Coty Inc. (COTY) posted weaker-than-expected third quarter earnings Wednesday but confirmed its full-year outlook and said its recent supply-chain disruptions had been addressed by its new management team.
The Cover Girl and Rimmel brand maker said it posted a loss of 2 cents per share for the three months ending in March, the group's fiscal third quarter, down 80% from the same period last year and 2 cents shy of the Street consensus forecast. On an adjusted basis, Coty earned 12 cents per share, beating comparable estimates by a penny. Group revenues, the company said, fell 10.4% on a reported basis to $1.99 billion and again missed analysts' forecasts of $2.06 billion.
Looking into the final months of the fiscal year, Coty said it remains "on track" for a moderate decline in adjusted operating income, compared to the whole of 2018, and continues to expect positive cash flow and free cash-flow generation.
"While we have achieved good profit delivery, the weak top-line result demonstrates that there is still much to be done to turnaround the business," said new CEO Pierre Laubies, who joined the luxury goods group in November of last year. "We must capitalize on the solid results of the Luxury and Professional Beauty divisions, and address the weakness of the Consumer Beauty division's performance via shelf productivity, product range simplification, and brand investment at scale."
"These are the main priorities of the strategic plan that we are completing and which we will start deploying as soon as fiscal 2020," he added. "We are more than ever convinced that the core business principles, which were outlined on the second quarter earnings call, are the most relevant levers to maximize value creation in the short and medium term."
Coty shares were marked 5.22% lower following the earnings release and changing hands at $11.64 each in the opening minutes of trading.
Last November, Coty said Hurricane Florence, which struck in the second half of September, "significantly impacted" the manufacturing plant and distribution center in North Carolina, which primarily affected the luxury division.