Coty Inc. announced financial results for the first quarter of fiscal 2014, ended September 30, 2013.

The company’s net revenues of $1,178.2 million decreased 2.6% like-for-like and 2.9% as reported relative to the prior-year period.

Adjusted operating income of $186.1 million decreased from $203.0 million in the prior-year period. Adjusted net income of $108.3 million decreased from $117.8 million in the prior-year period. Adjusted earnings per diluted share decreased to $0.28 from $0.30 in the prior-year period. Net cash provided by operating activities, excluding cash used for private company stock option exercises, increased by $123.0 million to $101.2 million from a use of ($21.8) million in the prior-year period.

Michele Scannavini, CEO of Coty Inc., commented:
“In the first quarter we faced a significant market slowdown in the fragrance and nail categories, particularly in the U.S. This triggered heavy trade destocking and a slower order pace thatmeaningfully affected our U.S. mass market and overall business. On the other hand, we are very pleased with our growth in the prestige channel and in the emerging markets, areas we had targeted for accelerated development.

Scannavini continued, “While our business is facing challenges in the first half of the fiscal year, we are targeting the return to sustained top-line growth in the second half, fueled by strong initiative plans on our power brands, particularly in the Color Cosmetics segment, and further acceleration of our business in the emerging markets. During this time, we will continue with our successful efforts to further optimize our cost structure and increase the cash generation from our business.”

Adjusted operating income for Fragrances increased 14% to $152.8 million from $134.3 million in the prior-year period, resulting in 21.7% adjusted operating income margin, an improvement of 260 basis points versus the prior year. There was an increase in net revenues on a like-for-like basis reflected growth in our power brands Calvin Klein, Chloe, and Davidoff. Segment growth was also driven by the strengthening of the Roberto Cavalli brand through new launches Just Cavalli for him and Just Cavalli for her, and the new launch of Katy Perry’s Killer Queen.

In Color Cosmetics, adjusted operating income decreased to $36.8 million from $73.2 million in the prior-year period, resulting in 11.8% adjusted operating income margin, a decline of 930 basis points compared to the prior-year period.

Net revenues declined in part due to significant destocking across key mass retailers in the U.S. following a demand slowdown especially in the Nail category. This, together with increased competitiveness in the category, has particularly impacted Sally Hansen’s performance. Rimmel continued to grow during the quarter, supported by a strong innovation pipeline. Over the last 12 months, Rimmel has been the fastest growing color cosmetics brand within the top 10 in the U.S. mass market.

In Skin & Body Care, net revenues declined by $2.5 million, or 2% on a like-for-like basis, due to declines in the TJoy brand, mostly due to distribution network reorganization. Adjusted operating loss was $3.5 million compared to $4.5 million in the prior-year period, resulting in a 60 basis point improvement in the adjusted operating margin.

Philosophy recorded solid growth for the second quarter in a row. The brand experienced growth across key retailer customers and our direct-to-consumer business in the U.S., thanks to the impact of the new innovation plan.adidas was in line with the prior year period, as strong momentum in emerging markets was offset by softness in the European and U.S. markets.