Coty Lifts Sales Outlook on Back of Fragrance Boom
Coty Inc. raised its full-year sales outlook as the fragrance effect shows no sign of slowing.
The beauty company, which holds the fragrance licenses for myriad brands such as Gucci and Hugo Boss, said that in the four weeks since it released its latest quarterly earnings it has seen strong momentum in beauty demand across key markets and categories, particularly in prestige fragrances as Burberry Goddess sets new market records.
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As a result, Coty is now expecting core like-for-like sales growth of between 8 percent and 10 percent for fiscal 2024, up from its earlier guidance of 6 percent to 8 percent.
At the same time, Coty lifted its adjusted EBITDA forecast to between about $1.08 billion and $1.09 billion, from a range of $1.07 billion to $1.08 billion in its prior guidance.
However, the company made no changes to its EPS forecast, which is expected to hit a range of between 44 cents and 47 cents, below Wall Street estimates of 48 cents.
Nevertheless, Coty’s stock price was up 5.4 percent to $12.09 in mid-morning trading on Wednesday.
Sue Nabi, chief executive officer of Coty, said: “Having spent the past three years strengthening Coty’s fundamentals and elevating Coty’s organizational capabilities across our categories, we enter the next phase of growth with best-in-class innovation and marketing power.”
In particular, Olivia Tong, an equities analyst at Raymond James, sees strong potential as the holiday season approaches.
“With supply constraints having now recovered and fill rates back in the mid- to high-90s, Coty can also now return to gift sets heading into holiday, a positive vs last year,” she said. “We maintain our ‘Outperform’ rating and $15 price target on Coty driven by sustained opportunity in fragrance and whitespace opportunity in makeup and skin care.”
The news comes as reports continue to circulate that both Kim Kardashian and Kylie Jenner are looking to regain full ownership of their brands back from Coty. The group paid $600 million for a 51 percent stake in Kylie Cosmetics in 2020 and acquired a 20 percent stake in Kardashian’s beauty business, then called KKW Beauty, for $200 million in 2021, implying that the brand was valued at $1 billion at the time.
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