COTY on Wednesday forecast current-quarter earnings below expectations and withheld its annual outlook, calling fiscal 2027 a “transition year” as it pushes ahead with a business overhaul.
Shares of the company fell 7 percent in extended trading as its lack of an annual outlook, unlike peers Estee Lauder and Elf Beauty’s strong forecasts, overshadowed a surprise beat on fourth-quarter revenue estimates due to resilient demand for fragrances and cosmetics.
Coty also announced the appointment of former British American Tobacco finance chief Soraya Benchikh as CFO, saying it was part of organizational changes it unveiled in early July under the initiative. Benchikh succeeds Laurent Mercier, who had been CFO for around five years.
The company is advancing its “Coty. Curated.” strategy, aimed at streamlining operations, cutting costs and sharpening its focus on key brands, helping offset a likely sales hit in fiscal 2028 from its early return of the Gucci Beauty license.
Meanwhile, a strategic review of its consumer beauty business, expected to conclude by year-end, could result in the sale of brands such as CoverGirl and Rimmel.
Coty forecast first-quarter adjusted earnings per share of 11 cents to 13 cents, below analysts’ estimates of 14 cents, according to data compiled by LSEG.
It expects like-for-like revenue in the current quarter to decline by a low- to mid-single-digit percentage, compared with an 8-percent drop last year.
The company’s sales rose 1.3 percent to $1.27 billion in the quarter ended June 30, compared with analysts’ expectations of a 4.6-percent decline, according to data compiled by LSEG.
“Consumer demand for beauty remains resilient ... although consumers are becoming increasingly selective in their purchasing decisions,” the company said.
Coty said the Middle East conflict reduced quarterly sales by about 1 percent, less than it had forecast in May.
Interim CEO Markus Strobel said higher oil prices would have an annual impact of $20 million to $30 million, while tariff refunds could provide up to $30 million of annual upside.
Its quarterly adjusted loss per share of 2 cents was wider than analysts’ expectation of a 1-cent loss.
“[Coty] faces an uphill battle as consumers prioritize value,” eMarketer analyst Rachel Wolff said, adding that it underscores challenges despite the company making “interesting moves” such as recalibrating CoverGirl’s marketing to target Gen X. REUTERS
INDIA’S securities regulator on Wednesday banned two firms from the market for allegedly manipulating trades on a newly launched closing-price mechanism used to determine the final official price of a security at the end of a trading day.
The regulator said the alleged violations by the firms, Copthall Mauritius Investment and Mansi Share and Stock Broking, happened on Aug. 13 when weekly derivatives contracts linked to the BSE Sensex expired.
Public records show that Copthall is a Mauritius-based entity owned by JP Morgan Chase.
The Securities and Exchange Board of India (SEBI) ordered impounding a total of 36.8 million rupees ($384,324) from the banned firms, it said in an interim order.
In an interim order pending further investigation, SEBI said aggressive buy orders by Copthall and large sell orders by Mansi during the newly introduced closing auction session (CAS) for determining closing prices distorted the prices of Sensex constituent stocks.
The regulator said Mansi later canceled much of its sell-side activity.
SEBI estimated wrongful gains of about 29.6 million rupees for Copthall and 7.2 million rupees for Mansi.
CAS, which was introduced in India on Aug. 3 to improve price discovery, is a 20-minute auction window that starts at 3:15 p.m. IST (5:45 p.m. in the Philippines) after regular trading ends.
In its first two weeks, the new mechanism, introduced to align with global practices, has triggered sharp swings in the Nifty 50 and BSE Sensex benchmarks, as well as in options contracts linked to the indexes.
“Any manipulation or unfair practices employed to disturb the fair discovery of prices in CAS has to be dealt with sternly by the regulator,” SEBI said, adding that such conduct could “undermine the integrity of the CAS mechanism” and disrupt the orderly functioning of securities markets.
According to the regulator, CAS is transparent, making it easier to catch such manipulation.
The regulator, in an order issued within six days of the alleged manipulation, added that it had so far not found any evidence that the two firms acted together.
