Perfume giant Coty loses 16.5% in after hours on falling sales
Coty reported an adjusted quarterly loss of 5 cents per share for the quarter, compared to analysts' estimates of earnings of 2 cents per share. The loss included a negative impact from an equity swap.
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Coty forecast a drop in sales for the current quarter as weak spending in the US cast a shadow over demand for beauty products, sending its shares down 16.5 per cent in after-hours trading to $4.86.
The New York-based company also said it will raise prices of its premium fragrance unit in the US to mitigate the impact of 15% tariffs on the import of goods from Europe into the US. This comes at a time whenretailers in the US are increasingly wary of tariffs and shrinking inventories as cost-conscious consumers reduce spending on certain beauty and skincare products.
Coty saw like-for-like sales - sales on a like-for-like basis - for the first quarter drop from 6% to 8%, compared to 4.5% growth a year ago.
The company remains positive and expects that product launches in both the prestige and consumer beauty categories will drive sales growth in the second half of the year.
"Our analysis of the weaknesses of the cosmetics category shows a certain fatigue towards innovation and less frequent use, particularly with the migration of Generation Z - people born between the mid-1990s and 2012, ed. - towards fragrances," said chief financial officer Laurent Mercier in a note. "Changes in immigration policy under the Trump administration have also contributed to the country's slowdown," Mercier added.
