Neville Prior

Cosmetics "Make Up" for Weak Perfume Sales at Coty

Neville Prior  14 August 2015 03:43:49 PM
Coty Inc reported higher-than-expected sales 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 its perfumes weakens due to fierce competition. The efforts seem to be paying off, with cosmetics replacing fragrances as Coty's biggest business by revenue in the fourth quarter. Coty said sales of its cosmetics rose 13 percent in the quarter, while fragrance sales fell 10 percent. The contribution of cosmetics to Coty's total sales grew to 42 percent in the fourth quarter from 29 percent in the first quarter, while the share of fragrances shrank to 40 percent from 54 percent.

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 CEO Bart Becht said an improvement in sales would take longer than anticipated, with "very modest growth" expected in 2016. Coty reported net income of $21 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. Revenue fell 2.1 percent to $1.02 billion.
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