Coty Inc (NYSE: COTY) stock lost over 8.7% on August 27th, 2020 (as of 1:48 pm GMT-4 ; Source: Google finance) on lower than expected FY20 performance.
For fiscal year of 2020, Coty net revenues fell 22% hurt by COVID pandemic, but saw improving sales from April through June, and solid performance in July and August across the portfolio. The group forecasts to return to profitability in the first quarter of FY21 on an adjusted operating income basis for Continuing Operations.
EMEA segment which accounts 49% of total Coty continuing operations, fell by 20.7% against the prior year net revenues of $2,308.6 million. On a LFL basis, EMEA net revenues fell 18.5% in FY20 and just for fourth quarter LFL decline was 67.2% for the EMEA segment.
Buy the firm’s second major contributor Americas, which accounts 38% of net revenues reached $1,771.0 million falling 21.3% yoy against the prior corresponding period for FY20. On a LFL basis, Americas net revenues lost 21.5% hurt by challenging mass beauty market coupled with shelf space losses within mass beauty business. Americas reported a LFL net revenue fall of 51.5% during the fourth quarter of FY20. However, like every retail firm, they saw demand shift to e-commerce, leading to a solid e-commerce sell-out for both mass and prestige brands off a smaller base.CoverGirl US, Clean Fresh launch, saw e-commerce growth, including continued market share gains on Amazon. Moreover, Sally Hansen continued to generate solid growth on and offline, supported in part by the Good.Kind.Pure launch, which has been the #1 color cosmetics launch since December 2019. The firm’s core brands, Gucci, Burberry and Tiffany were also experience rising share in the U.S. Kylie Beauty partnership also helped Americas segment as it remained operable during the quarter, generating sales growth. However, operating loss of Americas Segment for FY20 fell to $89.5 million, against $159.2 million in the prior year, while operating margin was (5.1)% versus 7.1% in the prior year.
Asia Pacific performance was also disappointing which accounted 12% of total Coty continuing operations with net revenues falling 24.4% yoy to $582.7 million, hurt by China and Travel Retail.