By Prerna Bedi
(Reuters) -CoverGirl-parent Coty forecast like-for-like sales for the second quarter at the top end of its prior outlook, betting on steady demand for Calvin Klein and Hugo Boss fragrances even as customers curb spending on broader makeup and skincare items.
Shares of the company, which had previously forecast second-quarter sales to fall between 3% and 5%, were up about 8% in extended trading on Wednesday. They have fallen about 45% so far this year.
Coty said earlier this year it has launched a strategic review of its beauty business that could lead to the sale of brands such as Rimmel and CoverGirl, as it aims to refocus on its fragrances segment amid persistently weak demand for color cosmetics.
Fragrances and scenting is a very resilient category for Coty, and is performing well across the spectrum from $5 mass options to ultra-premium at $500, Chief Financial Officer Laurent Mercier said in an interview with Reuters.
Last week, peer Estee Lauder also signaled strong demand for its fragrances and an uptick in China.
Coty, however, missed first-quarter profit estimates as retailers cut back on orders amid ongoing macroeconomic and tariff uncertainty.
French beauty conglomerate and industry leader L’Oreal, which is set to buy Kering’s beauty business, including rights to Gucci, reported weaker-than-expected third-quarter sales last month, weighed down by its performance in North America and Latin America.
Coty, which currently holds the licensing to Gucci Beauty, will continue to operate the brand for the term of the agreement, Mercier said.
The company posted adjusted profit per share of 12 cents during the first quarter, compared with analysts’ average estimate of 15 cents, according to data compiled by LSEG. Its net sales fell 6% to $1.58 billion.
For the second quarter, it forecast adjusted profit between 18 and 21 cents per share, while analysts expected 19 cents.
Coty shares have fallen nearly 46% so far this year.
(Reporting by Prerna Bedi in Bengaluru; Editing by Shilpi Majumdar)
