Coty Inc. has announced its results for the second quarter of fiscal year 2022, ended December 31, 2021.
 
In Q2, Coty reported net revenues of $1,578.2 million, an increase of 12% year-over-year. LFL revenue increased 12%, driven by an 12% increase in both Prestige and Consumer Beauty, following the strong sales growth during Q1 as Coty shipped key launches including Gucci Flora Gorgeous Gardenia, Burberry Hero and the relaunch of the full Kylie Cosmetics range. With each of these launches strongly resonating in-market and the Consumer Beauty business gaining sales growth momentum and market share, the total Coty sell-out improved in Q2.
 
Year-to-date reported net revenues of $2,949.9 increased 16% year-over-year, including a positive FX impact of 1%. LFL revenue increased 16%, driven by LFL increases in Prestige of 21%, and Consumer Beauty of 8%.
 
“With our 1H22 now complete, I am very pleased to say that the year is shaping up as we had hoped, and in many respects even better,” commented Sue Y. Nabi, Coty’s CEO. “During the quarter, we continued to execute on our strategic growth pillars, allowing us to deliver sales, profit, and leverage results inline or ahead of guidance for the sixth consecutive quarter. The second quarter, and even more so the first half, further illustrates the virtuous cycle we have created. Strong topline growth combined with gross margin expansion and strong cost execution are generating both profit growth and re-investment in the business in the most promising opportunities. This combination has contributed to sequentially improving sell-out trends in Q2, which sets the stage for accelerating sales growth in the second half.”

Segments

Coty’s Prestige segment generated solid 12% reported and LFL growth in Q2, and 21% in 1H22. Prestige fragrance sales continued to grow at a double-digit pace in Q2, with nearly all brands contributing, particularly Gucci, Burberry, Chloe, and Hugo Boss. Encouragingly, Coty’s key launches saw strong in-market success, with Gucci Flora Gorgeous Gardenia and Burberry Hero among the top launches in the U.S. market and in China, including on Tmall.
 
Simultaneously, Prestige cosmetics sales nearly doubled in 1H22, led by global momentum in Gucci makeup and the continued expansion of Kylie Cosmetics following the relaunch over the summer. Regionally, the 1H22 performance was largely broad based as the U.S. and China delivered double digit growth, Travel Retail more than doubled, and many European markets continued to recover.
 
Consumer Beauty revenues increased 11% as reported and 12% LFL in Q2, and grew by 8% as reported and LFL in 1H22. The early success of Coty’s strategy to stabilize and grow its Consumer Beauty business is evident in the latest measured market share data, in which Coty grew its market share on a global basis for the first time in five years. This was underpinned by market share gains across all four key color cosmetics brands – CoverGirl, Rimmel, Sally Hansen and Max Factor – as the new brand equities, communications, and product launches resonated with consumers.

Outlook

According to Nabi, the company’s short-term and medium-term ambitions remain fully on track, as they continue to transform Coty into a true global beauty powerhouse.
 
The strong sales and sell-out momentum in 1H22, extending through January with LFL sales growth of +13%, reinforces Coty’s confidence that FY22 LFL sales will be at the upper end of its guidance range of low-to-mid teens percentage growth. Based on current FX rates, Coty expects a headwind of 3-4% to its reported sales in 2H22.