Coty Inc. saw a net sales decline of 16 percent over the holiday quarter, but said it has made progress on profitability and reducing debt.
“Our strong second quarter results build on the momentum of the first quarter, as the entire organization continued to act with discipline, flexibility and creativity in an uncertain environment,” said Coty chief executive officer Sue Nabi. “With revenues delivering on our objectives and profit, cash flow and debt all ahead of expectations, including 6 percent Ebitda growth, it is clear that a much stronger Coty is emerging, which we believe will weather any near-term market headwinds while simultaneously positioned strongly to capture the opportunities of the eventual global recovery.”
The company posted $1.4 billion in sales for the three month period ended Dec. 31, a 16 percent year-over-year decline. Coty posted a loss of $39.8 million for the quarter, which it said was due to charges related to the divestment of Wella to KKR and other restructuring costs. Adjusted operating income was up 7 percent, the company said, to $188.4 million.
The prestige division saw sales declines of 11 percent, to $903.7 million. The mass segment dropped 23 percent, to $511.5 million.
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Regionally, sales in the Americas declined 7.2 percent in the quarter, to $539.5 million; sales in Europe, the Middle East and Africa fell 21.9 percent in the quarter, to $708.9 million, and sales in Asia/Pacific dropped 13.9 percent to $167.2 million.
For the six month period ended Dec. 31, Coty posted an 18 percent fall in net sales, to $2.5 billion, with net income of $56.1 million.
The company said that e-commerce sales were up 40 percent, and that it will increase its cost savings target from $200 million to $300 million for the fiscal year.
The divestiture of Wella, OPI and Clairol to a joint venture that is majority owned by Coty delivered $2.9 billion in gross proceeds, Coty said, and allowed the company to reduce net debt to $4.8 billion at the end of the second quarter.
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