Coty underwhelms with Q1 results | Progresiv

Coty Inc has reported weaker-than-expected results for its fiscal first quarter, hurt by continued weak demand for its mass-market beauty brands.

For the three months to 30 September, net revenue was down 4.4% to 1.94 billion dollars while like-for-like sales declined by 1.1%.  Adjusted operating profit rose by 10% to $154.7m, but adjusted net profit slumped by 37% to 50.5 million dollars.

The company’s Luxury unit saw its revenues grow by 1.7% to 806.7 million dollars, on LFL growth of 4.4%, driven by growth in Europe.  Coty reported strong demand for its luxury fragrances as well as brands such as Burberry cosmetics and Gucci lipsticks.

However, this was offset by a 13.5% drop to 716.5 million dollars at its Consumer Beauty business, where LFL sales slid by 9.7%.  Revenue in Europe declined by a low single-digit, while they remained soft in other markets.  While Coty saw gains in some areas, such as market share gains for Sally Hansen in the US and Rimmel in the UK, it also continued to report declines in the overall body care, colour cosmetics, and mass fragrances categories.

Despite the weak performance, CEO Pierre Laubies said the results “marked the first quarter of implementing our turnaround plan”, adding that it had seen “revenue growth and market share gains on select brands in Europe, strong performance in Sally Hansen U.S., and some early progress on Covergirl.”

CFO Pierre-André Terisse added: “Our equation is healthier as the significant gross margin improvement allowed us to reinvest behind our brands. This gives me confidence in our ability to deliver our targets for the year.” (www.kamcity.com)