Coty has withdrawn its financial guidance for its full fiscal year 2020 and expects net revenues for the third quarter of the year to decline by 20% like-for-like, with an impact on profit, due to the spread of COVID-19.
As part of its response to the crisis, the company will prioritize the markets and channels that remain open, most notably e-commerce.
The plan includes activations on Amazon, with sales in the US nearly doubling in recent weeks, in addition to launching Kylie skincare in Europe in the coming weeks. Coty is also preparing for a surge in demand post-COVID-19 disruption, beginning with Asia.
The company also intends to focus on controlling costs and protecting cash flow. Coty says that following the amendment of its financing arrangements in 2019, it has sufficient liquidity and headroom to meet its covenants based on management’s current view of market conditions.
Coty has established a global response team in light of the virus’ spread, which includes manufacturing and supplying hand sanitizer to medical and emergency services.
Coty chief operating officer and chief financial officer Pierre-André Terisse said: “The work performed by Coty over the past 18 months has been incredibly helpful given the current exceptional circumstances, not only because our brands have been improved, but also because we have considerably strengthened our cost and financial structures. […] Having faced several financial crises in my career, I know they always contain opportunities as well, and we will look to seize them.”
Peter Harf, founding partner of JAB and chairman of Coty added: “We are very confident in Coty’s ability not only to navigate well through this crisis, but also to exit stronger, as the management continues to reduce its costs aggressively and to accelerate top line initiatives.”