Coty making ‘gradual progress’ amidst structural changes and tough fragrance market

By Andrew MCDOUGALL contact

- Last updated on GMT

Coty making ‘gradual progress’ amidst structural changes and tough fragrance market

Related tags: Perfume, Coty

Coty is struggling to grow its non-core brands in a tough North American fragrance market, reporting flat revenue for the first quarter, however it is meeting expectations and interim CEO Bart Becht says it is making ‘gradual progress’.

This year has been an eventful one for Coty, with CEO Michele Scannavini stepping down and a new management structure put in place, organizing its products under the categories: fragrance, skin care, color cosmetics and body care, and also along four geographic markets.

Uncertainty

With regards to the company’s restructure, Becht acknowledges there have been a number of changes, but that these strengthen the team and make the whole business more professional.

“We should not forget, we have gone from being a private company to a public company and that requires a more disciplined approach,” ​he adds.

“Clearly, there is a level of uncertainty, because the one Coty project is not fully implemented yet and we clearly need to work through this period of uncertainty, so we can get back to business and that is exactly what we are focused on.”

Non-core offsets power brands

For the quarter ended September 30, Coty posted a profit of $10.6 million compared with a year-earlier profit of $93.5 million.

The company's top revenue driver, its fragrances segment, posted a 2.7% sales decrease to $640 million, partly offset by growth from the Calvin Klein and Marc Jacobs brands, led by new launches.

Color cosmetics revenue grew 10% to $344 million, mostly on the Rimmel and Sally Hansen brands, and Becht comments that the quarter showed "good strategic progress but mixed financial results."

The Coty boss says that fragrance results have been affected as the support levels for its non-core brands are clearly not at the same level as the power brands.

“Particularly on the fragrance side, there is a long list of celebrity fragrances, some of which are gradually fading away, so there are a number of brands which are late in their lifecycle and are gradually losing their position,” ​he said in a conference call.

“As we are focusing harder and harder on the power brands, this issue should gradually go away over time, but it will be a very gradual process. It is not something, which is going to happen within a couple of quarters.”

Related topics: Business & Financial

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