Coty Inc. posted nearly $800 million loss in the most recent quarter, according to its annual report, but the company expects to return to profitability in the first quarter of fiscal 2021.

The company posted a 25 percent decline in net sales, to $4.7 billion, for the fiscal year, with a net loss of $1 billion. (Total net sales including Wella, which will be divested in 2020, is $6.7 billion.) 

For the quarter ended June 30, the company posted a net sales decline of 63 percent, to $560.4 million, with a net loss of $778.2 million.

• Coty's Consumer Beauty division, which includes its mass brands, declined in sales by 55% in the fourth quarter, to $340.7 million. For the year, the division declined 29%, to $2.1 billion in net sales.


• Coty's Luxury business declined 71% percent to $219.4 million -- and declined 21%, to $2.6 billion, for the year. 


• Coty’s Professional business, including Wella (which will be divested this year)--declined by 41% for the quarter, to $361.6 million -- and posted a 14% decline for the year, to approximately $2 billion. Declines were attributed to salon closures during the COVID-19 pandemic.

"Coty is Back" says Peter Harf
 
Coty Inc. executive chairman and chief executive officer Peter Harf said in a press statement, "Coty is back. In the last two months, we have seen a significant improvement in the business and we expect the positive momentum to continue, with a return to profit in Q1."

Harf further explains, "On our portfolio, we have taken concrete steps to re-balance and strengthen the portfolio to be competitive in light of changing consumer demands. We have begun building platforms to address our under-exposure in skincare, Northern Asia, and e-commerce, while at the same time creating space for additional brand building investment."

Harf continues, "Finally, in July, we recruited Sue Nabi, a proven-successful leader with over 20 years of beauty experience across the areas which are most relevant to Coty." Nabi (shown above) takes over as CEO on September 1, and Coty is expected to buy a stake in Nabi’s own skin-care brand, Orveda.

Part of Coty's recovery plan, and making it through the Covid crises, includes selling most of its factories and outsourcing all operations, reports Financial Times.   
 
More Highlights, By the Numbers

• FY20 Total Coty net revenues decreased 22% -- reflecting the impact of the COVID-19 health crisis. 


• Coty has seen gradual sales trend improvement from April through June, with significant improvements in July and August.


• Coty expects to return to profitability in Q1 FY21


• FY20 Total Coty adjusted operating income of $161.4 million and adjusted operating loss of $161.7 million for Continuing Operations, were weighed down by significant deleverage from over $1 billion of lost sales primarily due to COVID-19


• Significant immediate liquidity of $1,618.1 million at the end of Q4 includes $750 million of KKR direct investments, with remaining $250 million received on July 31, 2020


• Divestiture of 60% of Wella business to KKR on track to close by end of CY20

Emphasizing that the future looks bright, Harf adds, "I am convinced the new Coty today is set up for strategic optionality and has more potential than ever before to unlock and create value."