By Praveen Paramasivam
(Reuters) -Cosmetics maker Coty Inc said on Thursday it expects to return to annual sales growth for the first time in at least three years as people splurge on fragrances and beauty products following the easing of coronavirus restrictions.
Shares rose 4.3% to $8.58 premarket as revenue in its prestige division, which makes Gucci and Marc Jacobs-branded fragrances, surged 160% to $570.2 million in the fourth quarter.
As schools, colleges and offices reopen, people are dressing up and wearing makeup as well as fragrances after snubbing them for skincare and wellness products in 2020. That is benefiting companies like Coty, which also 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.
“Coty is clearly strongly benefiting from a surge in fragrance consumption in two key markets (China and the United States),” Chief Executive Officer Sue Nabi told Reuters in an interview.
Nabi said its cosmetics brand CoverGirl had gained market share for three consecutive months for the first time in five years, as its efforts to target Gen Z and Hispanic consumers through advertisements pay off.
Coty estimated its fiscal 2022 sales will increase in the low teens percentage range even as it flagged some uncertainty from the COVID-19 Delta variant.
Nabi, however, added that the fast-spreading variant did not have any impact so far.
Net revenue in the quarter increased 90% to $1.06 billion, beating estimates of $1.01 billion, according to IBES data from Refinitiv.
The company reported a smaller net loss attributable to common stockholders of $210.2 million compared with $772.8 million last year. Excluding items, Coty posted a loss of nine cents, as it spent heavily on advertising and product launches.
(Reporting by Praveen Paramasivam in Bengaluru; Editing by Amy Caren Daniel)
