Shares of Coty Inc. (NYSE:COTY), a global beauty company with strong positions in fragrances, salon hair, and color cosmetics, jumped over 22% early Wednesday, before giving back some gains, after the company announced better-than-expected fiscal second-quarter results.
Revenue checked in at $2.35 billion during the second quarter, a 6.6% decline from the prior year but still ahead of analysts' estimates of $2.34 billion. Like-for-like (LFL) revenue declined 1.4%, which was driven by a 6.7% LFL decline in Coty's consumer beauty segment and only partially offset by 2.2% and 1.3% LFL gains in its professional beauty and luxury divisions, respectively. Adjusted earnings per share checked in at $0.27, a 13% increase over the prior year, beating analysts' estimates of $0.24 per share.
"Our turnaround plan has now been under way for two quarters, and we are confident that the actions we are taking will build a much healthier business and growth," CEO Pierre Laubies said in a press release. "We saw momentum across many of our priority Luxury brands, including Burberry, Gucci, Tiffany and Hugo Boss, while continuing to grow our footprint in Luxury color cosmetics."
As the turnaround continues, management hopes to keep driving gross margin improvements by increasing prices of certain products and taking a more disciplined approach to discounts and promotions. Management anticipates hitting its full-year targets with stable to slightly lower LFL net revenue and mid-single digit growth in adjusted earnings per share. Coty still has challenges in a crowded industry, but the second quarter was a step in the right direction.