Coty Expects Annual Profit at Low End of Forecast

(Reuters) – Coty (NYSE:COTY) on Wednesday stated it anticipates annual profit to align with the lower boundary of its forecast, primarily due to weakening demand for beauty products in key markets like the United States and Australia. This decline overshadowed gains in the fragrance segment.

The beauty industry, particularly in the U.S., faces a demand slump, even for mainstream makeup and cosmetics. Lower- and middle-income consumers are prioritizing essential daily products over what are considered "affordable luxuries."

Coty is also encountering strict inventory management from retailers globally, especially as it experiences soft sales in drug stores and pharmacy chains across the U.S.

Coty mentioned, "Mass beauty is now growing in the low single digits, with flattish performance in the mass cosmetics category," citing slower consumer demand and significant shifts in purchasing channels in U.S. mass beauty and Asia affecting order levels leading into the second quarter.

The company has adjusted expectations for its annual adjusted per-share profit to align with the lower end of its range at 54 cents to 57 cents.

Additionally, Coty anticipates like-for-like sales growth of 3% to 4% in the first half of 2025, revised down from a previous estimate of 6% to 8%.

Conversely, Coty's prestige fragrance segment reported a notable 9% increase in like-for-like sales, fueled by new launches such as Burberry (LON:BRBY) Goddess and Marc Jacobs Daisy Wild fragrances.

Larger competitors Estee Lauder (NYSE:EL) and L'Oreal have also reported fragrance growth but highlighted a deceleration in demand trends for the broader beauty category.

Coty’s first-quarter adjusted net income rose to $128.1 million, or 15 cents per share, up from $74.1 million, or 9 cents per share, a year prior. Its quarterly net revenue increased nearly 2% to $1.67 billion, slightly below estimates of $1.68 billion, according to data compiled by LSEG.