Coty: Despite ‘challenging’ fiscal 2014, signs of nail segment turnaround emerge
NEW YORK — Beauty company Coty Inc. had a “challenging year” in fiscal 2014 as net revenues declined because of pressure on its nail business and fierce competition from rivals. However, the company is starting to see the first sign of a turnaround in its nail business thanks to the new Sally Hansen Miracle Gel.
“Fiscal 2014 was a challenging year for Coty. We reported a marginal decline both on top-line and bottom-line. Our net revenues decreased 1.6%, and our adjusted net income decreased 2.2%,” Michele Scannavini, CEO of Coty, told analysts. “The revenue decline was mainly due to the pressure we had on our nail business, particularly in the United States, which more than offset the growth we had in the fragrance and skin care segments.”
Net revenues for fiscal 2014 totaled $4.6 billion, a decrease of 1.6% like-for-like and 2.1% as reported from the prior-year. Adjusted net income was $316.2 million, a decrease from $323.2 million in the prior year. Adjusted earnings per diluted share decreased to 81 cents from 82 cents in the prior year.
According to the company, the U.S. market — which accounts for close to 30% of its business — experienced a 1.5% decrease in total fragrance for the year driven by a decline in the mass channel.
The U.S. color cosmetic market in mass was flat during the year and decreased 2% during the fourth quarter. Hampering the segment was nail, which recorded a 7% decline for the year and a 13% decline during the fourth quarter. However, there is sign of a turnaround.
“We are particularly excited to see the first sign of a turnaround in our nail business in the beginning of this fiscal year, driven by the launch of the new Sally Hansen Miracle Gel. First sales results are outstanding,” Scannavini told analysts. “According to IRI retail panel, in the four weeks ending Aug. 11, Sally Hansen hit its highest market share in the last two years.”
The company also noted that Rimmel London was the fastest-growing color brand among the top 10 in mass in fiscal year 2014. New launches under the Rimmel brand include a new mascara called Wonderful.