Shares of Coty (COTY -0.27%) had an ugly day, down by 8% at the close, after the company reported fiscal fourth-quarter earnings. The results missed expectations, as the COVID-19 pandemic impacted retail foot traffic.
Revenue in the second quarter plunged 53% to $922.1 million, shy of the $1.34 billion in sales that analysts were modeling for. That all resulted in an adjusted net loss of $386.7 million, or $0.51 per share. The consensus estimate had called for the beauty products company to post an adjusted net loss of just $0.11 per share.
"Coty's fourth quarter was marked by external shocks, as the COVID-19 pandemic triggered a crisis in the real economy and supply," CEO Peter Harf said in a statement. "The severe sales contraction for total Coty, with revenues down $1.2 billion year-over-year, led to significant operating deleverage in the quarter, even as the company focused all its efforts on protecting free cash flow which came in inline with our expectations."
Harf noted that business conditions have improved in the two months since the quarter closed, with the chief executive expressing optimism that the positive momentum will continue and allow the consumer discretionary company to return to profitability in fiscal Q1.
Coty entered into a strategic partnership with KKR during the quarter, which will include divesting 60% of the Wella business to KKR and a $1 billion direct investment via convertible preferred shares. That relationship bolstered liquidity, with Coty finishing the quarter with $1.6 billion in cash (including $750 million from KKR) and subsequently receiving another $250 million at the end of July.
The company last month announced Sue Nabi would become CEO, effective Sept. 1, while Harf will become executive chairman.