PZ Cussons beauty business takes a hit as retailers prioritise essentials
Consumer goods group PZ Cussons said on Thursday it expects to meet its annual profit guidance despite seeing a significant decline in its beauty business.
The British group, owner of tanning brand St. Tropez, haircare specialist Charles Worthington and skincare label Sanctuary Spa, said the Covid-19 pandemic has “severely impacted” its beauty business.
A trading update for the three months ended 29 February revealed that third quarter revenue declined against last year, but at a reduced rate compared to the first half.
This was mainly due to consumer fragility in key markets, as well as the start of the outbreak towards the end of the period.
The company, which is focusing on its Cussons Baby, Morning Fresh and Carex personal and homecare brands, has recently sold its Polish beauty brand Luksja to Athens-based Sarantis Group for £9.2m and has exchanged contracts for the sale of its Nutricima dairy business to a Nigerian firm.
So its balance sheet remained strong in the third quarter, with net debt of £116m versus £183m at the same time last year. And £147m worth of undrawn borrowing facilities means the company is prepared to face the consequences of the pandemic.
In the UK, demand for Carex hand wash and sanitiser gel products and Imperial Leather soap has been “exceptionally high”, but PZ Cussons said its teams is struggling to source packaging and raw materials to fully meet demand.
St Tropez has been hit hard in the UK, US and across Europe, with a slow recovery ahead. Other beauty brands have been adversely impacted with the focus of retailers at this time on hygiene and personal care and the closure of hair salons.
In Asia, the Indonesian business has continued to trade largely as normal but Australia also reported a “severe reduction” in beauty sales. And in Nigeria, the situation is uncertain as the Covid-19 pandemic continues to develop.
Despite this, PZ Cussons said guidance on profit remains within consensus, albeit at the lower end.
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