Coty Inc. (COTY) - Get Coty Inc. Class A Report posted modestly weaker-than-expected third quarter earnings Monday as resurgent sales in China were offset by slower growth in locked-down markets in Europe.
Coty said adjusted earnings for the three months ended in March, the group's fiscal third quarter, came in at zero cents per share, up from last year's loss of 8 cents per share but just shy of the Street consensus forecast of 1 penny per share. Group revenues, Coty said, fell 3% to $1.03 billion, a figure that matched analysts' estimates.
Coty said sales of key brands such as Burberry, Gucci and Marc Jacobs were 'standouts' over the quarter, with topline growth in the high double-digits, while overall sales in the Asia-Pacific region were up more than 20% from last year. European sales, however, fell 7.8% to $473 million.
Coty also reiterated its full-year sales outlook of around $4.5 billion to $4.6 billion in sales, with cost reductions from its ongoing turnaround plan expected to reach $300 million. It also reaffirmed its full-year EBITDA target of $750 million.
"Our Q3 marked another strong milestone in our journey to rejuvenate Coty's position as a global beauty powerhouse," said CEO Sue Nabi. "In less than a year, the leadership team and the broader organization have successfully mapped out our strategy, activated our brand and category plans, while generating operational improvements, and strengthening our financial position."
"We saw a significant improvement in our sales trends even as we continued our efforts to strengthen the health of our business and brands by cutting sales in low quality channels. Importantly, the prestige sales returned to growth as the impact of the pandemic abated in many markets," she added. "We have seen strong momentum in several of our key markets, with China sales growing double-to-triple digits versus FY20 and FY19, and U.S. prestige sales up high single digits in the quarter and nearly flat in the fiscal year-to-date."
Coty shares were marked 7% lower in early trading immediately following the earnings release to change hands at $9.67 each, a move that cuts the stock's year-to-date gain to around 40%.