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Coty’s prestige business continued to be buoyed by the fragrance effect, but its mass offering saw a drop in sales on the back of pharmacy chains closing hundreds of stores in the U.S.
Coty’s net revenues grew 2 percent to $1.67 billion in the first quarter of fiscal year 2025, ended Sept. 30. This was a touch below Wall Street estimates. On a like-for-like basis, they were up 4.5 percent.
Within that, prestige net revenues increased 5 percent, driven by growth in the underlying fragrance category. Consumer beauty net revenues declined 3 percent as gains in mass fragrance and mass skin care were partially offset by declines in body care and mass cosmetics.
For cosmetics, the weakness was concentrated in the U.S. mass color cosmetics market, which was further exacerbated by significant channel shifts.
Walgreens recently revealed plans to close 1,200 stores in the U.S. over the next three years, while CVS is shuttering 900 stores and Rite-Aid 500.
“It has to do a lot with what is happening at retailers and less with what is happening among our brands,” said Coty chief executive officer Sue Nabi in an interview with WWD.
It’s understood, though, that Coty is not overexposed to any individual market, brand, retailer or channel.
Americas net revenues declined 2 percent, with growth in Mexico and South America offset by lower U.S. consumer beauty sales.
EMEA net revenues increased 8 percent, while Asia-Pacific net revenues declined 5 percent, primarily driven by the ongoing difficulty in the Chinese mainland market and the Asia travel retail channel.
Net income was $79.6 million, compared to a net loss of $1.7 million in the prior year.
Looking ahead, Coty said: “Within this backdrop, slower end demand and significant channel shifts in U.S. mass beauty and in Asia, are continuing to weigh on order levels into the second quarter, with sell-in tracking well below sell-out. As a result of these factors, Coty expects like for like sales growth in the first half of 3 to 4 percent.”
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