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Coty Raises Sales Forecast As Travel Retail Revives

Cosmetics maker Coty Inc has raised its forecast for annual organic sales, boosted by a revival in travel retail as shoppers in Asia and Europe bought more of its Gucci makeup and Burberry perfumes.

Shares in Coty jumped 9% premarket as quarterly net revenue in its prestige segment increased 35.1% to $870.7 million.


The Kylie Cosmetics seller said it is optimistic for the current holiday-quarter as demand for fragrances and foundations has picked up amid easing restrictions that have led to a phased return to offices, parties and social events.

Coty, whose sales had taken a hit from weak traffic at duty-free stores due to pandemic-induced restrictions for over a year, is now seeing a revival in its travel retail as shoppers start taking trips again.

"Travel retail is clearly back. It's not at the level of pre pandemic (but)...this is clearly helping the prestige performance," Coty chief executive Sue Nabi told Reuters.

Supply-Chain Bottlenecks

Coty, which is grappling with industry-wide supply-chain bottlenecks and impact from inflation, forecast fiscal 2022 adjusted per-share earnings between 19 cents and 23 cents, largely above estimates of 20 cents.

It said cost pressures were managed through high-end product launches, cost cuts, localised sourcing and freight under contract.

The Max Factor parent forecast its fiscal 2022 organic like-for-like sales of low to mid-teens percentage growth, above its previous forecast of low-teens growth.

The CoverGirl owner said its net revenue from continuing operations rose 22% on a reported basis to $1.37 billion in the first quarter ended 30 September. Adjusted earnings was 8 cents per share, 5 cents above estimates.

Separately, Coty said it would sell a 4.7% stake in professional beauty business Wella to KKR & Co Inc in a deal valued at about $215.7 million.

Following the sale, Coty will have a 25.9% stake in Wella.

In August, Coty said it expects to post full-year sales growth for the first time in at least three years, as people splurge on fragrances and cosmetics following the easing of coronavirus curbs.

News by Reuters, edited by ESM. For more A Brands news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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