Beauty Sales:

$5.3 billion

Key Personnel:

• Sue Y. Nabi, chief executive officer
• Laurent Mercier, chief financial officer
• Stéphane Delbos, chief procurement officer
• Jean-Denis Mariani, chief digital officer
• Isabelle Bonfanti, chief commercial officer, Luxury
• Stefano Curti, chief brands officer, Consumer Beauty
• Alexis Vaganay, chief commercial officer, Consumer Beauty
• Constantin Sklavenitis, chief prestige brands officer
• Graeme Carter, global supply chain officer
• Peter Harf, executive chairman

Major Products:

Fragrance, color cosmetics, hair care, skincare and body care products for Luxury and Consumer (Mass). Luxury includes Alexander McQueen, Chloé, Kylie Jenner, Marc Jacobs, Bottega Veneta, Burberry, Calvin Klein, Davidoff, Gucci, Hugo Boss, Escada, Philosophy. Coty Consumer includes CoverGirl, Rimmel, Max Factor, Sally Hansen, Adidas, Nautica.

New Products:

Clean Fresh Skincare, Kylie Baby, SKKN by Kim skin care, Sally Hansen Limited Edition Miracle Gel X Friends collection, Marc Jacobs Perfect, Gucci Guilty and Gucci Bloom.

Comments:

In a year in which the external environment became increasingly complex and macro concerns dominated headlines, Coty continued to make progress strategically, operationally and financially.

Coty’s sales increased 15% year-over-year to $5.3 billion in the year ended June 30, 2022, driven by strong and consistent momentum in both divisions, with Prestige growing 20% as reported and 22% like-for-like in FY22, and Consumer Beauty growing 7% as reported and 8% like-for-like in FY22. Geographically, revenue improvement was fueled by double-digit growth across nearly all EMEA markets, the doubling of sales in Travel Retail enabled by Coty’s category expansion and premiumization strategy, double digit growth in Brazil, which continues to successfully manage the highly inflationary environment, and continued momentum in the U.S.

E-commerce continued its strong performance, with double-digit sales growth in Q4 and FY22, supporting high teens e-commerce penetration for the year.

2021/2022 Highlights:

After much speculation and anticipation—in July 2021, Coty Inc. announced it was relaunching Kylie Cosmetics with new and improved formulas that are clean and vegan, along with refreshed packaging. The updated formulas don’t contain animal oils, parabens, or gluten—along with a long list of over 1,600 other potentially harmful and irritating ingredients.

Also in July, Coty appointed Constantin Sklavenitis to the role of chief prestige brands officer. Sklavenitis joins Coty from M·A·C Cosmetics where he was senior vice president/general manager of North America. Prior to that, he spent more than two decades at L’Oréal, creating and executing the global business models of new brands, leading business development and growing sales for multiple brands including Urban Decay, IT Cosmetics and Kiehl’s.

In September 2021, Coty announced a multi-channel agreement with beauty tech solutions provider Perfect Corp. that will embed a suite of augmented reality and artificial intelligence experiences into the digital marketing toolkits of its beauty brands. The technology solutions will provide virtual try-ons, online skin diagnostics, and data-driven personalization for brands including CoverGirl, Sally Hansen and philosophy, among others, as well as for Coty’s broad fragrance portfolio.

In October 2021, Coty announced a definitive agreement to sell an approximate 9% stake in Wella to KKR in exchange for the redemption of approximately half of KKR’s remaining convertible preferred shares in Coty, reducing its total shareholding in the professional beauty company to approximately 30.6%. The transaction reflects a 50% appreciation in Wella’s value since the closing of Coty’s 60% sale of Wella to KKR in December 2020, coinciding with the re-opening of global hair salons and the positive momentum in the Wella business.

In November 2021, CoverGirl launched its first-ever skincare collection with Clean Fresh Skincare, a 100% vegan and clean lineup of products shown to visibly improve the look of skin – instantly and overtime. Formulated with 90% naturally derived ingredients, the Clean Fresh Skincare range includes, depending on the product, TruClean Cactus Water, Meadowfoam Seed Oil, Rosewater and Vitamin C, to hydrate, improve texture and enhance skin tone.

Also, Coty entered into a licensing agreement with Orveda, an ultra-premium skincare brand made in France. Coty plans to immediately begin to integrate Orveda and its know-how in microbiome science into the company’s Prestige portfolio, with Coty developing, manufacturing and distributing the full range of Orveda products globally.

In February 2022, Coty started production of the world’s first globally distributed fragrances made using carbon-captured ethanol. Coty is making these fragrances using CarbonSmart ethanol produced by partner LanzaTech, a supplier of sustainable ingredients that manufactures ethanol by capturing and fermenting carbon emitted by industrial activity before it is released to the atmosphere. Coty is ahead of schedule on its goal to integrate sustainable ethanol into a majority of its fragrance portfolio by 2023.

In April 2022, Coty pulled out of Russia following the country’s invasion of Ukraine. Russia accounted for about 3% of Coty’s sales.

In May, Kim Kardashian shut down her fragrance brand KKW Fragrance, so that she can relaunch the brand in the future under a new brand name—and under a new web store. (Kim’s initials have changed since her divorce.) Coty owns a 20% stake in KKW Beauty and KKW Fragrance.

In June 2022, Kim Kardashian, in partnership with Coty, introduced SKKN BY KIM, an efficacious nine-product skincare collection “sitting at the intersection of elevated simplicity and innovative science.” Each product was formulated to care for all skin types, tones, and textures at every stage of maturity. Also, each product is bottled inside sleek, minimalistic and refillable packaging.

Looking Ahead:

In late 2021, Coty Inc. unveiled its comprehensive transformation “All-In To Win” program, and announced its financial goals through FY25 and beyond. The All-in to Win program encompasses cost saving and capital deployment initiatives intended to ignite the full potential of Coty, with an additional $75 million of savings identified for FY24.

Over the coming years, Coty expects to benefit from an improving beauty market, including a stronger U.S. and Chinese market, a robust rebound in Travel Retail, and steady improvement across Europe. Based on this favorable market backdrop, the strong performance of recent brand repositioning and product launches, and Coty’s robust category and market expansion plans, the company forecasts net revenues to grow 6% to 8% annually LFL through FY25 and beyond, ahead of expected beauty market growth of 3% to 5%.

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