02.12.24
Happi Top 50 Company Coty Inc. announced its results for the second quarter of fiscal year 2024, ended December 31, 2023.
The company's strong sales growth ahead of the beauty market, profit growth and operating and EBITDA margin expansion in Q2 marked the 14th consecutive quarter of results in-line to ahead of expectations, the company said.
Coty's strong Q2 sales growth of 13% as reported and 11% LFL, with first half reported sales growth of 16% and LFL growth of 14%, exceeded guidance of +11-13% LFL for the first half. These first half results once again reflected the company's focus on balanced growth, with strong LFL growth in both prestige and consumer beauty; robust LFL growth across Americas, EMEA and APAC; and LFL expansion in each of its core categories of fragrances, cosmetics and skincare.
At the same time, Coty delivered a healthy growth mix with low-single-digit percentage volume growth, estimated high-single-digit percentage pricing contribution, and estimated low-single-digit percentage benefit from mix and other.
Prestige Revenue Growth “Remained Robust”
Prestige revenue growth remained robust, expanding 17% as reported and 15% LFL in Q2, and 20% as reported and 18% LFL in the first half. The company said even when taking into account several points of benefit year-on-year from the fragrance service level recovery, Coty's low teens percentage sell-out growth in prestige exceeded the underlying market, which grew closer to 10%.
Burberry Goddess continued to set new records, becoming the “No. 1” fragrance launch in multiple markets, and together with Burberry's other top-sellers, Hero and Her, propelled strong market share gains and brand rank improvements globally for Burberry. The continued momentum in the prestige fragrance market and Coty's strong execution fueled double-digit percentage LFL revenue growth in the company's leading prestige fragrance brands, including Hugo Boss, Calvin Klein, Gucci, Chloé, Marc Jacobs and Davidoff in the first half of FY24.
As a result of strong consumer demand, retailers exited the holidays with “healthy inventory levels,” the company said. In Q2, Coty also saw double-digit percentage LFL revenue expansion in prestige cosmetics, with strong momentum in Kylie, Burberry and Gucci. And, in prestige skincare, focus brands Lancaster and philosophy continued their positive momentum since the spring CY23 relaunch.
Coty's consumer beauty Q2 revenues grew by 7% as reported and 5% LFL, growing in-line with the global mass beauty market. For the first half, consumer beauty revenues grew 8% as reported and 7% LFL. During the quarter, the company saw strength in its color cosmetics, mass fragrances and mass skin and bodycare sales. The company continued to lean into its social media strategy, leading to improvements in earned media value and propelling viral CY23 consumer beauty launches such as CoverGirl Yummy Gloss and Rimmel Thrill Seeker mascara.
E-Commerce a “Stand-Out” Growth Driver
E-commerce was a stand-out growth driver in first half FY24, with over 20% e-commerce revenue growth for both prestige and consumer beauty, resulting in e-commerce penetration in the low-20s percentage. This represents a strong penetration increase of approximately 180 basis points compared to last year. During the quarter, Coty gained e-commerce market share in both prestige and consumer beauty, fueled by strong improvements in e-commerce fundamentals and service levels, social media activations, and close collaboration with e-retail partners.
Geographically, all regions generated double-digit percentage LFL revenue growth in the quarter and year-to-date. EMEA sales expanded 16% as reported and 10% LFL in Q2, driven by double-digit percentage growth across most markets and Travel Retail. Americas sales rose 10% as reported and 11% LFL in Q2, driven by strong momentum across most markets and Travel Retail. Asia Pacific sales grew 15% as reported and 16% LFL in Q2, with strength in most Asian countries and travel retail.