Coty reveals cracks in consumer business with sluggish beauty sales

The beauty giant reports a revenue fall of 9.7% impacted by the business decline of the recently divested Younique brand

Coty has reported first quarter net revenues of US$716.5m for its Consumer Beauty division, a decline of 9.7% like-for-like.

The business made a loss of $14.2m, a slightly better performance than the $14.8m reported for the same period last year.

The beauty giant said that weakness in its Younique brand negatively impacted the business’ performance by around 2%; Coty offloaded its 60% stake in Younique in September.

In North America, revenues continued to be pressured by less shelf space for its brands and low single digit declines in mass beauty.

Colour cosmetics suffered with net revenue declining in the high single digits, although Coty said “we saw pockets of improvement as we began implementing our turnaround plan”.

Remaining upbeat, Pierre Laubies, Coty CEO, said: “Q1 marked the first quarter of implementing our turnaround plan.

“With Younique excluded from our results as of September, we have also begun to see some improvements in the Consumer Beauty division.

“These improvements include revenue growth and market share gains on select brands in Europe, strong performance in Sally Hansen US, and some early progress on CoverGirl.”

Rimmel was said to have gained share in its core UK market, while Max Factor saw some improvement resulting in a low single digit sell-out decline.

Coty’s hair care brand revenues remained pressured, while in body care and mass fragrance, revenues declined mid-single digits.

The company has been actively reallocating nearly all of its working media to priority brand and country combinations and stepping up media investments.

Coty is reported to be exploring a sale of its Professional Beauty division.

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