By Ben Dummett and Sharon Terlep 

Coty Inc. is set to appoint its fourth new chief executive in less than four years, as the cosmetics and fragrance maker strives to revive slumping sales and reduce its burdensome debt load.

Peter Harf, Coty's current chairman, will also assume the CEO role as soon as Monday, according to people familiar with the matter. That will leave the New York-based company's fortunes directly in the hands of its largest shareholder, JAB Holding Co., of which Mr. Harf is one of two managing partners. JAB also counts Krispy Kreme and Keurig Dr Pepper among its holdings.

Mr. Harf has a lot riding on the turnaround as a major shareholder of Coty who has been involved in the company since 1990. As part of his new role, he will jointly oversee a newly created executive committee alongside Chief Financial Officer Pierre-André Terisse and Gordon von Bretten, the company's chief transformation officer, the people said.

Coty wants to implement changes more quickly as it aims to cut costs by 25% over the next three years. Revenue growth is expected in part to come from plans for additional investments in high-end and social-media driven brands such as Kylie Jenner's cosmetics startup. Coty acquired a 51% stake in Kylie Cosmetics for $600 million in November to take advantage of the celebrity's brand that is supported by 178 million Instagram followers.

It is also targeting additional investments in skin-care products, which are more profitable than makeup, and in core mass beauty brands including Rimmel and CoverGirl to boost sales by broadening their availability online and in stores, the people familiar with the matter said.

Mr. Harf's appointment comes as a surprise since Coty, whose other brands include Clairol hair dye and OPI nail polish, announced only in February that Pierre Denis, previously head of the Jimmy Choo fashion brand, and a Coty director, would take over the CEO role this summer. He won't get that chance now, though he will remain a company adviser.

The leadership turmoil underscores the mounting challenges Coty faces to successfully emerge from more than $8 billion in debt at the end of March and a failed attempt to compete against industry heavyweights Estée Lauder Cos and L'Oréal SA in makeup and fragrances.

In 2016, Coty acquired dozens of beauty brands from Procter & Gamble Co. for $12 billion. But last year, it took a $3 billion write-down on the P&G business amid weakening sales as consumers increasingly favor higher-end and niche beauty brands.

Since then, Coty has focused on unwinding its effort of adding businesses and churning out products. Instead it has sought to shrink through asset sales and paying down debt -- a strategy Mr. Harf has supported. "We didn't execute well because we tried to do too many things at one time," Mr. Harf told The Wall Street Journal in November.

The coronavirus pandemic, however, has undermined that strategy, plunging Coty's sales amid the economic lockdown. The company's results for the most recent quarter, announced in May, showed that like-for-like sales fell 17% in the consumer beauty business, while the luxury unit reported a 26% decline and the professional beauty division fell 14%.

In May, Coty secured a deal with KKR & Co. to raise much-needed cash and to help alleviate investor concerns over its outlook. At the time, Coty said the moves would help to strengthen its balance sheet and achieve long-term growth.

But the stock is down more than 54% since that announcement, in part due to the high interest-rate costs Coty faces under the agreement.

Coty is getting an immediate cash injection of $750 million from the sale of convertible preferred shares that pay KKR an interest rate of 9% and an additional $250 million from a subsequent issue of the same type of securities to KKR in the coming weeks. Those deals entitle the private-equity firm to two board seats. KKR also entered into exclusive talks to acquire 60% of Coty's professional beauty and retail hair-care businesses for about $3 billion.

Terms of these deals remain unchanged, according to the people familiar with the matter.

Write to Ben Dummett at ben.dummett@wsj.com and Sharon Terlep at sharon.terlep@wsj.com

(END) Dow Jones Newswires

May 31, 2020 18:44 ET (22:44 GMT)