Coty’s third quarter net revenues grew 8 percent to 1,386 million dollars on a reported basis and 10 percent on a LFL basis supported by growth in fragrances, colour cosmetics, skin care and body care.
These results trended above the company’s guidance of 6 to 8 percent LFL for the second half of FY24.
On a year-to-date basis, net revenues grew 13 percent to 4,755 million dollars on both a reported and LFL basis.
The company said in a release that Coty continued to deliver growth in both Prestige and consumer beauty, across all regions and in each of its core categories partially offset by a 2 percent headwind in the third quarter from the divestiture of the Lacoste licence.
Commenting on the operating results, Sue Nabi, Coty’s CEO, said: “Our Q3 results reinforce Coty’s established track record of delivering results ahead of the beauty market and ahead of expectations, and once again illustrate that we are executing on our imperative to drive balanced portfolio growth. We continue to see a strong and dynamic beauty market, with our diversified portfolio and strong execution enabling Coty to once again outperform the underlying market.”
Review of Coty’s Q3 and nine months results
In the third quarter, Prestige net revenues increased 8 percent on a reported basis and 13 percent on a LFL basis. On a year-to-date basis, Prestige net revenues grew 17 percent on both a reported and LFL basis. The reported net revenue growth in Prestige remained strong in fragrances, cosmetics and skin care.
Consumer beauty net revenues increased 6 percent on a reported and LFL basis in the third quarter, while on a year-to-date basis, revenues increased 8 percent on a reported basis and 7 percent on a LFL basis.
Consumer beauty’s reported net revenues grew in colour cosmetics, mass fragrances and mass skin & body care in most countries, offsetting the market weakness in US mass cosmetics.
Coty’s third-quarter e-commerce revenue growth was 20 percent driven by new launches such as Cosmic Kylie Jenner and Marc Jacobs Daisy.
Coty’s performance across markets
Revenues in the Americas rose 8 percent on a reported basis and 11 percent on a LFL basis in the third quarter driven by strong double-digit percentage growth in Latin America, Canada and the travel retail channel partially offset by a 2 percent negative impact from FX and a 1 percent headwind from the divestiture of the Lacoste licence.
EMEA’s third quarter net revenues increased 7 percent on a reported basis and 9 percent on a LFL basis driven by continued growth across most markets and the travel retail channel, coupled with a 2 percent FX benefit partially offset by a 4 percent headwind from the divestiture of the Lacoste licence.
Asia Pacific sales grew 7 percent on a reported basis and 11 percent on a LFL basis driven by double-digit percentage growth in Asia excluding China and the travel retail channel, and triple-digit percentage growth in Hainan, partially offset by a 3 percent negative impact from FX.
Third quarter adjusted net income fell to 43.8 million dollars or 5 cents per share, while reported and adjusted gross margin of 64.8 percent increased 190 basis points year-over-year.
Coty aims for upper end of 2024 targets
The Company now expects FY24 LFL revenue growth to be at the high end of its prior guidance range of 9 to 11 percent, which includes expectations for low-to-mid single-digit percentage LFL revenue growth in Q4 reflecting an estimated mid-single-digit percentage headwind in its Prestige business.
Coty also expects FY24 adjusted EBITDA margin expansion to be at the upper end of its previous guidance range of 10 to 30 basis points. At the same time, FX headwinds in Q4 are contributing to Coty’s expectations for FY24 adjusted EBITDA to remain within its prior guidance range of 1,080 dollars to 1,090 million dollars based on current FX rates.
In total, the company continues to expect modest FY24 gross margin expansion year-over-year. Coty now expects FY24 adjusted EPS to be at the high end of the prior guidance range, excluding the equity swap, of 44 cents to 47 cents, implying strong growth at the upper end of the 16 to 25 percent guidance range.