Coty Sales, Profit Beat on Strong Demand For Cosmetics

Reuters

Coty reported higher-than-expected sales and profit for the first time in five quarters as strong demand for its Sally Hansen nail products and Rimmel cosmetics more than made up for declining sales of its perfumes.

The company, which makes fragrances for brands such as Calvin Klein and Marc Jacobs, has been expanding its product portfolio as demand for perfumes weakens due to fierce competition.

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The efforts seem to be paying off, with cosmetics replacing fragrances as Coty's biggest business by revenue in the fourth quarter.

Coty said on Thursday that sales in its cosmetics business rose 13 percent, while sales in its fragrances business fell 10 percent. The contribution of Coty's perfumes business to its total revenue shrank to 40 percent in the fourth quarter from 54 percent in the first quarter.

Coty said last month that it would buy 43 brands from Procter & Gamble Co, including Wella and Clairol hair treatment products.

Coty also announced a $700 million share buyback program on Thursday and said it had raised its annual savings target by $70 million to $270 million by 2017.

Coty reported net income of $21.0 million, or 5 cents per share, attributable to the company for the quarter ended June 30. It had reported a loss in the year-earlier quarter due to a $316.9 million asset impairment charge.

Excluding items, the company earned 8 cents per share.

Revenue fell 2.1 percent to $1.02 billion.

Analysts on average had expected earnings of 7 cents per share and revenue of $999 million, according to Thomson Reuters I/B/E/S.

Coty's shares were up about 2 percent at $29.20 in thin premarket trading. Up to Wednesday's close, the stock had risen about 64 percent since the company went public on June 13, 2013.

(Additional reporting by Subrat Patnaik in Bengaluru; Editing by Kirti Pandey)