Coty Inc.,
COTY 0.72%
one of the world’s biggest beauty companies, on Tuesday said organic sales grew 9% in the quarter ended Sept. 30, the company’s sixth-straight substantial quarterly sales gain after years of declines that predate the Covid pandemic.
The maker of products from CoverGirl makeup to Hugo Boss cologne said demand for makeup, fragrances and hair-care products continues to rise across regions and product categories. Organic sales strips out currency moves and deals.
“This is the first time we are in a recessionist backdrop that comes after two years of restrictions,” Coty Chief Executive
Sue Nabi
said. “Usually recessions happen after overconsumption.”
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Have your spending habits changed with regard to beauty products? Why or why not? Join the conversation below.
Other big beauty companies are reporting strong demand. E.l.f. Beauty Inc., known for selling low-cost-but-trendy makeup in drugstores, reported a 33% sales gain last quarter, while sales at L’Oréal SA rose 9% despite slower-than-expected sales in China due to Covid-related lockdowns there.
Consumer spending has remained strong in the face of persistent inflation that has stayed near a four-decade high, though there are signs that rising prices for rent, food and fuel are cutting into demand for goods.
Amazon.com Inc.
AMZN -0.49%
last month projected sales in the current quarter would be far below expectations.
Coty’s Ms. Nabi said demand is up across regions and income levels, both for Coty and the overall industry.
Affluent customers are continuing to splurge, Coty said, driving demand for luxury fragrances and cosmetics. The company’s prestige unit, which includes fragrances, saw 7% organic sales growth in the quarter, bolstered by offerings such as a new Gucci eau de parfum that costs $118 for a 1.6-ounce bottle. It is a trend reflected in other luxury-goods brands, as companies including
Hermès International
RMS 0.48%
SCA, the French maker of $10,000 handbags, and Gucci owner
Kering SA
posted higher-than-expected sales gains for the quarter.
Younger consumers and men also are increasingly buying perfumes and colognes, and are shifting toward pricier, more potent fragrances as well, Ms. Nabi said. “You have a new generation of consumers entering the fragrance market since the end of lockdowns,” she said.
On the other end of the economic spectrum, cash-strapped shoppers are continuing to buy lower-priced makeup and skin creams, something executives and analysts say is happening because beauty products are a luxury most people can afford even on a tight budget. Coty’s raft of mass-market brands, sold largely at drugstores and big-box retailers, saw a 12% increase in organic sales.
Industrywide, sales of mass-market cosmetics grew more than 5% in the quarter ended June 30, with about two-thirds of the growth coming from higher volumes and the other third from pricing, according to Bank of America research. In many consumer-products categories, from groceries to household staples, higher prices are driving most or all of companies’ revenue growth.
Hermès International is among the luxury-goods companies that have posted strong sales gains.
Photo:
Noriko Hayashi/Bloomberg News
Estée Lauder
EL -2.15%
Cos., with brands including Clinique, M.A.C. and Bobbi Brown, has been an exception in the beauty sector. The company, for years one of the industry’s strongest performers, saw organic sales fall 5% last quarter. The company is especially dependent on China, where parts of the country are still in Covid lockdowns, as well as on department stores and travel retail, which are still recovering from the pandemic. L’Oréal also said China shutdowns hurt sales in its luxury division.
Coty is still recovering from steep sales declines amid the pandemic. The company is working to shrink its heavy debt load and grow in China, where it still has a relatively small presence. The company has struggled since it acquired Procter & Gamble Co. beauty brands in 2016, several of which have experienced sales declines.
Coty’s share price is down nearly 25% from a year ago, though it has recovered from a pandemic low of $2.70 in the fall of 2020.
Write to Sharon Terlep at sharon.terlep@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Coty Inc.,
COTY 0.72%
one of the world’s biggest beauty companies, on Tuesday said organic sales grew 9% in the quarter ended Sept. 30, the company’s sixth-straight substantial quarterly sales gain after years of declines that predate the Covid pandemic.
The maker of products from CoverGirl makeup to Hugo Boss cologne said demand for makeup, fragrances and hair-care products continues to rise across regions and product categories. Organic sales strips out currency moves and deals.
“This is the first time we are in a recessionist backdrop that comes after two years of restrictions,” Coty Chief Executive
Sue Nabi
said. “Usually recessions happen after overconsumption.”
SHARE YOUR THOUGHTS
Have your spending habits changed with regard to beauty products? Why or why not? Join the conversation below.
Other big beauty companies are reporting strong demand. E.l.f. Beauty Inc., known for selling low-cost-but-trendy makeup in drugstores, reported a 33% sales gain last quarter, while sales at L’Oréal SA rose 9% despite slower-than-expected sales in China due to Covid-related lockdowns there.
Consumer spending has remained strong in the face of persistent inflation that has stayed near a four-decade high, though there are signs that rising prices for rent, food and fuel are cutting into demand for goods.
Amazon.com Inc.
AMZN -0.49%
last month projected sales in the current quarter would be far below expectations.
Coty’s Ms. Nabi said demand is up across regions and income levels, both for Coty and the overall industry.
Affluent customers are continuing to splurge, Coty said, driving demand for luxury fragrances and cosmetics. The company’s prestige unit, which includes fragrances, saw 7% organic sales growth in the quarter, bolstered by offerings such as a new Gucci eau de parfum that costs $118 for a 1.6-ounce bottle. It is a trend reflected in other luxury-goods brands, as companies including
Hermès International
RMS 0.48%
SCA, the French maker of $10,000 handbags, and Gucci owner
Kering SA
posted higher-than-expected sales gains for the quarter.
Younger consumers and men also are increasingly buying perfumes and colognes, and are shifting toward pricier, more potent fragrances as well, Ms. Nabi said. “You have a new generation of consumers entering the fragrance market since the end of lockdowns,” she said.
On the other end of the economic spectrum, cash-strapped shoppers are continuing to buy lower-priced makeup and skin creams, something executives and analysts say is happening because beauty products are a luxury most people can afford even on a tight budget. Coty’s raft of mass-market brands, sold largely at drugstores and big-box retailers, saw a 12% increase in organic sales.
Industrywide, sales of mass-market cosmetics grew more than 5% in the quarter ended June 30, with about two-thirds of the growth coming from higher volumes and the other third from pricing, according to Bank of America research. In many consumer-products categories, from groceries to household staples, higher prices are driving most or all of companies’ revenue growth.
Hermès International is among the luxury-goods companies that have posted strong sales gains.
Photo:
Noriko Hayashi/Bloomberg News
Estée Lauder
EL -2.15%
Cos., with brands including Clinique, M.A.C. and Bobbi Brown, has been an exception in the beauty sector. The company, for years one of the industry’s strongest performers, saw organic sales fall 5% last quarter. The company is especially dependent on China, where parts of the country are still in Covid lockdowns, as well as on department stores and travel retail, which are still recovering from the pandemic. L’Oréal also said China shutdowns hurt sales in its luxury division.
Coty is still recovering from steep sales declines amid the pandemic. The company is working to shrink its heavy debt load and grow in China, where it still has a relatively small presence. The company has struggled since it acquired Procter & Gamble Co. beauty brands in 2016, several of which have experienced sales declines.
Coty’s share price is down nearly 25% from a year ago, though it has recovered from a pandemic low of $2.70 in the fall of 2020.
Write to Sharon Terlep at sharon.terlep@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8