American-French beauty house Coty has posted a +13% reported (+11% like-for-like) year-on-year rise in net revenues to US$1,727.6 million for its second-quarter of FY24.
Profit growth, operating and EBITDA margin expansion results are in-line or ahead of expectations, Coty said.
This was propelled by +15% like-for-like growth in prestige and +5% in consumer beauty. Year-to-date, Coty reported net revenues of US$3,369 million, an increase of +16% year-on-year.
This performance was boosted by a robust travel retail business with revenues growing +20% year-on-year in the first half of FY24. This momentum was evenly spread across categories and geographies with double-digit sales growth in Europe, Americas and Asia Pacific travel retail, where Coty said it is gaining significant market share.
Coty CEO Sue Y. Nabi commented: “The strength of our Q2 and first half results reinforce several of our convictions, including the attractiveness of the beauty market, the continuing momentum of the fragrance index, the power of our brands, Coty’s transformed and industry-leading capabilities, our new ability to create blockbuster fragrance launches, and our disciplined financial execution.
“First, the momentum of the global beauty market in the midst of geopolitical and macroeconomic disruptions confirms that consumers continue to gravitate to and prioritise beauty as a fundamental pillar of their wellbeing. Worldwide, consumers continue to purchase fragrances, cosmetics, skin and bodycare both as affordable luxuries and forms of self-expression.
“This is particularly true for mid to higher-income consumers, resulting in the continued outperformance of luxury beauty. And they continue to engage with beauty both in-store and online, emphasising the key role both channels play in the consumer journey.”
Continued momentum in prestige beauty
The prestige category recorded net revenues of US$1,122 million or 65% of Coty sales, growing by +17% reported (+15% like-for-like) in Q2 and +20% reported (+18% like-for-like) in the first half. Burberry Goddess, one of Coty’s biggest success stories last year, was a key contributor to this performance.
Coty highlighted strong continued momentum of prestige beauty in the travel retail channel, which led to a solid increase in net revenues across all regions, particularly in the Americas and Asia Pacific.
In Q2, prestige fragrances continued to grow led by the US, Germany, Canada, Italy and Spain, recording +15% growth. Coty’s ongoing premiumisation, existing pillar and new launches were highlighted as key drivers.
The company highlighted Chloé Atelier des Fleurs as one of the best performers for fragrance, with Burberry, Kylie Cosmetics and Gucci performing well for makeup and Lancaster and Philosophy for skincare.
Coty’s Consumer Beauty division revenues grew +7% reported (+5% like-for-like), recording US$605.5 million in net revenues or 35% of group sales. This was led by colour cosmetics, mass fragrance, skincare and bodycare. The performance was supported by Coty’s ongoing investments in social media and on improving its earned media value, resulting in an over +20% increase in ecommerce sales.
Nabi added: “Our amazing brands and industry-leading capabilities are enabling Coty to bring exceptional innovations to the market, further strengthening consumers’ desire for beauty. While we had expected Burberry Goddess to be a major blockbuster, the launch results are exceeding all our expectations and setting new records, fuelled by a winning juice and disruptive market activations across all touchpoints.
“Burberry Goddess is the biggest launch in Coty’s history, becoming the number one fragrance launch in many markets and resonating with consumers across all regions.”
“Importantly, strong momentum across our other key fragrance launches, including Boss Bottled Elixir, Gucci Flora Gorgeous Magnolia and additions to the Chloé Atelier des Fleurs collection, drove each of our top seven fragrance brands to grow at a double-digit percentage in the first half FY24.
“We are seeing outstanding results in our cosmetics innovations as well, including CoverGirl Yummy Gloss and Rimmel Thrill Seeker mascara, which supported solid revenue growth in our consumer beauty business, in line with the underlying mass beauty market.
“And we are starting Q3 on strong footing, as our disruptive innovation, CoverGirl Simply Ageless Essence foundation, activated by a large and multi-tier influencer campaign, is already seeing great momentum in the first month of the launch including being named the number one makeup release on Amazon.”
Growth by Region
In terms of geography, EMEA stood out, recording net revenues of US$825.7 million or 48% of Coty sales. This represents an increase of +16% as reported (+10% like-for-like).
Net revenues in the Americas reached US$687.9 million or 40% of Coty sales, an increase of +10% (+11% like for like). The regional performance was supported by strong growth in nearly all markets with particularly robust double-digit percentage growth in Latin America, prestige fragrances in the US and regional travel retail.
This was followed by Asia Pacific where net revenues reached US$214 million or 12% of Coty sales, an increase of +15% reported (+16% like-for-like). Prestige’s growth in the region was driven by double-digit percentage growth in several markets including South Korea, Hong Kong and Taiwan, Australia and New Zealand, and regional travel retail.
In China, Coty’s prestige revenues grew by double-digit percentage in Mainland China and more than three times in the travel retail hotspot of Hainan, while Consumer Beauty revenues were lower.
Nabi added: “All together, we are continuing to deliver on our balanced growth agenda, with like-for-like growth in both prestige and consumer beauty, in each of our regions, in each of our categories of fragrances, cosmetics, skincare and bodycare, and across volumes, price and mix. As a result, we are once again outperforming the beauty market.
“Importantly, this growth is accompanied by strong and disciplined financial delivery, as we generate robust profit growth, operating and EBITDA margin expansion, and deleveraging progress. Our All In To Win Savings programme has been a key driver of our financial and operational improvement in the last few years, having delivered over US$660 million of savings life-to-date, which have gone to fuel both the reinvestment in our growth engines and our profit delivery.
“With the transformation now largely complete and as we enter the next phase of our sustainable growth agenda, our Chief Transformation Officer Gordon Von Bretten will be joining Coty’s controlling shareholder JAB as partner and will also be joining Coty’s Board of Directors. We are extremely grateful to Gordon for his leadership in driving this extremely successful transformation over the last four years.”
Coty’s leadership team has been strengthened by this week’s announcement that Jean Holtzmann has been promoted to Chief Brands Officer Prestige. Holtzmann has been with Coty for seven years and has been instrumental in driving the momentum of Hugo Boss as well other ultra-premium fragrance collections.
Coty’s second half outlook remains strong as its double-digit percentage growth from the past two years normalises in the medium term. It expects +6-8% like-for-like revenue growth in the second half of FY24 despite headwinds caused by retailer inventory issues [in North Asia travel retail -Ed].
Nabi continued: “As we continue to advance our six pillar strategy, we are further strengthening our portfolio. We are excited to further enhance our prestige fragrance portfolio through our new license agreement with Marni, an Italian brand renowned for its artistic collections and strong brand appeal with young consumers across Asia and Europe. And in the past week, we’ve announced long-term extensions of two of our key Consumer Beauty licenses, bruno banani and Mexx, as we continue to expand these leading European lifestyle fragrance brands.
“In sum, as we celebrate the 120th anniversary of Coty as a beauty pioneer, we are proud of the progress we have made and are energised by the many opportunities in front of us.” ✈
