Coty's color cosmetics power brands help fuel Q2

NEW YORK — Beauty brand Coty posted a boost in second quarter net income and saw renewed strength in such core brands as Sally Hansen and Rimmel.



Net income increased 52% to $125.4 million from $82.5 million in the prior-year period, driven by higher operating income.

For the quarter, net revenues totaled $1.3 billion and were flat like-for-like and declined 5% as reported from the prior-year period. Continued strong growth in color cosmetics was offset by declines in fragrances and skin and body care. The 7% like-for-like increase in the color cosmetics segment was driven by all three power brands, Sally Hansen, Rimmel and OPI, the company stated.



Fragrances declined 1% like-for-like, in part, reflecting innovation phasing on select brands and pressure in the mass fragrances market. Skin and body care declined 6% like-for-like, driven primarily by lower net revenues from adidas and Playboy.




"Our Q2 and first half results demonstrate that our strategy, as outlined last quarter, of investment in and revenue growth on our power brands and returning Coty to profitable growth behind efficiency programs is beginning to yield results. While power brands' like-for-like net revenues grew only very modestly in the quarter and half year, we saw renewed strength on a fiscal year-to-date basis in Sally Hansen, Rimmel, Marc Jacobs, Chloe and philosophy, fueled by successful innovations,” stated Bart Becht, chairman and interim CEO.



Looking ahead, Coty is targeting to gradually return to profitable growth. The company stated that it remains focused on growing its power brands around the world behind innovation, strong support levels and improving "in-market" execution. Coty is also focused on cost optimization opportunities to improve profitability and to provide for investment in its power brands. The $200 million of annual savings expected from the Global Efficiency Plan should help the company make progress against this target over time, Coty stated.