Coty’s first quarter sales growth to miss guidance

Coty expects to report about 4 per cent to 5 per cent like-for-like sales growth in the fiscal first quarter, below its forecast 6 per cent increase.

The company noted its perfume segment continued to outperform, supported by expansion in both volumes and price/mix, while the beauty segment continued experiencing slower growth due to unit demand.

Very tight order and inventory management also contributed to weaker performance in certain markets such as the US, Australia, and China. Each of these markets, however, accounts only for a low-single-digit percentage of the business.

The company estimates adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) to be roughly flat to moderately lower due to investments in sell-out initiatives, the timing of certain fixed costs, and the profit impact from the divestiture of the Lacoste licence.

Coty anticipates like-for-like sales to grow moderately in the second quarter.

For the full fiscal year, Coty forecasts adjusted EBITDA to grow 9 per cent to 11 per cent, consistent with prior guidance.

This comes amid the company’s reacceleration of cost reduction efforts to deliver savings well above the initial target of about $75 million.

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