The overall beauty industry is booming, but cosmetics companies are finding themselves in an increasingly competitive environment with an influx of new startups and consumers’ rapidly changing preferences.
Some beauty product companies are feeling the weight of consumer shifts, including a growing tendency toward online shopping. Others are pivoting their strategies and finding the efforts now paying off.
Investing in a Turnaround
Coty Inc. (COTY
), which was once struggling with high inventory levels after it acquired P&B Beauty Business, reported third-quarter results May 10 that showed revenue is improving. But the company is still operating at a loss, now at $192.5 million. Net revenue was $2.0 billion, up 6 percent from a year prior, and adjusted earnings were $0.15, up from $0.14 last year.
Coty, which has been folding acquired beauty companies into its operations in recent months, is focused on tackling short-term challenges as it tries to implement new programs and strengthen its brand portfolio. CEO Camillo Pane said Coty’s revenue improvement this quarter was driven by its luxury division. The company says it will try to reconnect its strongest brands with consumers while strengthening its digital transformation, which includes e-commerce, and improving in-store experiences.
Meanwhile, Coty has planned to keep a foothold on growth with more acquisitions, including a planned takeover of Burberry Beauty Business.
“We are both integrating and simultaneously reorganizing the entire company to create the organization we need,” Pane said in a statement.
Like some of its beauty company counterparts, Coty shares have been struggling in recent months, with the stock down 24.7 percent the past year. Coty shares were essentially flat year to date before its earnings release, when the stock surged about 14 percent. Avon Products Inc. (AVP
) shares have also been struggling, down 15.7 percent the past year and down 27.8 percent year to date.
Avon Products is making small strides toward a turnaround. The New York-based cosmetics company on May 4 reported that first-quarter revenue increased 2 percent from a year prior, to $1.3 billion, as its average customer order increased 2 percent. Avon reported a loss of $0.10 per share, improved over a loss of $0.36 per share a year prior. Avon says it is investing more in social media and marketing efforts and improving its customer experience.
“We are moving into the second year of our three-year Transformation Plan, in which we will continue to build on the robustness of our brand, drive beauty innovation, and invest in initiatives,” CEO Sheri McCoy said in a statement.
Maintaining Positive Momentum
Other beauty product companies have already achieved significant strides in their sales and profit growth, in part by leveraging their established brands to target millennials.
Nu Skin Enterprises Inc. (NUS
) reported first-quarter revenue of $499.1 million, up 7 percent from a year prior, as earnings of $0.51 per share increased 21 percent from the year-ago period.
“We will continue to focus on accelerating growth, driving innovation throughout our business, and empowering our customers,” said CEO Ritch Wood. Nu Skin shares are up 51.3 percent the past year, and up 23.4 percent year to date.
Likewise, shares of Estee Lauder Companies Inc.) are up 23.2 percent year to date. Estee Lauder reported third-quarter sales of $2.68 billion, up 8 percent from a year prior. Net earnings increased 12 percent to $298 million.
“By further penetrating the specialty-multi channel globally and selectively opening freestanding stores in some key international markets, our brands made great progress reaching new consumers,” said CEO Fabrizio Freda.
[Source”timesofindia”]
