Thanks to consistent demand for both its mass-market and premium products worldwide, the beauty business Coty exceeded Wall Street projections for third-quarter revenue on Monday and stated it expects to reach the upper half of its yearly targets.
The company’s shares increased by almost 3% in aftermarket trading.
To stimulate demand at a time when rising costs for basics are making consumers reconsider luxury purchases, the parent company of CoverGirl has been heavily investing in the launch of new products as well as partnerships with influencers and online retailers.
Coty’s e-commerce revenue increased by over 20% in the third quarter thanks to the release of new products like Marc Jacobs Daisy and Cosmic Kylie Jenner.
Like-for-like sales increased by 13% in Coty’s prestige area, which is home to Gucci and Burberry, and by 6% in the consumer beauty segment, which is home to CoverGirl and Rimmel.
Rival in Europe L’Oréal had noted a decline in the luxury sector despite reporting a gain in like-for-like sales in the first quarter due to high demand for dermatological and mass-market products.
Coty CFO Laurent Mercier told Reuters, “The (Prestige) category remains very, very dynamic… we are overperforming the category dynamic and we are gaining market share across all continents.”
Coty’s total net revenue for the third quarter increased 7.5% to $1.39 billion, exceeding LSEG projections of $1.37 billion.
Adjusted net income decreased to $43.8 million, or 5 cents per share, from $168.1 million, or 19 cents per share, the previous year. This was due to a reversal of $133 million in the benefit from the mark-to-market stock swap, which more than offset profit expansion.
Due to increased pricing and lower manufacturing costs, the company’s adjusted gross margin increased by 190 basis points to 64.8% for the quarter.
Coty’s fiscal 2024 core sales growth estimate is expected to be at the upper end of the previously projected range of 9% to 11%. Additionally, it expects annual adjusted profit per share to be between 44 and 47 cents, which is the upper end of its previous estimate.
