- Coty names former British American Tobacco finance chief Benchikh as CFO
- Interim CEO Markus Strobel says higher oil prices may cost $20 million to $30 million annually
- Tariff refunds could add up to $30 million a year, Strobel says
(Reuters) - Coty on Wednesday forecast current-quarter earnings below expectations and withheld its annual outlook, calling fiscal 2027 a "transition year" as it pushes ahead with a business overhaul.
Shares of the company fell 7% in extended trading as its lack of an annual outlook, unlike peers Estee Lauder and Elf Beauty's strong forecasts, overshadowed a surprise beat on fourth-quarter revenue estimates due to resilient demand for fragrances and cosmetics.
Coty also announced the appointment of former British American Tobacco finance chief Soraya Benchikh as CFO, saying it was part of organizational changes it unveiled in early July under the initiative. Benchikh succeeds Laurent Mercier, who had been CFO for around five years.
The company is advancing its "Coty. Curated." strategy, aimed at streamlining operations, cutting costs and sharpening its focus on key brands, helping offset a likely sales hit in fiscal 2028 from its early return of the Gucci Beauty license.
Meanwhile, a strategic review of its consumer beauty business, expected to conclude by year-end, could result in the sale of brands such as CoverGirl and Rimmel.
Coty forecast first-quarter adjusted earnings per share of 11 cents to 13 cents, below analysts' estimates of 14 cents, according to data compiled by LSEG.
It expects like-for-like revenue in the current quarter to decline by a low- to mid-single-digit percentage, compared with an 8% drop last year.
The company's sales rose 1.3% to $1.27 billion in the quarter ended June 30, compared with analysts' expectations of a 4.6% decline, according to data compiled by LSEG.
"Consumer demand for beauty remains resilient... although consumers are becoming increasingly selective in their purchasing decisions," the company said.
Coty said the Middle East conflict reduced quarterly sales by about 1%, less than it had forecast in May.
Interim CEO Markus Strobel said higher oil prices would have an annual impact of $20 million to $30 million, while tariff refunds could provide up to $30 million of annual upside.
Its quarterly adjusted loss per share of 2 cents was wider than analysts' expectation of a 1-cent loss.
"(Coty) faces an uphill battle as consumers prioritize value," eMarketer analyst Rachel Wolff said, adding that it underscores challenges despite the company making "interesting moves" such as recalibrating CoverGirl's marketing to target Gen X.
Reporting by Neil J Kanatt in Bengaluru; Editing by Leroy Leo
Source: Reuters