Nov 7, 2013
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Coty expects US sales to remain weak in holiday season

Nov 7, 2013

Perfume and cosmetics maker Coty Inc reported lower-than-expected quarterly results, hurt by weak demand for its fragrances and nail products in the United States, and said it expected this trend to continue in the key holiday season.

Chloé is one of Coty's brands

Coty gets most of its revenue by manufacturing perfume brands such as Calvin Klein, Davidoff and Playboy as well as those it sells under the names of celebrities such as Beyonce Knowles, Lady Gaga and Jennifer Lopez.

There have been concerns that the company is too dependent on the United States and Europe, where middle-income consumers have been cutting back on discretionary items.

Comparable-store-sales fell 10 percent in the United States in the first quarter as weak demand led to a reduction in orders from large retailers.

Coty's customers in the United States include Wal-Mart Stores Inc, Target Corp and a variety of other smaller chains that sell some of its fragrances, nail polish and other products.

"The company expects to see the challenges coming from the market slowdown and trade destocking in the U.S. and from the highly promotional environment in Europe to continue in the next quarter," Coty said in a statement, adding that it expects sales to grow in the second-half of its fiscal year.

Coty competes with companies such as Estee Lauder Cos Inc , L'Oreal SA and Elizabeth Arden Inc.

Founded in 1904 by Francois Coty in Paris, Coty went public in June, after dropping a $10.7 billion takeover bid last year for larger peer Avon Products Inc.

Avon also reported lower-than-expected results, hurt by a slowdown in sales in North America.

Net income attributable to Coty rose to $93.5 million, or 24 cents per share, in the first quarter ended Sept. 30 from $86.7 million, or 22 cents per share, a year earlier.

Excluding items, Coty earned 28 cents per share, missing analysts estimates by 1 cent, according to Thomson Reuters I/B/E/S.

Revenue fell about 3 percent to $1.18 billion, just below the average analyst estimate of $1.20 billion. Like-for-like sales fell 2.6 percent in the quarter.

New York-based Coty's shares closed at $15.40 on the New York Stock Exchange on Wednesday.

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