Coty financial results show consumer beauty brands not doing well

Coty financial results show consumer beauty brands not doing well

The global beauty corporation released Q4 and full-year results this month, disclosing how Coty’s acquisitions of not only the P&G Beauty Business but also of ghd and Younique are impacting the business.

Camillo Pane, CEO at Coty, calls 2017 a “transformational year,” in his remarks to investors, and goes on to explain that quite a lot happened over the past year to precipitate that change: “We completed the incredibly complex acquisition of the P&G Beauty Business, fully reorganized into a product and customer focused organizational structure, successfully reached significant milestones in our integration efforts, and boosted our brand portfolio through the additions of Younique, ghd, and the agreement to acquire the Burberry Beauty license.”

Consumer brands

The consumer beauty category has been a challenge for Coty over the past year, which the company attributes in part to lower-performing brands that came to the company as part of the P&G Beauty acquisition, like Cover Girl and Clairol.

“Our Consumer Beauty division remains under pressure and its recovery is a key priority for us,” acknowledges Pane in his comments about the company’s latest financial results.

Full-year results show a 5% decline in combined company net revenues, because of “continued underlying challenges in consumer beauty,” according to the company news release, as well as because of “flat performance in professional beauty, [and] a modest decline in luxury,”

Luxury brands

Luxury brands and pro brands are doing better for Coty. “Professional Beauty's positive performance was driven by continued growth in Wella and improving trends at OPI,” Pane says. “And the Luxury division delivered strong growth for the second quarter in a row supported by Hugo Boss, Gucci, Chloe and philosophy.”

For the year, luxury brands brought in $2,566.6m in net revenue for Coty, a 40% lift compared to the legacy business this same time last year. For the combined company that 40% lift translates to a 3% drop or only a 1% drop in constant currency terms.

Facts and figures

For Q4, Coty reports net revenue of $2,241.3m; and for the year $7,650.3m. Adjusted operating income was up 24% for the year to $772.8m. And net cash from operating activities amounted to $757.5m for the year.

“I am proud of what we have been able to accomplish in less than a year since the transformational acquisition of the P&G Beauty Business,” say Pane, adding that he remains “confident in our potential to establish Coty as a global leader and challenger in beauty.”

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