Coty reports solid Q3 with $459.8M net revenue, fueled by Consumer Beauty segment
09 May 2022 --- Coty has unveiled its solid financial progress Q3 of the fiscal year 2022. Results were mainly fueled by the company’s Consumer Beauty and Prestige business segments. Consumer Beauty’s net revenues of US$459.8 million, or 39% of Coty sales, increased by 8% year over year in the third-quarter.
Coty’s overall sales climbed 15% as reported and 19% on a like-for-like (LFL) basis, above its prior expectation of mid-teens LFL growth.
The revenue increase was also driven by the sustained recovery in many EMEA areas, a significant return in Travel Retail and continued strength in US markets. E-commerce sales grew by double digits, supporting high teens e-commerce penetration even when stores reopened.
“Our Q3 earnings mark the seventh consecutive quarter of Coty reporting results in line to ahead of expectations,” says Sue Y. Nabi, CEO at Coty.
“Our Q3 LFL sales growth in both Prestige and Consumer Beauty confirms that our decision to step up media investment during Q2 has proven right. Importantly, our gross margins also showed solid expansion during the quarter, allowing us to maintain a strong level of media investment while also delivering significant profit performance.”
Impact on regions and looking ahead
Coty’s Consumer Beauty net revenues increased 10% on an LFL basis due to excellent success in color cosmetics, mass perfumes and body care. The company adds that all regions experienced LFL growth in the quarter, which is encouraging.
The repositioning of Rimmel, Max Factor and Bourjois continued to fuel Coty’s performance in Europe.
Rimmel has maintained its market share in numerous European areas, particularly in e-commerce, thanks to the positive response to its big launch, the Kind & Free clean and vegan makeup range.
Substantial success in Prestige and Consumer Beauty drove Coty’s sales, with overall revenue growth keeping pace with sell-out performance.Meanwhile, Max Factor continued to increase its market share across EMEA, especially in the UK, with the largest market share in the last two years.
While temporary supply constraints for CoverGirl’s highly successful Lash Blast Clean mascara are affecting trends in the US, the brand continues to drive momentum in its Magnificent 8 franchises while steadily building consumer awareness and visibility for the brand’s first-ever skincare range.
“Coty is benefiting from several categories and market tailwinds led by fragrances, though at the same time, we and industry face lockdowns in China, the war in Ukraine, inflationary headwinds and global supply pressures,” Nabi explains.
“What is clear is that Coty has navigated this complex backdrop very successfully thus far,” she adds. “We have continued the premiumization of our portfolios in both Prestige and Consumer Beauty to implement price increases to retain talent and protect margins while also maintaining the necessary flexibility in our supply chain.”
Prestige and Consumer Beauty drive sales
Coty’s Prestige segment reported a robust sales growth of 21% versus the prior year and 25% on an LFL basis.
In the third-quarter, sales of high-end fragrances increased by more than 20%, with Gucci Beauty, Chloe, Burberry, and Hugo Boss leading the way. Prestige cosmetics nearly doubled YoY in both Q3 and fiscal year-to-date, led by the continued momentum of Gucci Beauty and solid performances by both Burberry and Kylie Cosmetics.
“We maintained outstanding trends within our Prestige fragrance business, even as we further reduced low-quality sales. Consumers globally continue to gravitate toward the fragrance category and our recent innovations continued to resonate with consumers,” says Nabi.
“Meanwhile, we are as confident as ever regarding our expansion into prestige cosmetics, as Gucci Beauty, Burberry, and Kylie continue to deliver great results with plenty of room ahead further to build out both distribution and the product portfolios.”
Within Consumer Beauty, Rimmel increased its market share in significant geographies because of the success of its Kind & Free cosmetics line. Although temporary supply difficulties on CoverGirl’s Clean mascara have dragged on the brand’s recent market performance, Max Factor, Sally Hansen and CoverGirl all saw share advances.
“Coty’s Consumer Beauty business continued to gain market share globally for the fifth consecutive month, a milestone that this business had not achieved in the previous five years,” Nabi explains.
“Underpinning this market share momentum is our phased approach to brand repositioning, which began with CoverGirl last spring, followed by Rimmel and Max Factor last fall and most recently Bourjois that has delivered solid initial results in France.”
Coty’s previous climate and partnership moves
Tracking Coty’s previous developments, in the CDP 2021 climate change disclosure, the company scored a B for its efforts to reduce climate impact. Additionally, Coty signed a multi-channel deal with Perfect Corp. to use the latter’s augmented reality and artificial intelligence technology to increase personalization and customers’ digital experience.
In a separate partnership, Coty collaborated with LanzaTech to create environmentally sustainable fragrances using carbon-captured ethanol.
Edited by Nicole Kerr
