Coty CEO: Prestige fragrance will see ‘structural growth’ and is ‘one of the most TikTok-able’ categories

Coty CEO Sue Nabi joins Yahoo Finance Live to break down how the beauty brand has been able to grow through diverse product lines, versatility in foreign markets, celebrity brand ambassadors, and finding opportunities during the pandemic.

Video Transcript

- Coty just boosted its full-year earnings forecast, seeing adjusted EPS of $0.20 to $0.24. And it's all part of a multi-year growth strategy of the maker of CoverGirl, Rimmel and Max Factor. And here with the details and to discuss some of the retail beauty trends heading into the holidays is Sue Nabi, Coty CEO. And we also have Yahoo Finance's Brian Sozzi here to help with this interview. And Sue, can you just break down your growth strategy here? Pretty aggressive. How are you going to execute?

SUE NABI: So thank you for giving me the opportunity to tell you about this amazing investors day that we've done today. We've laid out, you know, the foundation for the growth for the coming years. We've announced that we'll be outperforming the beauty market until fiscal '25 and beyond. And we've been explaining to each and everyone the reasons why we have everything at Coty to tackle all the growth opportunities, be it in the US, in Europe or in China.

We've explained the back to success of CoverGirl. We've announced that the new face, America Ferrera becoming the new face of CoverGirl. We have announced, you know, several other things in terms of skincare brand acquisitions or new launches that are going to help us in a way to make sure the company is positioned where it's growing and where the tailwinds are, you know, very strong. So this is really what we've been telling today. And we've been announcing a growth that's higher than the market for the next coming years.

BRIAN SOZZI: Sue, it's Brian here. It's nice to see you. Part of this turnaround, a large part of it is a bet on you and your decades of experience in this industry. Talk to investors about how you're changing the culture inside of the company.

SUE NABI: So again, if I understood what your question, how we are, in a way, navigating in this new world, again, the company has been betting on key trends behind, you know, CoverGirl, for example, such as clean beauty, clean makeup, or makeup that's powered by skincare ingredients. This is perfectly on trend with what consumers are looking more and more, especially post-pandemic. Consumers are looking more and more also for prestige fragrances. This category is probably going to have a structural growth for the coming years, be it in the US or in China.

This category is becoming today one of the most TikTokable category that you could find today in the beauty industry, the same way makeup was strongly TikTokable a few years ago. So these areas that are clean beauty, anything that has to do with healthier kind of beauty, and also categories strongly benefiting from, you know, social media, such as TikTok, are clearly key drivers for the industry and key drivers for Coty. We've announced recently some of our key launches, such as Perfect by Marc Jacobs, Gucci Flora, Burberry Hero, to name a few, that are outstandingly doing well. And again, the trend behind clean beauty and healthy beauty, I would say, is the one that's making CoverGirl regain market share now for 20 weeks among 30 since spring of 2021.

BRIAN SOZZI: Sue, how will your company play in the surging skincare market?

SUE NABI: So skincare, we've presented for the first time, you know, the portfolio of skincare brands. And the great news for everyone who was in this presentation is that the company owns all price tiers, and also have brands to position on the key trends on the market. If you think about entry market, it's all about ingredients. And there, CoverGirl announced two days ago that it's having its first skincare line in decades. If you move into what we call celebrity-led skincare brands, such as Kylie Skin or the upcoming Kim Kardashian West Skincare, we do have two of the most powerful brands in this area now in the world.

If you think about brands that could resonate with the Chinese market, you have-- we have Lancaster, which is the inventor, you know, of formulations using this ingredient everyone loves today, which is called the retinol. And Lancaster was the inventor of retinol formulations 30 or 40 years ago. Last but not least, we just announced that Coty is going to operate one of the most, I would say, awarded skincare brands in the world, an ultra premium skincare brand called Orveda that's going to compete on this very, very strategic, highly profitable and highly growing segment of the Chinese market.

- Sue, we've seen a lot of makeup brands struggle during the pandemic because of the mask wearing. How much of that has now returned to pre-pandemic levels?

SUE NABI: So the makeup market is almost back to pre-pandemic level. And that's great news. And in fact, the brands we do operate at Coty, again, we've made a conscious choice in the middle of the pandemic and, you know, when we started to see people getting out of lockdowns to bet on categories that we felt were categories that people are going to continue to use. First, mascaras and anything that has to do with the eye zone, which is not covered, obviously, by the mask.

And second, people have been using a lot of skincare during lockdowns. And the natural extension of skincare is skinified makeup. And therefore, with bet on skinified makeup. And this was really what made CoverGirl not only resist, but grow market share for the first time in many years, because we've been betting intentionally and clearly on these two categories.

When it comes to our prestige brands, be it Kylie Cosmetics, Gucci Makeup or Burberry Makeup, specifically in Asia, these are makeup lines coming some of the most desirable fashion brands from some of the most followed influencers or celebrity brands online. And therefore, there the fact that people were craving, you know, to be back to buying high-end products, high-end fashion, in a way, the natural extension was prestige makeup. And we've been benefiting from this.

The three brands that I've just mentioned are growing super fast at Coty, and are helping us to go from almost 0% of prestige makeup just two years ago to today, you know, around 4% to 5% of makeup. So that's really a very, very quick progress we're making. And in a way, the choices we have done or the portfolio of brand allowed us to benefit, I would say, from the need and desire for people to look better post-pandemic.

- And Sue, lastly, you recently had to relaunch the Kylie Cosmetics line inspired by Kylie Jenner. Why did you have to relaunch that, and how big is that business?

SUE NABI: No, it was not, in fact, a relaunch. It's true that people called it a relaunch. What we do with Kylie, and we've done exactly the same thing with many brands, is to make sure the brand is exactly fitting the needs post-pandemic, you know. And people were all talking about vegan skincare, cruelty-free skincare, clean ingredients first. So this was an arena now where the brand was already positioned, and we took it one step further. And the second reason is really we wanted to make sure that the cosmetic line of Kylie was benefiting 1,000% from all Coty know-how in terms of long-wear technologies, in terms of products that are going to stand the test at the time or the test of the mask.

And you know the Kylie lip kit continued to sell like hotcakes, even in spite of people wearing masks, first because people were doing, you know, a lot of remote meetings, remote parties, whatever is the name. And the Kylie lip kit was one of the only products on the market that was resisting, in fact, two or three hours of mask wear. So in a way, there again it's really positioning our brands to make sure that the new tailwinds are 1000%, you know, used by our brands behind them.

- And we're going to have to leave it there, but we really appreciate your time and stopping by to talk with us. Sue Nabi, the Coty CEO.