Koty's Cosmetic Balancing Act: Growth Targets and Cost-Cutting Measures

The cosmetics giant Coty, known for brands like CoverGirl, has revised its growth forecasts for the first quarter downwards. The estimated revenue increase of 4% to 5% is below the previous forecast of 6%, primarily due to a slowdown in the US market. This announcement led to a 4% drop in Coty's stock price after the market closed. Coty attributes the lowered expectations to the strict ordering and inventory management by retailers, which has led to noticeable losses, particularly in markets such as the US, Australia, and China. Interestingly, not only Coty, but also competitors like Estee Lauder and L'Oréal have indicated that consumer behavior in beauty products, often seen as affordable luxury, is under pressure. To address this challenge, Coty is intensifying its cost-cutting measures with the goal of significantly exceeding the originally targeted savings of 75 million US dollars in the fiscal year 2025. This strategy is a response to the "uncertain demand conditions" characterized by cautious retailer behavior and a complex macroeconomic environment. Despite these adjustments, the company is maintaining its annual target for core earnings and plans to release its first-quarter results on November 6.