Coty revenues and supply chain hit by Hurricane Florence

By Sarah Parsons 8-Nov-2018

The owner of CoverGirl, Rimmel and Wella reported disappointing Q1 2019 sales due to the North Carolina storms

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Brand owner Coty has reported falling luxury, consumer and professional beauty sales, as Hurricane Florence in the US disrupted the company’s supply chain.

Net sales were down 9.2% to US$2.03bn for the three months to the end of September.

Luxury like-for-like sales, for Q1 2019, declined by 2.1% with the North Carolina storms impacting Coty’s manufacturing plant and distribution centre in the state.

The maker of Clairol and CoverGirl announced consumer beauty net revenues dropped by 20.6% to $828.8m.

However, Wella – Coty’s largest brand – was singled out for its solid performance, thanks to its colour and styling lines.

Camillo Pane, CEO of Coty, said: “Consumer beauty's underlying high single digit revenue decline clearly reflects category weakness in developed markets, continued competitive pressure and performance challenges with some of our brands, as well as the repercussions of our severe supply chain disruptions on our consumer beauty gross-to-net, including customer penalties and increased promotional support.”

Pane said the firm plans to develop new growth channels, restore service levels and improve its supply chain to counteract the disappointing figures.

The firm’s professional beauty division declined by 2.6%, which was also attributed to Hurricane Florence.

“The disruption of service levels at our North America distribution centre had a significant negative impact on our North America hair and nail businesses,” the US brand said.

“We see no underlying change to the strong customer demand for our brands in North America or to the overall health of our salon professional business.”

Pane added: “To conclude, Q1 2019 was a disappointing setback in achieving our financial targets and strategic goals, and we are working hard to solve the issues.

“With the P&G Beauty integration near completion, and after we have overcome the internal challenges, we will be better equipped to focus more externally, so that we can fully capitalise on the exciting and dynamic changes in the beauty industry.

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“We remain absolutely convinced that the fast-paced and ambitious transformational agenda we are pursuing, including comprehensive upgrades to our systems, processes, culture, and people, is ultimately building a much stronger Coty for the long term.”