Coty profit and sales beat as acquisitions pay off, shares rise
today May 10, 2017
Beauty products maker Coty reported higher-than-expected quarterly profit and sales, helped by strong demand for brands such as Calvin Klein as well as for recently acquired brands GHD and Younique.
To battle stiff competition, Coty has inked multiple deals in the past year to gain market share and reduce dependence on its struggling perfume business.
In the past year Coty has bought more than 40 brands from Procter & Gamble, the personal care and beauty business of Brazil's Hypermarcas, a majority stake in online cosmetics retailer Younique and also a high-end hair styling appliance brand, GHD.
Coty said revenue rose 6 percent to $2.03 billion a constant currency basis in the third quarter after adjusting the year-ago period's sales for the acquisition.
That beat the average analyst estimate of $1.94 billion, according to Thomson Reuters I/B/E/S.
Excluding acquisitions, the company's sales declined 2 percent in constant currency.
Net loss attributable to Coty increased to $164.2 million in the quarter from $26.8 million a year earlier, due to $213.5 million in restructuring charges related to the P&G deal.
Excluding items, Coty earned 15 cents per share, beating the average analyst estimate by 2 cents.
Sales in the company's luxury business, which sells high- end perfumes such as Calvin Klein and Hugo Boss, rose 2 percent when adjusted and on a constant currency basis.
The business accounted for nearly a third of total sales.
Coty's consumer beauty business saw sales increase 5 percent, reflecting strong contributions from Younique and one month of sales from the Hypermarcas deal, the company said.
The business accounted for nearly half of total sales.
Coty has a professional division, which caters to hair salons and professionals. Sales in the business rose 14 percent in the quarter, driven solely by the acquisition of GHD.
The company said it expects net revenue in the current quarter, excluding Younique and GHD, to weaken sequentially compared with the third quarter.
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