Nov 5, 2015
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Coty sales miss estimates as demand for perfumes fall

Nov 5, 2015

Perfume maker Coty Inc reported lower-than-expected quarterly revenue, hurt by a drop in demand for perfumes such as Calvin Klein and skin and body care products such as Playboy and Philosophy.

Coty, whose core perfume business is struggling due to increased competition, has been on an acquisition spree as it looks to transform itself into a global beauty products giant.

Coty holds the licence for Calvin Klein perfumes - Coty

It is buying 43 brands from Procter & Gamble Co for $12.5 billion, a deal that will make it the world's No. 3 make-up manufacturer, behind L'Oreal SA and Estee Lauder Cos Inc.

The company also said last week it would acquire the cosmetics unit of Brazil's Hypermarcas SA to beef up distribution of the brands it will buy from Procter & Gamble in Brazil.

Coty's perfumes, sold mostly at retailers such as Wal-Mart , are losing their appeal as they are available widely. Consumers are also seeking out more niche perfumes rather than the company's celebrity-branded perfumes.

Coty said on Thursday it was on track to close its P&G deal in the second half of 2016 and that the financing structure for the deal was in place.

Sales from perfumes fell 8 percent, while those from skin & body care fell 1 percent in the first quarter, on a comparable basis, which excludes special items such as foreign exchange fluctuations and acquisitions.

Net income attributable to Coty rose to $125.7 million, or 34 cents per share, in the three months ended Sept. 30, from $10.6 million, or 3 cents per share, a year earlier.

Excluding items, the company earned 59 cents per share.

Net revenue on a comparable basis fell 2 percent to $1.11 billion. On a reported basis, they fell 8 percent.

Analysts on average were expecting earnings of 30 cents per share and revenue of $1.13 billion, according to Thomson Reuters I/B/E/S.

Coty's shares were down slightly in premarket trading on Thursday. The stock, which has risen 45 percent this year, closed at $29.95 on Wednesday on the New York Stock Exchange.

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