Photo: Angela Andriot / CC BY-SA 3.0
Coty’s first-quarter sales fell 1% to $1.555 billion while net income rose to $106.2 million, as the beauty company entered a transition year focused on its core brands and cash generation.
The CoverGirl and fragrance-products owner forecast second-quarter adjusted earnings of 16 to 18 cents a share, excluding its equity swap. It expects like-for-like revenue to decline by a low-single-digit percentage and adjusted EBITDA to fall by a high-single-digit percentage.
For beauty retailers and suppliers, the results show improving earnings alongside continued pressure on sales and operating margins. Higher net income did not mean all measures of profitability strengthened.
Net income rises, operating profit falls
In the quarter ended September 30, reported operating income declined to $170.4 million from $185.0 million. Adjusted operating income fell to $220.5 million from $240.5 million, according to Coty’s earnings release.
Reported earnings per share rose to 12 cents from 7 cents; adjusted earnings rose to 16 cents from 12 cents. Coty said the current quarter included a 1-cent benefit from marking its equity swap to market, compared with a 3-cent negative impact a year earlier.
Gross margin contracted by 120 basis points to 63.3%. The company attributed pressure partly to higher freight and materials costs related to the Middle East conflict and higher excess and obsolete inventory.
Core brands and cash flow
Prestige revenue declined 1% to $1.058 billion. Consumer Beauty revenue fell 2% to $496.8 million. Coty said its six core Prestige brands collectively returned to like-for-like growth of 5%.
Operating cash flow increased to $130.4 million from $65.2 million, and free cash flow rose to $84.6 million from $11.2 million.
Coty said it expects to complete its strategic review by the end of calendar 2026. It is currently providing second-quarter guidance rather than a broader fiscal-year outlook, describing fiscal 2027 as a transition year.
JBizNews Desk | New York
© JBizNews.com. All rights reserved. Unauthorized reproduction or redistribution is strictly prohibited.
