THE WHAT? Coty has reported its results for the final quarter and full year of fiscal 2020. The US beauty behemoth saw revenue decline 53 percent like-for-like in the final quarter of fiscal 2020, leading to an overall revenue drop of 22 percent for the year.
THE DETAILS However, Coty did report a gradual sales trend improvement from April through June and significant improvements in July and August across the portfolio and said that it expected to return to profitability in the first quarter of fiscal 2021 on an adjusted operating income basis for continuing operations.
Both Luxury and Consumer lost ground, with each unit reporting a revenue drop of 23 percent like-for-like for the year ended June 30, attributed to store closures during lockdown and continuing subdued traffic to retailers. At the same time, both divisions saw significant growth in e-commerce with the digital channel accounting for approximately 30 percent of luxury sales in 4Q2020 and some 10 percent of consumer beauty revenues.
THE WHY? Commenting on the operating results, Peter Harf, Coty’s Founder and Executive Chairman, said, “Coty’s fourth quarter was marked by external shocks, as the COVID-19 pandemic triggered a crisis in the real economy and supply. The severe sales contraction for total Coty, with revenues down $1.2 billion year-over-year, led to significant operating deleverage in the quarter, even as the company focused all its efforts on protecting free cash flow which came in in line with our expectations. Having said that, we now close this chapter and turn to the next, because Coty is back. In the last two months, we have seen a significant improvement in the business and we expect the positive momentum to continue, with a return to profit in Q1.
“In the last three months that I have been CEO, my focus has been to re-steer the company back on track to realize its potential. We have taken decisive action to tackle the issues in our capital structure, financial under-performance, product portfolio, and management.”