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European Nail Care Demand Drives Coty's Profit Beat; Shares Jump 10%

By Donna Ahern
European Nail Care Demand Drives Coty's Profit Beat; Shares Jump 10%

Coty Inc beat Wall Street estimates for quarterly profit and revenue on Wednesday as it sold more nail care products to salons and beauty professionals in Europe, sending its shares up 10% in premarket trading.

The cosmetics maker, which is majority owned by German conglomerate JAB Holdings, said it would take a hit from the coronavirus outbreak, but it was still early to estimate the impact.

Strong demand for nail care products such as OPI in Europe drove a 0.6% rise in sales in its professional beauty unit in the second quarter ended 31 December the company said in a statement.

The company is in the midst of exploring options for the unit, including a sale, as part of a plan to focus on its higher margin skin care products and perfumes.

"We see a lot of appetite for the (professional beauty) business which has been performing very well," Chief Financial Officer Andre-Pierre Terisse told Reuters, referring to the review.


Influencer Promotions

The New York-based company is making a big push to attract millennial customers who are buying brands promoted by social media influencers, including Kylie Jenner and Lili Reinhart.

The company bought a $600 million majority stake in Jenner's make-up and skincare businesses in November and tapped American actress Reinhart to market its products.

Sales in its luxury beauty business, its biggest by revenue, slipped 0.1% to $1.02 billion on a reported basis due to protests in Hong Kong. Excluding Hong Kong, its sales rose 1.3%, boosted by sales at duty free and other travel-retail stores.

Net revenue fell to $2.35 billion from $2.51 billion, but was still ahead of analysts' estimates of $2.34 billion, according to IBES data from Refinitiv.


Net loss attributable to the company narrowed to $21.1 million, or 3 cents per share, in the second quarter ended 31 December from $960.6 million, or $1.28 per share, a year earlier.

Excluding certain items, Coty earned 27 cents per share, beating analysts' average estimate of 24 cents, according to IBES data from Refinitiv.

News by Reuters, edited by Donna Ahern, Checkout. Click subscribe to sign up for the Checkout print edition

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