Coty Inc., the American cosmetics conglomerate, is preparing for a significant decrease in sales for the third quarter as a result of the ongoing Covid-19 pandemic. The company has predicted a 20% decline in sales, which will inevitably impact its profits. In the same period last year, Coty reported revenues of $1.99 billion.
However, despite these anticipated challenges, Coty has assured shareholders that it is well positioned to overcome the hurdles presented by the pandemic. The company has implemented a global response team, responsible for monitoring the progress of the health crisis and implementing appropriate measures in all the countries where it operates, in accordance with local guidelines.
One major measure that Coty is taking involves refocusing its business on open channels, with a particular emphasis on e-commerce. As brick-and-mortar stores have temporarily closed, online sales have experienced a significant increase in traffic. Coty has taken advantage of this by carrying out activations on platforms such as Amazon, leading to nearly double the sales in the U.S. in recent weeks. The company is also preparing for a surge in demand in Asia as the impact of Covid-19 begins to ease, especially in China.
Like many other companies affected by the pandemic, Coty has withdrawn its previously reported financial guidance for fiscal 2020. Instead, the company is shifting its focus towards cost control and cash flow, implementing both temporary and structural measures. As part of its financial initiatives, Coty is recommending that shareholders be given the option to receive up to 100% of their quarterly dividend in kind for the next two quarters. Additionally, Coty’s largest shareholder, JAB, has announced its intention to fully repay the loan it took out to finance its tender offer in 2019.
Pierre-André Terisse, Coty’s COO and CFO, has expressed confidence in the company’s ability to navigate through the current crisis. He noted that the work done by Coty over the past 18 months has strengthened its cost and financial structures, positioning the company well to withstand the challenges presented by the pandemic. Peter Harf, founding partner of JAB and chairman of Coty, echoed this sentiment, stating his belief that the company will not only weather the storm but also emerge stronger. Harf emphasized the company’s commitment to aggressively reducing costs and accelerating revenue initiatives.
In an effort to support the fight against the coronavirus pandemic, Coty has joined forces with other industry peers to manufacture and supply hand sanitizer for medical and emergency services. This initiative demonstrates the company’s dedication to contributing to the global effort to combat the spread of the virus.
Overall, while Coty acknowledges the anticipated decline in sales for the third quarter, the company remains proactive in taking measures to mitigate the impact of the pandemic. With a focus on e-commerce and cost control, alongside their commitment to supporting the fight against Covid-19, Coty is confident in its ability to overcome the challenges and emerge stronger in the future.