A CoverGirl Comeback for Coty?

Third quarter sales fell 3.3% to $1.02 billion, but Coty Inc. executives said there is early evidence of recovery across its operations. The company noted that like-for-like sales in Asia rose 20%, along with 30% growth in e-commerce, and a relatively stable performance in the Americas, including strong growth in US prestige sales. Brands like Gucci, Burberry and Marc Jacobs were standouts, with double digit growth in the quarter, and Coty continued to build upon its newer prestige engines of growth in cosmetics and skincare. Overall prestige net revenues increased 6.5% to $600.6 million, while mass net revenues decreased 14.3% to $427.4 million.
 
“Our Q3 marked another strong milestone in our journey to rejuvenate Coty's position as a global beauty powerhouse. In less than a year, the leadership team and the broader organization have successfully mapped out our strategy, activated our brand and category plans, while generating operational improvements, and strengthening our financial position,” commented CEO Sue Y. Nabi.

Nabi noted that, in the past five weeks, CoverGirl has gained market share, according to scanner data. To get mass growing again in Europe, Coty is repositioning Rimmel and Max Factor. The company named Adwoa Aboah to the newly-created role as global activitist and appointed Prinyanka Chopra Jonas as global ambassador and creative collaborator.
 
“From a results standpoint, in Q3 we saw a significant improvement in our sales trends even as we continued our efforts to strengthen the health of our business and brands by cutting sales in low quality channels,” Nabi continued. “Importantly, the prestige sales returned to growth as the impact of the pandemic abated in many markets. We have seen strong momentum in several of our key markets, with China sales growing double-to-triple digits versus FY20 and FY19, and U.S. prestige sales up high single digits in the quarter and nearly flat in the fiscal year-to-date. While Europe sales remain under pressure, we are confident that the imminent lifting of COVID restrictions will drive improvement in this key region.”
 
As announced during the Strategic Update on April 23, 2021, Coty expects to end the year with net revenues of $4.5 billion to $4.6 billion. With strengthened profitability, the company expects to increase commercial investments in Q4 to support its strategic priorities and the improvement of sell-out trends, as the broader beauty market begins to recover.