Coty bets on fragrance rebound for return to sales growth, shares soar

By Praveen Paramasivam

(Reuters) -Coty Inc said on Thursday it expects to post full-year sales growth for the first time in at least three years, as people splurge on fragrances and cosmetics following the easing of coronavirus curbs, sending its shares surging 20%.

As schools, colleges and offices reopen, people are dressing up and wearing makeup as well as fragrances after snubbing them for skincare products in 2020. That is benefiting cosmetic makers like Coty, which makes Hugo Boss and Burberry perfumes.

Coty has cashed in on the change in customer behavior by rolling out new fragrances, including Burberry Hero and Calvin Klein Defy, marketed by actors Adam Driver and Richard Madden, respectively.

The company said it has a "robust launch" scheduled for the first half of the current financial year, adding it would also roll out touchless fragrance testers across the globe.

"Coty is clearly strongly benefiting from a surge in fragrance consumption in two key markets (China and the United States)," Chief Executive Sue Nabi told Reuters.

Nabi said its cosmetics brand CoverGirl had gained market share for three consecutive months — between April and June — for the first time in five years, as its efforts to target Gen Z and Hispanic consumers pay off.

Coty estimated its fiscal 2022 sales will increase in the low teens percentage range.

Coty forecast fiscal 2022 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of about $900 million on a constant currency basis, which analysts said was above estimates.

Net revenue in the fourth quarter rose 90% to $1.06 billion, beating Refinitiv IBES estimates of $1.01 billion.

Coty, however, reported an adjusted loss of nine cents per share, as it spent heavily on advertising and product launches.

(Reporting by Praveen Paramasivam in Bengaluru; Editing by Amy Caren Daniel)