Imperial Leather maker PZ Cussons to sell St Tropez and review African business

Imperial Leather manufacturer PZ Cussons has announced its intention to divest its St Tropez self-tanning brand and is conducting a review of its operations in Africa, particularly due to challenges faced in Nigeria.

The Manchester group said after a strategic assessment it aims to "refocus the group's portfolio on where it can be most competitive".

PZ Cussons plans to find a new owner for St Tropez, which it acquired for £62.5m in 2010, and is looking for someone "better placed to capture the brand's significant long-term potential".

Despite making strides in improving its African business performance, PZ Cussons described it as a "complex group of assets" for which it is exploring strategic options.

PZ Cussons' performance has been severely impacted by extreme volatility in the Nigerian economy, where it has a major market representing more than a third of its total sales. The firm slumped to a £94.2m loss in the half-year to December.

PZ Cussons has suffered from the prolonged devaluation of the Nigerian naira, which has depreciated by an average of 60% year-on-year in the first quarter of 2024, while inflation rates have soared to nearly 30%, the highest in three decades.

In today's update, the group reported a sharp 23.7% decline in revenue for the quarter ending March 31. However, when adjusting for currency fluctuations, the like-for-like sales saw an increase of 6.4%.

Sales by volume increased 0.2% against a first-half decline of 4.9%, driven by improved trading across UK brands. Excluding Africa, like-for-like revenues fell 2.9%, compared to a 3.9% drop in the first half.

PZ Cussons said: "In addition to the challenges of its significant exposure to Nigeria, the group is too complex for its size, with financial and human resources spread too thinly to generate consistent returns."

"This means its competitive advantages have been constrained in comparison to those of both larger multinational companies and some focused, smaller ones."

Chief executive Jonathan Myers added: "The macro-economic challenges and complexities associated with operating in Nigeria are significant and there is much more to do to unlock the full potential of the business."

"As such, we have undertaken a strategic review of our brands and geographies and have embarked on plans to transform our portfolio, refocusing on where the business can be most competitive."

Proceeds from any sale will be directed towards growth initiatives, with the company also exploring targeted acquisitions and debt reduction.

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