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Coty CEO Seeking Organic Growth, Not Big Acquisitions

Thursday, 13 Jun 2013 | 11:23 AM ET
Sweet Smell of Success; Coty CEO Celebrates IPO
Michele Scannavini, CEO of Coty, discusses his company's debut today on the NYSE.

Coty opened for trading Thursday, ranking as the third-largest IPO of 2013, and the company's CEO, Michele Scannavini, spoke with CNBC's "Squawk on the Street" about the fragrance maker's strategy as a public company.

Coty shares hit the market at $17.50 and raised about $1 billion for the company, but dropped slightly on its trading debut, despite high interest from investors.

Coty bottles go on display at Harrods London to celebrate the launch of Lady Gaga's fragrance.
Dave J. Hogan | Getty Images
Coty bottles go on display at Harrods London to celebrate the launch of Lady Gaga's fragrance.

"Our single-minded objective is to keep growing in line or faster than the market where we compete, in terms of revenues and in terms of bottom line as well," Scannavini said. "I'm very optimistic for the future."

Although Europe, one of Coty's key areas, is "not an easy market," Scannavini said that the U.S. is "growing pretty nicely" and will be a center for Coty's growth, along with emerging markets.

Scannavini said that acquisitions, along with organic development, are important parts of the company's strategy. Although no "transformational acquisitions" are on the way, he said that Coty will continue looking for opportunities in the market.

In May, Coty dropped its unsolicited $10.7 billion bid for Avon Products after courting the company through early 2013.

Bringing on high-profile celebrities and designers is "obviously the core of the fragrance business. It is a very profitable business for us," he said.

There are some costs to this strategy, but Scannavini said that this is surpassed by the benefit of developing products alongside key celebrities, such as Beyonce or Vera Wang, which help improve the brand image and awareness.

Right now, Scannavini sees greater strength in the high-end portion of the market compared with the low end, but this situation is highly dependent on broader cycles.

—By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul.

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