."

Gerard Raymond, senior executive at LF Asia, a business unit of Li & Fung, commented, "We are delighted to be deepening the longstanding relationship between LF Asia and Coty. Li & Fung provides its expertise to Coty in different areas of the supply chain, including sourcing, manufacturing and now distribution. LF Asia is uniquely placed to give Coty's power brands access to the Chinese consumer and throughout our network in China.  We are very much looking forward to this opportunity with Coty and we see great potential to develop our partnership further."

In an unrelated announcement, Coty said that its board of directors has approved an additional $200 million share repurchase authorization of its Class A common stock. With this authorization and the $100 million remaining under the already existing stock repurchase authorization, the company's total current share repurchase authorization is $300 million.

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