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Prestige Beauty Drives Rising Revenue at Coty

Prestige cosmetics more than doubled year-over-year, with Gucci Beauty and Kylie Cosmetics, which relaunched during the quarter, leading that growth.
Coty website.
Coty website. (Shutterstock)

The beauty giant, which owns labels including CoverGirl and Kylie Cosmetics, as well as the beauty licenses for luxury brands such as Gucci, saw its revenue increase 22 percent in the first quarter of its 2022 fiscal year, which ended Sept. 30. In e-commerce, revenue increased 23 percent.

A particular standout point was prestige, which grew by 34 percent overall. Prestige cosmetics more than doubled year-over-year, with Gucci Beauty and Kylie Cosmetics, which relaunched during the quarter, leading that growth. Prestige fragrance also saw growth across “nearly all brands,” the company said. As well, in consumer beauty — which accounts for the CoverGirl, MaxFactor and Rimmel brands, all of which underwent repositioning this year — a sector that previously struggled to grow, saw revenues increased by 4 percent.

“For me, [this quarter] is the perfect illustration of what is supposed to be the new Coty, with strong growth in prestige, but also back to growth in consumer beauty, which used to be more difficult,” said Coty chief executive Sue Y. Nabi. “All this is fuelling better profitability. We’re investing in more profitable innovations in more profitable categories in the most profitable regions.”

Along with its earnings, Coty also announced that it is selling part of its stake in hair care label Wella. The company will sell 4.7 percent of its stake in Wella to investment firm KKR for approximately 56% of KKR’s remaining convertible preferred shares in Coty, which equals about 25 million common stock Coty shares. The deal is valued at $215.7 million, according to the company. The move, according to a statement from the company, will result in an extra $14 million in annual dividend cash savings for Coty.

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The conglomerate had already been moving away from tis hair care businesses, selling a majority stake in its hair brands to KKR for $4.3 billion in May of last year. It’s also been divesting other parts of its business in an effort to save cash and ramp up profitability, including filing an IPO for its Brazilian business in April. Coty announced that it had continued to lower its cost base, with year-over-year savings of $60 million.

Still to come from Coty is the relaunch of KKW Beauty, Kim Kardashian West’s beauty brand, which shut down its website and ceased operations in August in order to prepare to revamp and return as “a completely new brand with new formulas.” Nabi confirmed to BoF that relaunch will be revealed near the end of the fiscal year 2022 — in the summer of next year.

Coty’s shares rose 11 percent on Monday.

Learn more:

What’s at Stake in the KKW Beauty Rebrand

While details of Kim Kardashian West’s cosmetics rebrand have yet to be unveiled, her coming entrance into skin care, and bringing each of her beauty categories under one umbrella, underscores prevailing trends in the industry.

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