Good morning, ladies and gentlemen. My name is Stephanie, and I will be your conference operator today. At this time, I would like to welcome everyone to Coty's Conference Call announcing its definitive agreement with KKR and strategic transformation. As a reminder, this conference call is being recorded today, June 1, 2020. On today's call are Peter Harf, Chairman and CEO, and Pierre-André Terisse, Chief Operating and Chief Financial Officer. I would like to remind you that many of the comments today may contain forward-looking statements. Please refer to Coty's earnings release and the reports filed with the SEC where the company lists factors that could cause actual results to differ materially from the forward-looking statements. In addition, except where noted, the discussion of the financial results or our expectations reflects certain adjustments as specified in the non-GAAP financial measures section of our release.
I will now turn the call over to Peter. Please go ahead, sir.
Hi everybody. I'm Peter Harf. I'm the new and the old CEO of Coty. I founded Coty in 1990, ran it until 2001, then turned it over when I was promoted up to the shareholders to my dear friend, Bart Becht, who then ran it for 10 years. We had two leaders in 20 years at Coty, and we grew the company across that time by 15% a year. Even in the 2000s, we grew at 10% a year. Coty was a $4.5 billion business when Bart left in 2011. A period of turmoil followed. We changed leadership quite a bit, and also the culture of Coty suffered. The entrepreneurial spirit, the direct action-oriented approach, all of a sudden disappeared.
Frankly speaking, today Coty is in a difficult situation, and we need to really do our best to regain the trust of our investors, but also of our people, because our people need to be motivated and ready to fight for the company as much as they can. Today we want to update you on a transaction that was already known to you from May 11, when we had a memorandum of understanding with KKR. Pierre-André, who's with me, signed the agreement a few minutes ago, and it is definitive now. The strategic transaction with KKR has been concluded exactly the way we had planned it. I'll now hand over to Pierre-André. He'll take you through the high-level transaction summary. Pierre-André, over to you.
Thank you, Peter, and good morning to all of you. Before we get to the very important and meaningful management changes, let me talk to you about the KKR partnership, which we indeed finalized over the weekend and the past few hours, three weeks after the initial announcement on the 11th of May. As you know, this is made of two different transactions. The first one is a $1 billion convertible preference shares issued by Coty and subscribed by KKR with a coupon of 9% and a conversion price of $6.24 per share. We had closed the first part of that and received the $750 million initially. We have now the complement of $250 million, which is going to close in the coming two months. That is the first transaction which has been completing today.
The second one is a very important one because this is the conclusion of a 60/40 partnership on a perimeter which includes the professional business of Coty and the retail hair business as well, with four important brands, among others, the Wella brands, Clairol, OPI, and GHD. This has been concluded alongside the parameters which we had announced on the 11th of May, an enterprise value of $4.3 billion, $1 billion of debt at the JV level, which are going to result in $2.5 billion in net proceeds to Coty, slightly different from what we had announced on the 11th of May, as we have adjusted that for some liabilities.
We are going to retain 4% ownership, valued at $1.3 billion, and effectively an important exposure to value creation because we believe this business is going to grow and to create a lot of value within this new scope in the coming few years. We expect to close this in six to nine months, so around the end of the calendar year 2020. Together with these two transactions, we also broadly have a partnership with KKR, which is important because they bring us the significant experience in driving consumer products turnaround. A very recent example of that is the Upfield business, to which, by the way, Gordon Von Bretten participated, so he will be able to bring his experience.
I don't know that.
Yeah. Gordon Von Bretten, who, as you know, as you have seen probably, has become the Chief Transformation Officer of Coty, and Peter is going to come back on that. These two transactions have two important effects on us. The first one is about liquidity and flexibility, so it decreased our leverage substantially from 5.6 x to 4.5 x on a pro forma basis. They provide immediate liquidity of close of $1 billion through the convertible, with an expected liquidity position of $1.8 billion-$2 billion at the exit of fiscal 2020. They provide us with the flexibility which we need to face the current environment, which we all know is an environment with difficulties, but at the same time opportunities, and we have the ability to catch these opportunities and to navigate through this period of time thanks to an improved liquidity.
The second effect is that it simplifies our portfolio, enabling us to focus the leadership of Coty on two important categories being prestige and less beauty, which themselves are going to be transformed. Again, we'll come back on that. They allow us to focus on the simplified portfolio and at the same time to start a very important program of cost-cutting to regain competitiveness and to regain as well the ability to invest for growth. That's for the transaction summary. A couple of slides now, the following slide about the deleveraging for you to see numbers. We had, as you can see, we had at the end of 2019, a net debt to EBITDA leverage of 5.6%.
If we take into account the Kylie transaction, the Wella deal, we'll come to 4.5%, which would even become 4.3% if we were to take into account the fact that we still have 40% of Wella and obviously access to the value of this stake. That is on the pro forma 2019. If we have a look at the same number, taking into account the COVID, they are obviously higher, but you can see that they rapidly converge towards the level of five times. Again, that is deleveraging, and in both cases, in fact, it is a significant acceleration of deleveraging. As I said, it also reinforced our liquidity, and we are going to reach $1.8 billion to $2 billion upon the payment of the $250 million, sorry, additional preferred convertible, which will happen at the end of July. That is for the deleveraging, which is obviously very important.
If we go to the following page, the second effect is the refocus. The new Coty remains obviously exposed to the upside and value potential of the Wella business, which is now going to become an associate business accounting-wise. Yet the new Coty is going to be considerably simpler. As you can see on the chart, we are going to be on a pro forma 2019 basis of $5.9 billion business, with a pro forma EBITDA of $1 billion, which becomes $840 million if you take into account the stranded cost which we expect to get from a lower fixed cost absorption. Geographically, Coty remains balanced between its two strong presence, which are the Americas with slightly less than 40% and Europe, Middle East, and Africa with slightly less than 50%. Asia-Pacific remains a very meaningful opportunity for us at 13% of net revenues.
In terms of category, prestige fragrances now represent half of our revenues. Cosmetic, between mass and prestige, accounts for 45% of our sales, and the last one is obviously prestige skin, which represents close to 5% of our sales. That is the base of Coty we have following these two transactions. I will leave it to Peter to tell you what we are going to do with that.
Yeah, let me start on the next slide with the new structure of the business. On the right side, the professional beauty activity, I'm not talking about that. That's going to be part of the new entity that KKR is going to lead. You have 40%, but KKR will drive it. We are very optimistic because KKR, and particularly Johannes Schultz, who leads KKR in Europe, has ample experience in this business, in this B2B business, that I think under their guidance will flourish. Let me focus on our two sectors, prestige beauty and mass beauty. I won't take you through the key metrics because, I mean, you know them, the revenues and the growth profile. And you also know the brands. I mean, what you see on the left side is an addition, which is the Kylie brand.
You will see other social media phenomena added to our portfolio because we feel that this is a growing part of the market, a very attractive part of the market, and a market that's going to stay. In contrast to some other people, commentators of the industry, who kind of fear that the internet-based social media-based brands and endorsers will basically turn out to be a fad, we strongly believe that they are here to stay. Kylie, in our opinion, can be a very, very strong business that we can take global. We are going to refocus in the beginning on skincare. You may have read in the newspaper that Kylie Skin was launched last week across Europe by Douglas. They sold, I mean, I think $2 million in three days, which is for a single customer, quite a high number.
If we can take Kylie global, and I think one of the big key activities will be to launch Kylie globally and leading this activity with skincare. In addition to that, we are in the process of creating a digital platform for social media and e-commerce across all the brand portfolio of Coty. It will be very good technology. I mean, it's already well advanced with click-through possibilities. You know it apart from other places. You click on a product, and you can right away order it with one click. All this is in the making. The same thing is also true for mass beauty, same kind of focus on the digital platform.
We also are in the process, and we are hiring somebody very, very powerful who will direct these efforts to reinvent mass color for not only the current users, but also the millennials and Generation Z. What we are absorbing, generally speaking, in consumer goods is a trend back to traditional brands. People in the crisis return to what they know and share it when they were younger. It's also a question of availability on a channel basis. It's also a question of the price. We see at the moment the traditional brands in color cosmetics, for example, gain market share. CoverGirl is doing great. CoverGirl is stabilizing in the market share, and the other brands are doing well. We see lightning at the end of the tunnel. If you invigorate that, you know this is a growth.
If we go to the next slide, another change we made. We reduced the executive committee to three people. We want to do that because we think that in a crisis, both a crisis, a health crisis, but also the crisis of Coty itself, we need to be very decisive, fast, and disciplined. We will have a team of three people in the executive committee under my leadership. As you see, I am a founding partner and a managing partner of JAB. I'm a director of Keurig and of Egberts, and of Jacobs Douwe Egberts, the company that was just taken to the public market on Friday. Obviously, my track record is former CEO and executive chairman of Coty, which I built in 1990. From 1990, I was a CEO until 2001, and I was chairman afterwards.
I built Bankiza and formed really Bankiza through the merger. She was a reverse takeover of really and Coleman through Bankiza. I'm also the ex-chairman of Anna and Anheuser-Busch InBev. With Coty, if you want to, since the new Coty was invented and founded in 1990, I'm at the helm there since 1990. Peter, do you want to take yourself, lead us through your credentials? You are the COO and CFO. Over to you.
Yeah, so I've joined Coty as probably most of you know in February 2019. It's about 16, 17 months ago. Before that, I had spent as a CFO and then later on encompassing as well some responsibilities in the area of supply chain and procurement. Before that, I had spent 30 years in a public company, for the most part of it in finance. I've been the CFO of Danone. I've been as well leading the Africa division of Danone and setting up a business myself. That's all for me.
Okay, last on the chart is our Chief Transformation Officer, Gordon Von Bretten. Gordon actually joined us actually eight days ago, and he was seconded by KKR to work with us. After about five days, he said, "Please, can I join you permanently? Because I see this opportunity is so promising that I would like to leave KKR and join you." I mean, many people, including me, call him a rock star because he's one of the best people in terms of transformation management that is available in Europe. He had a number of positions, you see it on the sides, and a lot of experience. He's done this work many, many times over some of the very, very prominent opportunities. The last thing he did is work on Springer, and KKR took that over. He helped with the spice business that was taken out of Unilever.
He's been around the block. He knows what he's doing. I think he finds it's a very nice endorsement that this seasoned executive has said, "Okay, you know what? I want to join permanently." The other thing he did, he said, "Please do me a favor. Give me all compensation and shares." That was a very nice endorsement. Thank you very much, Gordon. What we say about the board is, I think, more of the same. The only difference is that Coty now has two KKR board members. One of them is the leader of KKR in Europe and arguably one of the best investment bankers in the world, sorry, private equity managers in the world, Johannes Schultz. I've known him for many years. He's a very solid guy, completely reliable, and very creative from a strategic standpoint.
A very strong addition to our board. We now have four representatives of JAB on the board, two representatives of KKR, and six independents. The Wella board is what it will be as a private company, 60/40 KKR-Coty. There will be five or six board members. Four are coming from KKR and two from Coty. Now let's take it through the next slide, six. That is really very high level what Gordon Von Bretten is charged to do. He called it end-to-end transformation. The project name is All Into Win. It has a very strong revenue component. I touched on that already, so I'm not going to basically dwell on it again. The one point we added in the bottom is rebuilding portfolios by focusing on hero SKUs.
In the past, Coty has, unfortunately, too often used promotions as a tool and has launched too many flankers that has weakened the core. What I want to do over time takes some time. New strategies that our competitors use. For example, if you know J'adore, you see that the brand is the same since 1999. It's doing extremely well, over $500 million in sales. It's being tweaked a little here and there. They change the face every two or three years. The brand itself has a massive presence across the trade and across duty-free because it's managed in a very consistent, careful way. Recently, I mean, the same thing with relaunching Sauvage as Sauvage. That's really kind of the role model that we are following. We take the best ideas and copy them without any shame.
On the cost reduction side, again, we expand and accelerate the program that already was discussed by Pierre-André in the last earnings call. We're going to accelerate that, and we're starting actually tomorrow, 2nd of June. Also, there were a number of things that Pierre-André put into place because of the COVID crisis. We'll try to hold on to these measures as much as we can. Lastly, we're going to massively simplify Coty because the network, the product lines, and the organization. We already did that. We basically have our integrated leadership across the globe to lead the way as a regionalization at the top. We make this whole thing much, much easier. The marketing functions, we're going to report directly into me without any layer in between.
Overall, I think it's a journey back to the entrepreneurial path, back to the entrepreneurial spirit of Coty. Now, I know what we have to, Pierre-André.
Yeah, so a couple of words on the efficiency program before we conclude and we move to Q&A. You have on this slide the main blocks of efficiency program we are going to. In fact, we have already started implementing. The total amount we are targeting is in excess of $600 million. So $600 million here on the perimeter, which is obviously the current one, i.e., excluding Wella. The cost we'll need for that is the same as the one we announced last time, $350 million, which means that including what we already had, it's a total of $500 million. No change on that. You can see the main blocks, which are for a part the supply network, which we think can be very significantly simplified, flexibilized, and step up in terms of efficiency. We have already started working to design this program of simplification.
The second one is about the procurement for most of the initiative. These are the non-people and ANCP blocks. We believe, and that was already part of the turnaround, but we can expand it. We believe we have massive opportunity there based on the standardization on the one hand, making sure that we do not reinvent the wheel every time, but we just leverage the size of Coty. On the other hand, on the simplification of the group and the standardization again through business services, better controlling the cost and doing something which Peter often refers to, which is very important. We want to have discipline within the group. We want to have discipline, and this is going to deliver collective efficiency. The simplification is also going to touch the organization and the people blocks. This plan is being put in place.
It's going to be a key part, not the only part, but a key part of the transformation program of Coty. We expect more than a third to be delivered in year one, as we already have some actions in place, in particular on the non-people side. I'll turn to the following page, which is called Value Creation, because at the end of the day, this is what we are targeting, what we are trying to build. Our announcement today strengthens Coty in a very meaningful way. It does it with an improved capital structure, with a significant leveraging, but also an improved liquidity, which enables the execution of our transformation. That's obviously extremely key in the current period.
It helps us keep an exposure to the long-term value creation of a strong business, the Wella business, which we expect is going to be strongly performing in the context of the management within a private equity, within KKR. The meaningful change of leadership, we believe, is going to be a catalyst for change, as I think Peter has evidenced. After a trough in Q4, as we have been going through the lockdown in many, many markets in the world, in particular in Europe, we expect to be well positioned to benefit from the rebound of our categories. We are targeting strong medium-term improvements of our financials to create value, our operating margins, which we expect, which we are going to drive to mid-teens, and the leverage of Coty, which we are going to drive below four.
That's, I think, the summary of what we wanted to tell you. Now we'll go to questions. Thank you.
At this time, if you would like to ask a question, please press star, then the number one on your telephone keypad. That's star one to ask a question. Your first question comes from the line of Nik Modi with RBC Capital Markets.
Yeah, good morning, Pierre-André. Good morning, Peter. Just wanted to quickly ask, obviously, with Peter coming in as CEO, just what happened with Pierre Denis, if you can give us any context around that decision. Just on the Kylie, I know there's been a lot of news out over the weekend. Just want to see how you guys think about the social media strategy and influencers, etc., and some of the risk involved and the volatility involved in that business model. Any thoughts on that would be helpful. Thank you.
Okay. Yeah, very straightforward, the answer is to that. Pierre Denis was brought on board just before the crisis hit, and the crisis delayed the whole program. We were planning to spin off the Wella business before he would join in the 1st of June. That did not happen. I mean, we felt, and I think he agrees, that he is not really the best person in the world to affect such a complicated spin-off. I mean, KKR and I agreed that it would probably be better to have somebody who is a seasoned entrepreneur run this process, and that is why I stepped in. I think there is a full agreement with KKR. They are very happy that I am doing it. Pierre Denis understands he is sticking around as our senior advisor. Who knows what the future will bring?
I mean, we haven't committed to anything, but he remains not only a friend, but also a senior advisor to us. Now, to the other question, Kylie, let me first say that, I mean, obviously, we don't want to comment on a running lawsuit because there's a very high chance that it's going to end up in a lawsuit. I also heard, though, that, I mean, they're going to bring in their addition tomorrow the numbers that were originally listed under Kylie. So they seem to be retracting from their position. All I can say is that, I mean, we paid the amount that were published. And we know that for sure because it came from our bank account. And the allegation that they didn't pay the taxes, the money only was transferred to the accounts in the second week of January.
I mean, not an American, but normally Americans file like everybody else a tax at year-end. The allegation that she did not pay her taxes comes from is a mystery to me. These are the points. Does it have an impact? Obviously, we do a lot of social listening. The noise was very high. I mean, Kylie made a statement online, very much a statement of a young mother, not highly sophisticated, not a lot of legalese. There were some negative responses, a lot of support, but also some negativities. It does influence the standing. You see, these are risks you are running with every business. I mean, if you are a business and something happens to your brand, look at Tylenol or something like that. You need to respond. We need to write the right thing.
This is not a phenomenon that only affects social media brands. By the way, in contrast to some other industry observers, I think that the social media brands are there to stay. Let me remind you that in the 1940s and 1930s, the leading brands in cosmetics were Revlon, Max Factor, Elizabeth Arden, and the likes. There was a lady in, I think it was in Queens, who mixed her fragrances in the bathtub. Her name was Estée Lauder. She took over the American market. I would be careful to say that the people who are now gaining in the market, who have a large audience and a different way of communicating and going to market, are short-term phenomena. I do not have that certainty. I do not know where people take their conviction from. Thank you.
Thank you. Very helpful.
Your next question comes from the line of Faiza Alwy with Deutsche Bank.
Yes, hi, good morning. Peter, a couple of questions for you. One, I'm just curious sort of how your job changes. You were Chairman of Coty. You have a lot of other things on your plate. I'm just wondering how your day-to-day role changes and sort of how just personally, operationally, how much time do you expect to spend on Coty? You made some comments around the culture at Coty and how that maybe needs to be revitalized. I was wondering if you could expand a little bit on that and what your plans might be there. Thank you.
Okay. These are two very good questions. My role is very straightforward. I'm the founding partner of JAB. I really emphasize my supervising role in the company. I'm working only with two companies and two boards. Both of them outside Coty. I'm not chairman. One is KDP, Keurig Dr Pepper. I'm on the board there supporting Olivier. I'm on the board now of the newly formed Jacobs Douwe Egberts that was launched, went public on Friday. These two boards I have, and many, many CEOs have more than two boards. I mean, to rest assured, on the other brands we have and the other boards we have, I'm not serving anymore. That gives me a lot of time. Plus, I mean, we have in the last year strengthened our team amazingly. We have some of our partners who are world-class athletes.
Take for just an example, I mean, we have Ricardo Ritters, who before he joined us was the CFO of Anheuser-Busch InBev. And he as a 31-year-old provided and put together a $55 billion financing for InBev at the time when they took over Anheuser-Busch. That was in the height of the liquidity crisis. They have been a bunch of guys who have been around the block and doing a very, very good job. There is a lot of talent and a lot of support at the level. Plus, I mean, our CEO is and remains Olivier Goudon. I'd argue he was the best three or four investors in the world. I mean, we're in very good shape.
Culture-wise, there is a very unique culture at JAB. That culture was basically formed in the 1980s from a bunch of young guys that tried to really do business differently from the kind of the more military operations that many companies in Germany and across the world resembled. We were very nimble. We had new ideas. They came of the thought of the 1960s. We were protesters. Instead of going to the streets, we went through the organizations. That culture was all the values, entrepreneurship, bending down, act, speed, lack of bureaucracy, just get the job done, was part or is still part of the DNA of JAB. That's why we can operate a $120 billion portfolio with 10 partners. This culture was also at the heart of Coty.
We formed exactly the same culture within Coty for the 1st 10 years when I was running it. That was the spirit. Then Bart Becht came, who's now an investor who came from Dior and came from Procter & Gamble. He continued that strategy. I was his Executive Chairman. He was the CEO. Coty, the 1st 20 years, was very nimble, had a can-do culture, non-bureaucratic, fast, a fun place to work. That changed. I do not want to go into the reason why it changed, but in the last five years, we have five CEOs. I mean, that shows that we lost our way. That is why I am stepping in. You could say, well, Peter, why now? Maybe I am too late. Maybe I am too late. I am doing it now, and there is a COVID crisis.
There's a fantastic partnership with KKR, Johannes Schultz, who's one of the key players in KKR, is a good friend. We're going to do this together. Johannes will be our Vice Chairman. I'm going to be the Chairman, Johannes' Vice Chairman. We're going to have a lot of fun. We're going to get the job done. So much for culture.
Your next question comes from the line of Steph Wissink with Jefferies.
Hi, good morning, everyone. We just wanted to follow up on the separation of the businesses and what will be Coty's responsibility going forward in terms of post any sort of transitional service agreement. What core operations, or if any, will you be responsible for within the joint venture? Thank you.
That's a very good question, but let me try to start the answer, and then I'll turn it over to Pierre-André. In principle, it's very simple. KKR runs Wella. We run, I run Coty. Obviously, there's some overlap, but in most cases, the factories are dedicated, and the factories go over with the business. The complexity is in the trade business, and we have a number of countries. We have our brands like Clairol and Wella also available in big boxes and in the trade. There, I think, obviously, we have to do carve-outs. I think my friend Pierre-André is very, very well versed in this, and I'll turn it over to him.
Yeah. The separation is, we signed today. We expect to close at the end of the calendar year, so say around the end of December. By then, we need to continue what we have already started, which is the process of separation. The professional beauty division was already fairly autonomous. There are some functions which, when we utilize, we'll need to stand them up. That supply chain in particular with pretty autonomous factories altogether, distribution centers, which for a part of them are dedicated as well, for a part not. The administration has to stand up as well. The last piece is, and the more complex piece, obviously, is hair return, because hair return is currently operated by the consumer beauty division, so we'll need to carry it out.
I don't have any particular concern because we have been working for the past few months on very detailed plans. We know how to do. We have a very clear timetable to organize that and to make it happen by the end of December 2020, following which we will obviously have a transitional service agreement because we are not going to carve out everything at the same time. That would be unreasonable. We are going to do it progressively, which is going to leave time to Wella to take over the business and to focus not only on the stand-up, but also on growth and on profitability. The same is going to go for Coty. That is going to help us getting time to absorb the stranded costs and to reconfigure the group in a way which is more competitive. That is what we have in front of us.
For the rest of it, as Peter said, Wella is going to run Wella, and Coty is going to run Coty. We have very, very clear priorities on each side of the lake, if I may say.
Your next question comes from the line of Olivia Tong with Bank of America.
Great. Thank you. Good morning. Peter, obviously.
Hi, Olivia.
Good morning. You've obviously been part of Coty for a long time, and there's clearly been a significant amount of change that you alluded to, several CEOs now. Can you talk about your position? Do you view this as interim or more of a semi-permanent change? Should we expect to see more management changes with you as CEO? Also, should we expect any changes to the targets or even incentive structure to get to those targets? Thanks.
Yeah, I think these are all very, very relevant questions. With regard to my tenure, I'm coming back, by the way, I mean, without any pay. I mean, I own a lot of shares of Coty. So this is, I mean, good enough for me. I'm coming back because I really like the business. I'm passionate about cosmetics, and I'm passionate about the people at Coty. I mean, I led it for 10 years. I built it. And then I was next to the CEO for another 10 years. This is a business that's very close to my heart, both the people and the brands and the whole aura that cosmetics has around it. This is, I mean, one of the key things. My role is going to last until the business is in good shape.
I want to bring back the old Coty from a culture perspective, but also from a performance perspective. Now, I mean, in terms of numbers and projections and plans, I think we have a track record of not delivering for quite a while. We are going to fall into the trap of not promising all kinds of stuff. What I'm saying to you is we will go for the low-hanging fruit. We are going, as you already heard, there are lots of initiatives running. Whenever there's a significant initiative, a significant new person coming on board, we'll let you know. There will be a stream of information coming about Coty. Instead of big bangs, next earnings call, we're going to have 10 different initiatives. We're going to be talking to you and the market on a consistent, regular basis.
I think we're going to look at the earnings. I mean, frankly speaking, after the corona crisis, and depending on how long it lasts, I don't think it's going to be very pretty. I mean, we're going to face the brutal facts and tell you the truth. We also will come with the initiatives for the coming year. We will be very transparent. I think we are all fearless, to be honest. We have 60% of the shares between KKR and us. We have a long, long, I mean, perspective. I'm not afraid that somebody's trying to take us over because we're 60% in our hands. It's very difficult to take us over. I'm not planning to take the company private either.
We're going to fix this company in the public market because we have so many long-term, long-only investors that we disappointed in the past. We want to give these people, when they want to stick around, a chance to benefit from the improvements. That's my view. Thank you.
Your next question comes from the line of Joe Lachky with Wells Fargo.
Hi, thanks. Just real quick, first, a clarification on the cost savings. Obviously, you've outlined $600 million. I think that was a little bit lower than what you had outlined on the previous call, which was $700 million. I just wanted to get the difference there. My main question for Peter, Peter, thank you for being on the call. The prior CEO announcement for Mr. Denis, it really had a clear mandate of a focus on growth. Obviously, a lot's changed over the past few months, but it now seems like there's a number of different priorities that you're trying to tackle all at once, right? Growth, cost savings, deleveraging, etc. Does this change the priority? Where of the priorities, and where does growth fit within that rank, right?
Okay, the first one of the questions dealt with by.
Yeah, it is pretty easy. We had said $700 million in the context of a group, which was the total group Coty previously, including professional beauty, including hair return. The $600 million relates to everything but Wella, and therefore to the remaining group. That is the vast majority of it. Obviously, we are working with you to not only achieve it, but to achieve more than that.
Thank you. Go back to page six. We talked about revenue generation there, and they have very strong, very strong initiatives. Evo, Tech, Kylie, Global. I personally think that this is a brand that could reach, I mean, hundreds of millions. It could very, very soon be the biggest brand we have. We are investing also in other social media phenomena. I could get more concrete, but this is not yet in the public domain. This is a major focus for me to develop these properties. I tell you, Kris Jenner and I are good friends, and we're working on Kylie. We've worked on Kylie for a year and a half.
I think we locked that in, and I think I'm very proud that the Jenner family is working with us and have access to them and to other people who are big opinion leaders on social media. The other thing I said is digital platform for all Coty brands. We're investing heavily at the moment as all this was running in the background. We have been part of Pierre Denis' program, my program, heavily in this digital platform across Coty. That's both a social media platform, but also an e-commerce platform. As you know, e-commerce at the moment is going through the roof. We are going to have a very strong integrated capability. That's not going to be in two years. We're working on that already for quite a while.
My leadership, by the way, as Chairman, I took it on myself to develop the Kylie business, and I took it on myself to develop the digital platform. In that sense, I was in the background already doing a lot of the work that I'm doing right now in an official function. The cost-saving structure, I mean, the Easter project that Pierre and Vicky outlined, I mean, during the earnings call, that was, I mean, a very solid cost-saving program. All we're adding is the transformation office. I mean, discipline. I mean, we're tracking the cost. We are tracking the performance of every team member, of every workstream owner on a weekly basis. More discipline, but basically the same kind of idea. We reduce the assets and reduce the cost base in the P&L.
We're adding a revenue generation piece officially now that was before in the background.
Next question.
Your next question comes from the line of Mark Astrachan with Stifel.
Thanks. Morning or afternoon, everyone. I guess two questions. Peter, building on a prior question, how involved were you in the setting of the long-term, I guess, in particular, EBIT margin target? Why do you think at this point that's something that's necessary to lay out at this point, given all the moving parts? Secondly, just more of a broader picture. As somebody who's obviously been hugely involved in creating, running this business from behind the scenes without having interacted a whole lot with investors, I'm just really curious from your perspective how you view Coty's positioning within the beauty category and competing with its competitors, the likes of L'Oréal in particular, Lauder, and just how you think about this business in terms of its ability to compete.
Because it certainly seems from the outside that the brands that you have are definitely some that need a lot more investment to compete. It is kind of back to that first question, why stick to those targets when you might be better served to have flexibility?
I'm not sticking to any targets. I haven't mentioned any targets to anybody. I haven't laid out any operating margin targets. I'm involved. I mean, my involvement is fairly recent because, frankly speaking, there were some people running Coty who didn't want to listen to me, who didn't want me in the room. I mean, it's very clear that the moment I had the opportunity to input, I did input. Point number one. Point number two is, I mean, at the end of the day, we are or we must be very humble. We have two phenomenal leaders in the business. One is called L'Oréal. The other one is called Estée Lauder. There are broader houses, broader fashion specialists like Dior and Chanel. These are amazing companies. I would even mention Shiseido as a very strong competitor.
We have to get up very early in the morning and stay up very, very late to compete successfully at their level of performance. It's going to take us years to reach that level if we ever reach it. My expectations in that regard are not that high. Is it still a good business? Yes, it is. Because it's a business with an underlying market growth. We have aging population. We have premiumization. We have more and more people investing heavily in themselves. The core and the sweet spot of the industry is skincare. We have little in skincare. Now with Kylie and the other properties we're looking at, we will focus on skincare. We're going to build the skincare portfolio. Over time, we will slowly and gradually try to improve the top line, and we're going to slowly and gradually improve the bottom line.
As I said, whether we're going to catch up to the other guys, we're not going to be asleep at the wheel, I don't know. I know that it can be a good return business for us, and there's space for Coty in the future. That's why I think it's a good business. That's why I think JAB should stay invested. That's why we are not trying to sell the business. We're trying to make it stronger gradually over time.
Your next.
Okay.
You're next. Go ahead.
Yeah, and that will be the last question, please. Yeah, go ahead.
Your final question will come from the line of William Reuter with Bank of America.
Good morning. You've received $750 million of proceeds at this point, and you're soon going to receive another $250 million after that, and then the proceeds from the Wella sale. I guess if you could talk to us a little bit about the timing of debt reduction, whether all of these proceeds will be used for it, and if you know at this point which of the debt you will be targeting.
Speaking, they will basically use to improve our liquidity within the frame of the existing agreement and within the frame, in particular, of the revolver. What we intend to do is to keep flexibility, as I said, navigate a period of time which we have seen can be pretty volatile and demanding from a cash standpoint, and give us the ability to navigate it while investing behind the brands and making sure that we take advantage of the crisis to be stronger, both, by the way, from a brand standpoint and from a cost standpoint. To put it very simply, that's going to be increasing the liquidity, and that's going to be put on the revolver.
We expect that as we move forward, that's going to be one of the elements which help us reduce the debt overall altogether, as you have seen in the pro forma, and help reducing as well the leverage.
Thank you and good luck.
Thank you very much. Thank you all.
Bye-bye.
See you on the road. Bye-bye.
Thank you. This concludes today's conference call. You may now disconnect. Speakers, if you'll hold the line.