Coty lowers sales outlook for the first quarter

CoverGirl parent Coty, opening a new filing Monday, estimated like-for-like sales growth in the first quarter was below previous guidance due to a slowdown in the U.S., causing shares to fall 6% in after-hours trading.

The cosmetics maker forecast like-for-like sales growth (LFL) of between 4% and 5% for the three months to September, compared with 6% previously. Coty said very strict order and inventory management by retailers had led to weakness in certain markets such as the US, Australia and China.

The company and its competitors, including Estee Lauder (opens new registry) and L’Oreal (opens new registry), signaled tight consumer spending on beauty and cosmetics products, which are widely viewed as affordable luxuries and recession-proof.

Coty now expects LFL sales to grow moderately in the second quarter, with some acceleration in the second half of the year.

The company said it would again accelerate its cost-cutting efforts to achieve savings well above its initial target of about $75 million in fiscal 2025 in anticipation of “a more uncertain demand environment, including cautious retailer behavior and a complex macroeconomic environment.”

The company, which maintained its annual core profit target, will report its first-quarter results on November 6.

By Aishwarya Venugopal and Neil J Kanatt.

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