By Ananya Mariam Rajesh
(Reuters) – CoverGirl parent Coty missed fourth-quarter revenue expectations on Tuesday, impacted by its divestiture of Lacoste fragrance license and controlled orders from cautious retailers, which weighed on growth in prestige and mass-market perfumes.
Its decision to sell the Lacoste license back to Lacoste resulted in a 2% impact on net revenue, while uncertain consumer spending pushed retailers to tighten inventory purchases compared to heavy restocking seen in the prior year.
“We are seeing that color cosmetics market in the U.S. is more under tension and now some retailers managing their inventory in a very cautious way,” CFO Laurent Mercier told Reuters.
“There is no significant movement, but this is definitely a point of attention … it’s more linked to the U.S. and brick-and-mortar, which is just a small portion of our total business.”
Bigger rivals Estee Lauder and L’Oreal had signaled strained consumer spending, mainly in China, for beauty and cosmetics products, which are widely considered recession-proof and an affordable luxury.
Coty’s fourth-quarter net revenue rose nearly 1% to $1.36 billion, missing LSEG estimates of $1.38 billion.
Like-for-like sales at its prestige segment, which houses brands such as Burberry and Gucci, were up 6%. The consumer beauty segment, home to Rimmel and CoverGirl, grew 4%.
The company expects fiscal 2025 like-for-like sales to grow 6% to 8%, versus the 11% rise reported in fiscal 2024. But it is pushing ahead with new launches such as Burberry Goddess Intense and Gucci Flora Gorgeous Orchid fragrances to attract customers.
It expects annual adjusted per-share profit to be between 54 cents and 57 cents. Analysts on average estimate 57 cents.
Coty posted quarterly adjusted net loss of $23.9 million, or 3 cents per share, versus profit of $5.2 million, or 1 cent per share, a year earlier. Profit expansion was more than offset by an $88 million impact from mark-to market on the equity swap.
(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Shilpi Majumdar)
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