While the Estée Lauder Cos. pointed to a slowing prestige market in North America and China earlier this week, Coty Inc. is bullish on the entire category and not just fragrance, which has been a top performer for the beauty company.
In an interview to discuss Coty’s latest set of earnings, chief executive officer Sue Nabi said while prestige fragrance is still the “queen” category with booming sales of Burberry Goddess, Marc Jacobs Daisy Wild and Cosmic Kylie, prestige color cosmetics and skin care are performing well, too.
“The famous fragrance index is continuing to be fully at play, not only in the U.S., but around the world. It’s the case in Europe. It’s the case in emerging markets. Everyone is falling in love with fragrances like never before,” she said.
“But we are also igniting growth engines for the future. I’m thinking about prestige color cosmetics. We had a fantastic year here thanks to Kylie Cosmetics, which is doing great,” she continued. “Last but not least is prestige skin care. I know that there are some markets that are struggling, like China, but we are starting from such a low base that we can only grow and prestige skin care equity is growing. It’s been growing double digits, and this has to do a lot with the renewal of Lancaster.”
Coty’s fiscal 2024 total net revenues grew 10 percent to $6.1 billion. Within that, prestige increased 13 percent, led by a 10 percent gain in fragrances, while consumer was up 6 percent.
The fourth quarter, however, came in a touch below Wall Street expectations. Net revenue for the three months ended June 30 was $1.36 billion, versus analysts’ estimates of $1.37 billion, per Factset. Prestige net revenue was flat in the fourth quarter.
Full-year adjusted net income was $323.1 million, down from $457.9 million in the prior year, driven by the negative impact from the mark-to-market on the equity swap due to the stock price decline in fiscal 2024 and the fourth quarter.
Adjusted diluted earnings were a loss of 3 cents, lower than estimates for growth of 5 cents, per Factset.
For fiscal 2025, Coty is expecting the core business to grow in-line with its medium-term target range of 6 to 8 percent like-for-like.
“Looking to FY25, we expect our financial results to be consistent with our medium-term algorithm, with our FY25 outlook further reinforced by our white space opportunities, our robust commercial plans, and the strength of our innovation pipeline, including Burberry Goddess Intense,” said Nabi.
