Coty (NYSE: COTY) reported Q4 EPS of ($0.46), $0.34 worse than the analyst estimate of ($0.12). Revenue for the quarter came in at $922.1 million versus the consensus estimate of $1.34 billion.

• Q4 and FY20 Severely Impacted by COVID-19 Pandemic
• Free Cash Flow Inline with Guidance and $1 Billion KKR Investment Bolsters Liquidity
• Significant Improvement Expected in Q1, with Positive Adjusted Operating Income
• Wella Divestiture On Track to Close by End of CY20
• Action Plans Support over $200M of Fixed Cost Savings in FY21
• Seasoned Beauty Executive Sue Y. Nabi to Start as Coty CEO on September 1st

Commenting on the operating results, Peter Harf, Coty's founder and Executive Chairman, said:

"Coty’s fourth quarter was marked by external shocks, as the COVID-19 pandemic triggered a crisis in the real economy and supply. 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. Having said that, we now close this chapter and turn to the next, because Coty is back. In the last two months, we have seen a significant improvement in the business and we expect the positive momentum to continue, with a return to profit in Q1.

In the last three months that I have been CEO, my focus has been to re-steer the company back on track to realize its potential. We have taken decisive action to tackle the issues in our capital structure, financial under-performance, product portfolio, and management.

In order to lower Coty’s leverage and strengthen our balance sheet, in the midst of the pandemic Coty secured a $1 billion direct investment from KKR and entered into an agreement to sell 60% of Wella for $2.5 billion net cash proceeds, equating to over 12x Wella\'s FY19 EBITDA.

To address our financial performance, the team has set rigorous objectives for FY21, targeting adjusted operating income profitability in Q1 and for the full year, and constant like-for-like net debt – excluding proceeds from the Wella divestiture - supported by aggressive cost reductions and a simplified infrastructure and organization. We remain on track to deliver over 1/3 of the savings from our $600M fixed cost reduction program by the end of this year.

On our portfolio, we have taken concrete steps to re-balance and strengthen the portfolio to be competitive in light of changing consumer demands. We have begun building platforms to address our under-exposure in skincare, Northern Asia, and e-commerce, while at the same time creating space for additional brand building investment.

Finally, in July, we recruited Sue Nabi, a proven-successful leader with over 20 years of beauty experience across the areas which are most relevant to Coty. We firmly believe she has the ideal prerequisites to become CEO of Coty.

As a result of these changes, I am even more convinced the new Coty today is set up for strategic optionality and has more potential than ever before to unlock and create value."

For earnings history and earnings-related data on Coty (COTY) click here.