Weak demand in the US and China: Coty reports Q2 sales decline

Business

The “Coty Campus” in the Metaverse Image: Coty Inc./Business Wire

US-based beauty giant Coty Inc. experienced an unexpected decline in sales during the second quarter of its 2024/25 fiscal year, largely due to softening demand in China and North America.

According to a statement released Monday evening, group revenue for the three months ending December 31 totaled 1.67 billion dollars, a 3 percent decrease compared to the same period last year. On a like-for-like basis, revenue declined by 1 percent.

In the Americas, Q2 revenue fell 7 percent to 638.6 million dollars due to negative currency effects and declines in the mass beauty segment. In the Asia-Pacific region, revenue fell by 11 percent to 191.5 million dollars, which the company attributed to declines in China and Asian travel retail. Conversely, the EMEA region (Europe, the Middle East, and Africa) saw a 2 percent increase in revenue to 839.8 million dollars.

Thanks to lower supply chain costs, cost-saving measures, and pricing adjustments, operating income reached 268.2 million dollars, exceeding the prior-year level by 13 percent. Adjusted operating income grew by 8 percent. However, due to the revaluation of financial instruments, net income attributable to shareholders plummeted 88.5 percent to 20.4 million dollars.

The company cautioned that the current weakness in demand in Asia and the Americas, particularly in the affordable cosmetics segment, is expected to persist in the coming months. For the second half of fiscal year 2024/25, management now anticipates a 1 to 2 percent decline in like-for-like sales and further negative currency impacts. However, due to the implemented margin improvement measures, the company continues to expect an increase in operating income for the current fiscal year.

This article originally appeared on FashionUnited.DE. It was translated to English using AI and edited by Rachel Douglass.

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