Net revenues of $1.1 billion declined 2% like-for-like and decreased 6% as reported. Coty’s adjusted operating income was $173.4 million, an increase of 4% from $167.1 million in the prior-year period. Reported net income of $125.7 million increased from $10.6 million in the prior-year period.The firm’s adjusted net income was $219.7 million, up from $103.0 million in the prior-year period principally due to a favorable tax settlement of $113.3 million.
According to the firm, continued strong like-for-like growth in color cosmetics was offset by declines in fragrances and skin and body care.
A 9% like-for-like increase in the color cosmetics segment was driven by power brands Sally Hansen, Rimmel, and OPI. Fragrances declined 8% like-for-like driven by difficult innovation comparisons in the prior-year period and pressure on Calvin Klein. Skin and body care declined 1% like-for-like, driven primarily by lower net revenues from Playboy and philosophy, partially offset by like-for-like growth in adidas.
By geographic region, solid growth in Asia Pacific was offset by declines in EMEA and the Americas. Asia Pacific net revenues grew 4% like-for-like, reflecting growth in Australia, Southeast Asia, and regional exports. EMEA revenues decreased 3% like-for-like, as declines in the UK and Travel Retail were partially offset by growth in Eastern Europe, the Middle East, and Germany. Americas net revenues decreased 3% like-for-like, reflecting moderate declines in the U.S., travel retail, and a decrease in Brazil as a result of difficult comparisons in the prior year period as well as underlying economic weakness.
“Results in the first quarter were mixed. Profits were very good. The operating profit and margin continued showing very strong progress and earnings per share growth was up well ahead of profit growth, also helped by a one-off tax benefit. This confirms that our global efficiency program continues to generate the benefits we have been targeting. On the other hand, revenue growth was not where we would like it to be,” said Bart Becht, chairman and interim CEO. “While Color Cosmetics growth continued to be very strong due to Sally Hansen and Rimmel, and skin and body care trends are improving, Fragrance growth is lacking. Fragrance revenues continue to suffer from a very large number of unsustainable historical launches, not being compensated by current brand building efforts and launches. We will be working hard to clean up past portfolio practices, while strengthening our innovation pipeline and improving our capabilities in the areas of innovation and sales and marketing execution.”
According to Becht, the company continues “to believe that our strategy of investment in growing our power brands while bringing Coty back to profitable growth behind our efficiency programs, remains the right basis for delivering shareholder value over time."