Coty sales, profit best estimates despite supply chain woes

Coty Inc announced  its second-quarter results for fiscal 2019, confirming it expects to make in a net profit for the period, despite overall sales taking a dive and supply chain issues. The New York-based cosmetic and luxury fragrance company said net revenues for the second quarter came in at $2,511.2 million, for a decrease of 4.8%, while like-for-like revenues grew 0.7%.

The company said it was helped by higher sales in its luxury segment, with strong holiday demand for the Gucci, Marc Jacobs and Burberry brands.

That said, the maker of luxury perfumes recorded a net loss of $960.6 million compared to $109.2 million in the prior-year.

Adjusted net income was $181.9 million, a decline of 23%, “driven by the lower adjusted operating income and the $41.8 million positive foreign tax settlement in the prior year,” said Coty in press release.

Excluding certain items, the company earned 24 cents per share, topping expectations of 22 cents, and sending its shares up 20%

“I must stress that while we are confident that we can return Coty to a path of sustainable growth, we are also realistic that it will take time to achieve this outcome,” Coty’s recently appointed Chief Executive Officer Pierre Laubies, said in a statement.

Revenues in Asia, Latin American, the Middle East and Africa (ALMEA) totalled $567.4 million, to make up 23% of total revenues. Coty said the region showed solid growth despite impacts from supply chain disruptions. Revenues decreased 5% as reported, but grew 4% LFL, fuelled by strong growth in Luxury and Professional Beauty.

However, Coty’s consumer beauty Max Factor declined in China.

North America revenues were unchanged at $742.2 million, or approximately 29% of total net revenues, while Europe remained Coty’s largest market, accounting for close to half of company revenues at $1,201.6 million, down just 1% on last year.