It Was Both Hit and Miss for Coty in Its Fourth Quarter

Coty Inc. delivered on the top line, but not on profit in the final quarter of its 2023 fiscal year.

The beauty company, whose brands include Kylie Cosmetics, Lancaster and CoverGirl, reported net revenue of $1.4 billion in its fourth quarter ended June 30, up 16 percent year-over-year. Analysts had been expecting around $1.3 billion.

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Net income was $29.6 million, compared with a net loss of $286 million in the prior year. Adjusted EPS of 1 cent improved from a loss of 1 cent in the prior year, but came in below Wall Street predictions for 2 cents.

The prestige segment led during the quarter, with both reported and like-for-like sales growth of 21 percent versus the prior year.

Consumer beauty revenue rose 9 percent as reported in the fourth quarter, with like-for-like growth of 10 percent, driven by growth across all categories.

In a call with analysts, chief executive officer Sue Nabi said Coty has done “70 percent of the job” when it comes to tapping opportunities in the makeup space for its mass brands.

“The next phase is to fix the face category, which I believe is a category that has been driving the growth of some of our competitors. Hopefully once we have the face category joining lip and eyes, 90 percent, 95 percent of CoverGirl will be positioned for the future the way I want this brand to be positioned, using modern marketing,” she said.

For fiscal 2024, Coty said the core business would grow at the top of its medium term target range of 6 to 8 percent in like-for-like sales. EPS is expected to hit a range of between 44 cents and 47 cents, below Wall Street estimates of 48 cents.

Earlier this year, Coty disclosed it was eyeing a dual Paris listing and Nabi told WWD it was still in the “exploratory phase.”

“The feedback and the interest from European investors has been outstanding. For a lot of them, it’s a kind of a refresh,” she said. “They all heard about Coty and then Coty was not on their radar and now it’s back.”

As for press reports that Kim Kardashian is engaged in talks with Coty about buying her brand back, Nabi said she doesn’t comment on speculation. She did note, though, that the pricey direct to consumer skin care line, called Skkn by Kim, continues to perform well, while Kylie Cosmetics is growing by double digits.

Coty’s share price closed down 2.3 percent to $10.72 on Tuesday.

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