Coty Raises Guidance Following Strong Q3 Sales Performance

Global beauty company Coty Inc. has shared its results for the third quarter of fiscal year 2023, ended March 31, 2023. The company continued to deliver strong financial results, while consistently executing across its strategic growth pillars.
 
Coty's strong Q3 sales performance came in well ahead of expectations and recently raised guidance, fueled by accelerating demand for prestige fragrances, retailer restocking and Coty initiatives.

Net Revenues

3Q23 reported net revenues were $1,288.9 million, an increase of 9% year-over-year, including a negative foreign exchange (FX) impact of 4% and a negative impact from the Russia exit of approximately 3%. LFL revenue increased 15%, driven by a 16% LFL increase in Prestige and a 12% LFL increase in Consumer Beauty.
 
Fiscal YTD sales increased 2% as reported, while core LFL sales grew 10%, tracking well ahead of the Company's initial FY23 guidance of +6-8% LFL growth, adjusting for the impact of the Russia exit.
 
"We are once again proud to report strong operational and financial performance, with today’s Q3 results marking the eleventh consecutive quarter of results in-line to ahead of expectations. We are delivering on our balanced growth agenda, with strong LFL growth across both divisions and all regions, with growth contribution from volume, price and mix, and from our key categories including fragrances, cosmetics, and bodycare,” commented Sue Y. Nabi, Coty’s CEO.

Business Segments

Coty's Q3 Prestige revenues grew at a strong 10% rate as reported and grew 16% LFL. During the quarter, consumer demand for prestige fragrances accelerated to mid-teens growth, from the already strong high-single-digit growth of the previous quarter, highlighting the structural changes in consumer behavior which are fueling growth in category penetration, increasing consumer usage, and overall premiumization.
 
Coty's Prestige growth also benefited from the significant improvement in its Prestige service levels, allowing retailers to restock following the trade inventory depletion during Q2. Coty also ignited its comprehensive skincare strategy, with activities across its leading brands including the launch of its breakthrough Lancaster Ligne Princière skincare line in China and Travel Retail, setting the stage for its targeted multi-year skincare revenue acceleration.
 
Coty's Consumer Beauty Q3 revenues grew solidly at 6% as reported and grew 12% LFL. During the quarter, the global mass beauty category grew at a high-single-digit pace year-on-year, while Coty continued to outperform the market with double-digit sales growth. Many of the Company's leading Consumer Beauty brands delivered double-digit sales growth, including CoverGirl, Max Factor, Rimmel and Monange.

Geographic Performance

“In a complex global environment, beauty remains an advantaged category with consumers, at the sweet spot of affordable luxury, self-care, and confidence boosting,” Nabi remarked. “This dynamic reinforces our confidence in global beauty consumption outperforming in a variety of macroeconomic scenarios, with Coty well placed to succeed, supported by our positions as a leader in fragrances and cosmetics, and significant untapped potential in skincare, China and Travel Retail.”
 
Geographically, revenues grew in all regions on a constant currency basis. EMEA sales expanded 7% as reported and grew significantly at 18% LFL in Q3, driven by double-digit growth across most markets. Americas sales rose 13% as reported and 15% LFL driven by strong momentum in North America, Brazil and Latin America. Asia Pacific sales were stable as reported but grew 4% LFL in Q3, with strength in broader Asia and Travel Retail, and gradual improvement in China trends.

Outlook

Coty continues to see strong demand growth across nearly all categories and markets, particularly in Prestige fragrances, with Coty maintaining strong launch activity in both Prestige and Consumer Beauty.
 
With FYTD core LFL revenue growth of +10%, and Q4 growth expected to be in a similar range, Coty now expects FY23 revenues for the core business, adjusting for the impact of the Russia exit, to grow 9-10% LFL which reflects a significant increase from the Company's original outlook for 6-8% core LFL growth.
 
Coty continues to estimate a low-single-digit negative FX impact on revenues in Q4.

More Coty News

Earlier this week, Coty Inc. received authorization from its board of directors to explore a potential listing on the Paris Stock Exchange (PAR), a move that would make the company dual listed on both the New York Stock Exchange (NYSE) and PAR.