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Covergirl parent Coty, opens new tab on Monday estimated first-quarter like-for-like sales growth below its prior forecast due to a slowdown in the U.S., sending its shares down 6 percent in after-market trading.
The cosmetics maker projected sales growth on a like-for-like (LFL) basis of between 4 percent and 5 percent for the three months ended September, compared to 6 percent it previously forecast. Coty said very tight order and inventory management by retailers resulted in weakness in certain markets such as the U.S., Australia and China.
The company and rivals including Estée Lauder and L’Oréal, have signalled strained consumer spending for beauty and cosmetics products, widely considered an affordable luxury and recession-proof.
Coty now expects second-quarter LFL sales to grow moderately with some acceleration in the second half of the year.
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The company said it was re-accelerating its cost-reduction efforts to deliver savings well above the initial target of about $75 million in fiscal 2025 in anticipation of “a more uncertain demand backdrop, including cautious retailer behaviour and a complex macroeconomic environment.”
The company, which maintained its annual core profit target, will report first-quarter results on Nov. 6.
By Aishwarya Venugopal and Neil J Kanatt.
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