The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
NEW YORK, United States — Coty Inc posted a surprise quarterly profit on Friday as demand for its beauty products and fragrances recovered from lockdown lows and the cosmetics maker kept a tight lid on costs, sending its shares 17 percent higher in premarket trading.
Cosmetics makers' sales have improved in the past few months as a surge in online orders and higher demand for skin-care products offset the blow from weak traffic at brick-and-mortar stores.
To grab a share of the e-commerce boom, Coty has been ramping up investments in its digital platform, helping the company double its online penetration as a percentage of overall sales in the first quarter.
The Gucci perfume maker also said it was gaining market share in luxury fragrances across the United States, the United Kingdom and Germany.
ADVERTISEMENT
"The thinking that fragrances would be a category that's going to suffer eternally because of the lockdown is wrong at least (based) on what we are seeing in the United States," Coty Chief Executive Officer Sue Nabi said in an interview with Reuters.
Nabi also pointed to a recovery in the company's struggling mass beauty business, which sells products at supermarkets and pharmacies, with key US retailers opting against cutting shelf space for its CoverGirl brand for the first time in five years.
Coty said it reduced fixed costs by about $80 million in the quarter as part of its efforts to save more than $200 million annually, partly by simplifying its organizational structure.
Net revenue fell about 13 percent to $1.69 billion but was higher than analysts' estimates of $1.08 billion, Refinitiv IBES data showed.
Excluding items, Coty earned a profit of 11 cents per share, compared with expectations of a loss of 6 cents.
By Praveen Paramasivam, Aditi Sebastian; Editor: Aditya Soni
By selling existing formulas under their own name, retailers can tap into the lucrative beauty market without investing in custom formulations. But that doesn’t mean the private label model is an easy win.
The San Francisco-based company is hoping to tap growing consumer demand for financing for cosmetic treatments among other services.
Once thought of as long-term disruptors who would change the way we shop forever, multi-brand online retailers that sell cosmetics, skincare, fragrance and more are facing multiple headwinds.
Prestige makeup is fashion’s category expansion du jour. But even the market’s most powerful players could learn a thing or two from its celebrity-backed competition.