Coty Inc. is expecting coronavirus to cause a 20 percent sales decline in the third fiscal quarter, with a “meaningful impact on profit.”
The beauty company issued an update on how it planned to handle business as COVID-19 continues to spread globally. It includes starting to manufacture and supply hand sanitizer to medical and emergency services, as well as pushing products onto Amazon and expanding Kylie Jenner’s Kylie Skin in Europe in the coming weeks.
“The company has reviewed its financial position in view of the current market conditions, which are expected to amplify moving into [the fourth quarter]. Coty confirms that following the amendment of its financing arrangements in 2019, it has ample and sufficient liquidity and headroom to meet its covenants based on management’s current view of market conditioners,” the company said in the statement.
Coty added that the sale process for its Professional and Brazilian operations is moving forward.
The company’s chief financial officer and chief operating officer Pierre-André Terisse said in a statement that the turnaround work Coty has been doing for the past 18 months “has been incredibly helpful” in allowing it to navigate the current marketplace. He added that Coty will propose to the board that shareholders should be able to receive 100 percent of their quarterly dividend for the next two quarters, versus 50 percent.
Peter Harf, Coty chairman and founding partner at the beauty firm’s majority owner JAB, said he expects Coty to “navigate well” through the COVID-19 crisis, and to “accelerate top line initiatives.”
Before COVID-19, Coty has been going through a years-long rough patch since buying a bunch of lackluster beauty assets from Procter & Gamble in 2016. The business has gone through a series of chief executive officers, including current ceo Pierre Laubies, who organized the company’s turnaround efforts. In the summer, after Coty strikes a deal for the Professional and Brazilian assets, Laubies will step aside and former Jimmy Choo ceo Pierre Denis will take the helm.
He is tasked with accelerating growth.
Coty joins other beauty companies both in its commitment to providing public service in the form of hand sanitizers, and in the adjustment of quarterly guidance during the global pandemic.
LVMH Moët Hennessy Louis Vuitton led the way in terms of public service, unveiling Sunday that it would cease manufacturing luxury perfume in order to make hand sanitizer. Pictures of LVMH sanitizer in Dior-branded bottles have already surfaced on Twitter.
On Wednesday, the Estée Lauder Cos. withdrew quarterly guidance because of the growing impact COVID-19 is expected to have on sales. The business had previously guided between 0 and 1 percent growth. On Wednesday, L’Oréal revealed plans to begin producing hand sanitizer at its factories in France.
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