Coty Q3, 9-month 2024 Growth is Robust, Pointing to Strong Fiscal 2024

Coty witnessed growth in prestige and consumer beauty, as well as an uptick in China's prestige sector in its latest quarter.
Coty witnessed growth in prestige and consumer beauty, as well as an uptick in China's prestige sector in its latest quarter.
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Coty's Q3 fiscal 2024 net revenues totaled $1,385.6 million, an 8% gain year-over-year as reported (10% like-for-like [LFL]), while nine-month revenues totaled $4,754.6 million, a 13% gain year-over-year as reported (LFL also reflected a 13% gain).

Volume growth percentage was up in the low-to-single-digits, while pricing percentage was up in the high-dingle-digits. 

For the full fiscal year, Coty is now forecasting an upwardly revised 6-8% year-over-year gain in net revenues.

Prestige & Consumer Beauty Grow for Coty in Q3

Prestige net revenues in Q3 increased 8% on a reported basis and 13% on an LFL basis, per Coty, driven by fragrances, cosmetics and skin care, though slightly offset by the divestiture of the Lacoste license and foreign exchange impacts.

Prestige fragrance growth was driven by Burberry Goddess, Marc Jacobs Daisy Wild and Cosmic Kylie Jenner.

Prestige skin care business grew in part due to double-digit growth from Lancaster. 

Consumer beauty net revenues increased 6% on a reported and LFL basis, while 9-month revenues increased 8% on a reported basis and 7% on a LFL basis. Q3 results were driven by growth in color cosmetics, mass fragrances, and mass skin and body care in most countries.

That said, the U.S. mass cosmetics sector was weak.

According to Coty, CoverGirl in the U.S. market and Rimmel in the U.K. market ranked in the top four for earned media value in their respective core markets. 

Growth Drivers: Travel, E-commerce & China

Meanwhile, Coty notes that Q3 e-commerce grew 20%, on pace with the first half of the fiscal year.

Prestige e-commerce growth was driven by launches such as Cosmic Kylie Jenner and Marc Jacobs Daisy Wild.

Consumer e-commerce growth of about 30% was driven by virtually all geographic regions. 

"Travel retail trends were robust in all three regions," Coty noted in its quarterly report, "fueling reported net revenue growth of roughly 20% in Q3."

Meanwhile, China's prestige beauty net sales grew by the mid teens.

In China, Coty’s prestige business generated reported net revenue growth in the mid-teens percentage.

Meanwhile, key growth markets included Brazil and the rest of the LATAM region as well as Southeast Asia, India and Africa.

Sue Nabi, CEO, Comments on Q3 2024 Coty Results

Of the results, Sue Nabi, Coty's CEO, said:

Our Q3 results reinforce Coty's established track record of delivering results ahead of the beauty market and ahead of expectations, and once again illustrate that we are executing on our imperative to drive balanced portfolio growth. In both Q3 and fiscal year-to-date, we delivered strong growth in both the Prestige and Consumer Beauty businesses, in each of our three regions, and in our core categories of fragrances, color cosmetics, skin care and body care, all supported by a broad range of our leading brands.

Coty's global and multi-category presence is proving to be a key area of strength and differentiation, as subdued trends in a very few markets and subcategories, such as U.S. mass cosmetics, are more than offset by continued strong momentum in the majority of our core business areas, including global prestige and mass fragrances, where our business grew by a low-double-digit percentage, and prestige cosmetics, where our sales grew over 20%. In fact, in Prestige fragrances, we've seen category growth trends accelerate over the course of the quarter, speaking to the continued appeal of fragrances to a broad set of consumers. And in this favorable backdrop, Coty is gaining prestige fragrance market share across regions.

Our execution in our core businesses remains top notch. Building on our track record of leading fragrance launches in FY22 and FY23, we are elevating our leadership further with the blockbuster launch last fall of Burberry Goddess, which continues to grow and exceed all prior Coty benchmarks, and now in the spring the very successful launches of Marc Jacobs Daisy Wild and Cosmic Kylie Jenner, which are the #1 and #2 fragrance launches in the U.S. calendar year-to-date, respectively.

In our color cosmetics business, first-to-market innovations like CoverGirl's Simply Ageless Skin Perfector Essence and Rimmel's Wonder’Bond mascara are resonating with consumers, while both brands are making strong strides in accelerating their advocacy across social media platforms. Both CoverGirl and Rimmel now rank in the Top 4 in terms of earned media value in their core markets of U.S. and U.K., respectively, which is a significant improvement from last year.

We are also complementing our core business momentum by unlocking white space opportunities. This quarter marked a major milestone, as we launched our Coty-branded Infiniment Coty Paris fragrance collection, revolutionizing the fragrance category once again through market-leading advances in the formula, packaging, artcycling and merchandising. As we build both Infiniment Coty Paris and our leading ultra premium fragrance collections, we look to capture a bigger slice of the booming ultra premium fragrance market.

Similarly, our skincare momentum also continues to build with acceleration in Lancaster across both Europe and China, top industry awards and growing productivity for Orveda, and strong momentum in philosophy's social media resonance.

Our growth is further reinforced by our strong e-commerce momentum with our online sales expanding approximately 20% in both Q3 and fiscal year-to-date and now accounting for one fifth of our business. I am particularly proud of our market share expansion in this critical channel, with share gains in both Prestige and Consumer Beauty.

We are unlocking geographic white spaces as well, as our high-single-digit growth in developed markets was complemented by over 20% LFL expansion in growth engine markets, including Brazil, the rest of LATAM, Southeast Asia, including India, and Africa.

We are achieving these strong results and milestones all while delivering robust profit growth and margin expansion. This is enabling us to raise the midpoint of our FY24 guidance for the third time this year. Our focus is to continue to fuel this flywheel, delivering steady margin expansion, cash flow improvement and deleveraging progress.

In sum, we continue to see a strong and dynamic beauty market, with our diversified portfolio and strong execution enabling Coty to once again outperform the underlying market. As we continue to reinforce our position as a beauty powerhouse, in our 120th anniversary year, we remain excited by the many opportunities ahead.

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