Coty Restores Annual Profit Guidance as Middle East Sales Face Pressure
By Koyena Das
Coty's Financial Performance and Strategic Moves
May 5 (Reuters) - CoverGirl parent Coty on Tuesday flagged a hit to sales from the conflict in the Middle East, even as it leaned on cost-cutting to reinstate its annual profit target.
Background and Leadership Changes
In February, the company pulled its annual forecast, with new interim CEO Markus Strobel calling for improved discipline and execution to turn around sluggish financial performance.
Profit Guidance and Analyst Expectations
Coty on Tuesday projected 2026 adjusted earnings per share to be in the range of 33 cents to 35 cents, above analysts' estimate of 27 cents, according to data compiled by LSEG.
Strategic Review and Portfolio Assessment
The company in September initiated a strategic review of its consumer beauty division, which could lead to the sale of brands such as CoverGirl and Rimmel at a time when the industry is battling uncertain demand. It also plans to scale back smaller product launches and trim marketing spending.
Coty said on Tuesday it was nearing the conclusion of its "portfolio assessment."
Quarterly Results and Regional Impact
Net Loss and Adjusted Performance
In the third quarter, the company's net loss widened to $411.4 million from $409 million a year earlier. On an adjusted basis, the company posted a loss per share of 3 cents.
Middle East Sales Pressure
The company said disruptions in the Middle East weighed on its top-line performance by 1.4% in the quarter and expects fourth-quarter sales to be impacted by 2% to 3%.
Regional Sales Breakdown
"The conflict in the Middle East continues to weigh on sales trends in the region, consumer demand in developed markets has remained broadly consistent with recent periods," Coty said.
The Middle East represents a mid-single-digit percentage of Coty's annual sales.
Revenue and Brand Performance
The New York-based company sees fourth-quarter like-for-like revenue to decline by mid-single digits, compared with an 8% drop a year earlier.
Coty reported revenue of $1.28 billion for the third quarter ended March 31, edging past estimates of $1.27 billion, benefiting from its premium brands such as Marc Jacobs, Chloé and Kylie Cosmetics.
(Reporting by Koyena Das in Bengaluru; Editing by Sriraj Kalluvila)
