Could 9 (Reuters) – Coty Inc (COTY.N) on Tuesday raised its annual revenue forecast for the second time, because the CoverGirl guardian banks on worth hikes, new launches and resilient demand for its high-end and reasonably priced fragrances and cosmetics.
The corporate additionally crushed estimates for quarterly earnings, as enhancing provides of glass bottles and pumps bolstered gross sales of its high-end fragrances.
The outcomes replicate the so-called “lipstick impact” – the pattern of consumers indulging in smaller luxuries like lipsticks and fragrances as they shun high-end purchases amid inflation.
That additionally inspired retailers to restock on Coty merchandise after protecting a decent leash on inventories.
“Our retailers at the moment are rebuilding and reordering. On the finish of the third quarter, the extent of stock was very wholesome,” Chief Monetary Officer Laurent Mercier informed Reuters.
Coty additionally noticed a lift from the post-pandemic restoration in journey retail – an space of focus for luxurious corporations the place prospects decide up merchandise from duty-free shops at airports and main purchasing districts like Hainan in China.
“China has been very lively for Coty throughout this quarter,” Mercier stated in a post-earnings name, with the launch of luxurious foundations and skincare merchandise set to additional enhance gross sales within the present quarter.
In distinction, peer Estee Lauder (EL.N) forecast weaker gross sales and revenue final week, blaming sluggish restoration in journey retail, particularly in Asia.
“Coty’s technique to concentrate on product premiumization and new merchandise launched in China have delivered the specified consequence,” stated Kunal Sawhney, CEO of fairness analysis agency Kalkine Group.
Coty raised its 2023 adjusted per-share revenue expectation to between 38 cents and 39 cents, from 35 cents to 36 cents earlier. Third-quarter adjusted earnings of 19 cents per share crushed expectations of three cents.
Nonetheless, shares fell 4% amid broader market declines, with Jefferies analyst Ashley Helgans noting the weak spot may additionally stem from profit-taking following a greater than 40% achieve this 12 months.
Reporting by Ananya Mariam Rajesh and Deborah Sophia in Bengaluru; Enhancing by Sriraj Kalluvila
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