Coty Inc (NYSE:COTY) Shares Underperforming Due To Supply Chain Disruptions


The beauty products industry is very volatile, a fact which Coty Inc (NYSE:COTY) is grappling with. Customer sentiment, preference and perception can sway the market in any direction quite abruptly. Coty is in one of these doldrums. The company is experiencing supply chain disruptions that are hurting revenues.

Over the past four weeks, Coty shed 10.46% off its share value, Lakeland Observer reveals. However, the trend worsens with the change of metric. For instance, if one focused on a 6-month period, it is clear that there is a -34.71% change in share value. In the same breath, the shares changed -29.94% over the last full trading year.

Poor share value due to supply chain disruptions

Interestingly, Seeking Alpha agrees with the assessment. However, it further adds that Coty might just be victim of inadvertent supply chain disruptions. According to Seeking Alpha, decelerating demand for beauty products from China is a good place to start. China is one of the largest markets for Coty’s products. Therefore, when such disruptions as devaluation of the Yuan happen, it throws the market sideways.

However, amid all the gloom, Seeking Alpha offers a perspective of light at the end of the tunnel. In an August assessment, the publication noted that all was not lost for Coty. Also, it noted that the ongoing transformation of the company would disrupt operations and probably hit revenues. However, the luxury division of the company is sustaining revenues due to innovation, geographic expansion and new product offerings.

Relaunching brands

In addition, the company is relaunching CoverGirl and Clairol brands in an effort to drive up revenues. The brands come with improved innovations that seek to capture the taste of the market. Also, the company hopes to optimize the utility of the product offerings for the purpose of capturing and retaining customers.

However, investors are still in doubt regarding the company’s efforts towards returning Coty to productivity. Interestingly, Coty hopes to be able to determine and respond to such sentiments with the help of social media. According to Seeking Alpha, the coming months will determine whether this strategy is successful.

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