Gucci lipstick maker Coty has today missed market estimates for quarterly revenue, hurt by weak demand for makeup products as people stayed at home due to fresh Covid-19 restrictions.
Coty has been working to ramp up its presence in the skin-care category as well as online, as sales of makeup products, including foundation and lipsticks, have been pressured due to pandemic-induced lockdowns that have forced shoppers to stay at home.
Beauty product sales in major markets, including North America and Europe, have been hampered by a resurgence in coronavirus cases as it has prompted fresh lockdowns and store closures.
"The lockdowns in Europe, like on every other competitor in the industry, have had an effect," its chief executive Sue Nabi told Reuters, noting Coty's Europe, Middle East and Africa (EMEA) unit was the biggest contributor to its 40% overall online sales rise.
Sales in the EMEA region, however, dropped 21.9% to $708.9m.
"The e-commerce growth is not, in a way, compensating what's happening with the closure of the stores," Nabi added.
Cosmetic companies such as Coty have also been battling the closure of many sales channels, including duty-free shops at airports, leading to a hit in travel retail sales.
Coty has been laying off workers, freezing and reducing one-off expenses as part of its turnaround plan, which has involved reducing organisational layers and the addition of a new finance chief, helping it post profit above estimates.
Excluding items, the company earned 10 cents per share from continuing operations, beating analysts' average estimate of seven cents, according to IBES data from Refinitiv.
The Burberry fragrance maker, which in December sold a majority stake in its professional and retail hair division to US buyout firm KKR & Co, said its net revenue from continuing operations fell about 16% to $1.42 billion, missing estimates of $1.43 billion.