(Reuters) -Coty on Wednesday forecast a drop in current-quarter sales as weak spending in the U.S. cast a shadow on demand for beauty products, sending its shares down 18% in extended trading.
The company also said it would raise prices in its premium fragrances unit in the U.S. in the mid-single digit percentage range to mitigate the impact of the 15% duties on import of goods from Europe under U.S. President Donald Trump’s tariffs policy.
This comes at a time when retailers in the U.S. are increasingly cautious due to tariffs and destocking inventories as cost-conscious consumers tighten spending on some beauty and skincare products.
Coty sees first-quarter like-for-like sales declining 6% to 8%, compared with 4.5% growth a year ago. The company expects product launches in both its prestige and consumer beauty categories to drive sales growth in the second half of the year.
“Our analysis of cosmetics category weakness points to value-seeking behavior, some fatigue with innovation as consumers circle back to basics and less frequent usage, particularly with Gen-Z migrating to fragrances,” finance chief Laurent Mercier said in a statement.
Changes in the immigration policy under the Trump administration has also contributed to the slowdown in the country, Mercier added.
The company is also looking to move production for mass fragrances and entry prestige fragrances sold in the U.S. to a domestic manufacturing plant in order to cushion some of the $70 million headwind from tariffs in fiscal 2026.
Coty reported an adjusted quarterly loss of 5 cents per share for the quarter, compared with analysts’ estimates of a profit of 2 cents per share.
The loss included a negative impact from an equity swap mark-to-market of $0.07 due to the stock price decline in the quarter, the company said.
Beauty retailer Estee Lauder also gave a weak annual profit forecast on Wednesday.
Coty’s shares have fallen nearly 30% so far this year, following a 44% drop in 2024.
The company’s fourth-quarter revenue fell 8% to $1.25 billion, but beat estimates of $1.20 billion, according to data compiled by LSEG.
(Reporting by Juveria Tabassum and Anuja Bharat Mistry in Bengaluru; Editing by Maju Samuel)
Comments