FRAGRANCE and beauty company Coty reported $4.39 billion in net revenues for fiscal year ended June 30, 2015. Slow fragrances and skin and body care products sales offset strong like-for-like growth in color cosmetics to push down the company’s net revenues for the period by 3% and be flat like-for-like as opposed to the previous year.
Coty turned a profit during the fiscal fourth quarter, achieving $21.0 million in net income on the back of a large tax benefit.
Power brands Sally Hansen and Rimmel drove an 8% like-for-like revenue increase in the color cosmetics category. Meanwhile, declines in celebrity brands and a lower level of new launch activity in select brands resulted in a 2% like-for-like decline in fragrances revenue. The skin and body care sector also experienced a slump, dipping by 5% like-for-like due to lower net revenues from body care brands Adidas and Playboy, and offsetting growth in Philosophy.
In terms of geographical markets, Coty achieved 1% like-for-like growth in net revenues in the Americas, reflecting the contribution from the commercial distributor relationship with Avon in Brazil and a stable business in the U.S. This modest like-for-like growth, however, was offset by flat like-for-like results in EMEA and the Asia-Pacific. In EMEA, declines in the U.K. and Travel Retail tempered growth in Eastern Europe, the Middle East, and South Africa, and consistent results in Germany and Southern Europe, which translated in to flat like-for-like revenues.
Net revenues in the Asia-Pacific were likewise flat like-for-like, a reflection of the growth in Australia and Travel Retail, consistent revenues in Southeast Asia, and declines in China as a result in part of a shift in business model. Emerging markets grew 4% like-for-like during the year, accounting for 29% of net revenues in fiscal 2015 from 28% of net revenues in the prior year on a like-for-like basis.
According to chairman and interim CEO Bart Becht, “2015 was a good year. We made meaningful progress on our strategy of driving revenue growth on power brands, while fueling profit growth behind efficiency programs. During the year, power brand net revenue growth, while still modest, was in the low single digits like-for-like, driven by Marc Jacobs, Chloe, Sally Hansen, Rimmel, and Philosophy. On profits and margins, we made material progress over the last 9 months resulting in full year adjusted diluted EPS being up by 22%.
Mr. Becht is positive about the growth prospects arising from the company’s acquisition of P&G’s Fragrances, Color Cosmetics, and Hair Color businesses.
“We remain very excited about this transaction's potential for Coty. We continue to believe that it will not just create a pure-play global leader and challenger in the beauty industry, with approximately $10 billion in revenues, it will also offer material cost and cash savings as well as longer term enhanced growth opportunities.”
To continue driving profit growth behind efficiency programs, Coty has identified additional opportunities, according to Mr. Becht.
“As a result, we are increasing the savings target for our Global Efficiency Program by 35% to $270 million by fiscal year 2017. These additional savings should allow us to continue to drive margin expansion, while also re-investing part of these savings to gradually improve the growth trajectory of the overall business,” he added.Off White X Max 90
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