(Reuters) -Coty ( COTY ) on Wednesday forecast a drop in current-quarter sales despite edging past fourth-quarter revenue estimates, as weak spending in the U.S. cast a shadow on demand for its pricey beauty products, sending its shares down 12% in extended trading.

Retailers in the U.S. are increasingly cautious due to tariffs and destocking inventories as cost-conscious consumers tighten spending on some beauty and skincare products.

Coty ( COTY ) sees first-quarter like-for-like sales declining 6% to 8%, compared with 4.5% growth a year ago. The company expects product launches in both its prestige and consumer beauty categories to drive sales growth in the second half of the year.

At the same time, the company has focused on product launches for its prestige fragrances such as the Burberry Goddess as well as the upcoming line under the Hugo Boss brand to capitalize on demand for pricier fragrances from wealthy customers.

Coty's ( COTY ) fourth-quarter revenue fell 8% to $1.25 billion, but beat estimates of $1.20 billion, according to data compiled by LSEG.

Weak demand in the travel retail business at airports in regions such as mainland China and the hit from President Donald Trump's tariffs to costs have also been hurting sales at luxury beauty retailers like Estee Lauder, which gave a weak annual profit forecast on Wednesday.

Coty ( COTY ) reported an adjusted quarterly loss of 5 cents per share, compared with analysts' estimates of a profit of 2 cents per share. The loss included a negative impact from an equity swap mark-to-market of $0.07 due to the stock price decline in the quarter, the company said.

Its shares have fallen nearly 30% so far this year, following a 44% drop in 2024.

Coty ( COTY ) was also transferring production of mass fragrances and entry prestige fragrances sold in the U.S. to domestic manufacturing plant to mitigate some impact from President Donald Trump's tariffs on imports into the United States.

Operating results for fiscal 2025 included a $212.8 million non-cash asset impairment charge recorded in the third quarter related to its color cosmetics business due to weak demand in both the U.S. and Europe, the company said.