Global beauty giant Coty announced its preliminary results for Q1 2025.
The owner of Kylie Cosmetics and CoverGirl expects sales to grow by 4-5%, down on the previous 6% forecast.
Coty said the adjustment reflected how the "global beauty market has maintained solid, though slightly slower, growth".
A challenging macroeconomic environment and cautious retailer behaviour was also noted.
In response to the uncertain market outlook, Coty has intensified its cost-saving measures, aiming to exceed its initial target of US$75m in savings.
Prestige fragrance reportedly continues to outperform, driven by increased volumes and price adjustments, while mass beauty has seen more moderate growth, driven by unit demand.
However, the company said that the US market experienced a deceleration in the second half of Q1, affecting Coty’s overall sales performance.
The company attributed the deceleration to tight inventory management by retailers in key markets like the US, Australia and China as these countries represent a small percentage of Coty’s business.
Despite these challenges, Coty’s sales in other core markets grew with increases ranging from mid-single digits to double digits.
Looking ahead, Coty anticipates Q2 sales growth to be moderate, with a stronger performance expected in the second half of the fiscal year.
Coty says this is likely to be driven by several new product launches, and selective distribution expansions.
However, the company’s Q1 earnings before tax is expected to remain slightly lower year-on-year due to a combination of factors.
These include lower than expected orders in the latter half of the quarter; investments in high return sell out initiatives; the timing of fixed costs, and the financial impact of divesting the Lacoste licence.
The company said it remains committed to expanding its gross margins and maintaining a high level of advertising and consumer promotion expenditure in the high 20% range.
“We remain confident in our ability to achieve our full-year profit targets.”
The full set of Coty’s Q1 results will be published on 6 November 2024, followed by a live Q&A call with financial analysts and investors on 7 November.
