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Coty, Inc.

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Coty has lagged the industry in the past three months due to continued weakness in its Consumer Beauty unit, which along with supply-chain hurdles marred first-quarter fiscal 2019 results. During the quarter, revenues missed the consensus mark due to supply-chain hurdles in all divisions. In fact, the Consumer Beauty unit also saw underlying weakness, owing to soft mass beauty categories, competition and weakness in some developed markets. The unit is also expected to remain soft in the second quarter. Nonetheless, management expects reverting to LFL sales growth in Luxury and Professional Beauty units, which witnessed underlying growth in the first quarter on the back of robust innovations and solid demand. Moreover, the company is on track with saving efforts, which provided some cushion to operating income. Also, Coty is making solid efforts to solve the supply-chain woes, though full recovery is expected in the fiscal third quarter.

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