Nov 8 (Reuters) – Coty Inc’s (COTY.N) fragrances and cosmetics enjoyed strong demand in the first quarter, helping it surpass Wall Street targets despite pressure from a strong U.S. dollar and the company’s exit from Russia.<\/p>\n
Consumers heading out more after lockdowns are indulging in smaller luxuries such as makeup and perfumes even as they put off bigger purchases because of rising inflation and risks of a recession.<\/p>\n
The Hugo Boss perfume maker will also increase prices further, by mid-single digits around winter, as it combats higher freight and labor costs.<\/p>\n
Coty’s prestige division, home to cosmetics and fragrances from the Calvin Klein and Gucci brands, saw revenue fall 1% due to macroeconomic headwinds. But Chief Executive Officer Sue Nabi told Reuters that the company does not “see any slowdown or trading down in the prestige division.”<\/p>\n
In fact, consumers are trading up from lower-priced consumer beauty labels to prestige, she said.<\/p>\n
“Coty is seeing strong consumer demand and may remain strong in the coming months … as beauty products tend to be a more pocket-friendly way to boost confidence,” said Kunal Sawhney, CEO of equity research firm Kalkine Group.<\/p>\n
European peer L’Oreal (OREP.PA) had also reported strong third-quarter sales growth. China’s zero-COVID policy impacted Estee Lauder (EL.N), prompting it to slash annual forecasts, but Coty’s smaller exposure to that market has helped it shield itself.<\/p>\n
The beauty category is “more resilient than ever”, Nabi said, as Coty also reiterated its annual profit forecast.<\/p>\n
Supply constraints are keeping it from meeting strong demand though, especially in the fragrance segment, the company said. Shares remained flat at $6.98.<\/p>\n
Excluding items, Coty earned 15 cents per share in the quarter ended Sept. 30, surpassing estimates of 11 cents, according to IBES data from Refinitiv.<\/p>\n
Net revenue rose 1% to $1.39 billion, slightly above estimates.<\/p>\n
Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Devika Syamnath<\/p>\n
Our Standards: The Thomson Reuters Trust Principles.<\/p>\n","protected":false},"excerpt":{"rendered":"
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