Coty Q1 revenue boosted by prestige division sales

Coty has raised its full year guidance after reporting a 18% increase in sales to £1.3 billion ($1.6 billion) for the first quarter ending 30 September 2023.

Geographically, all regions generated double-digit percentage revenue growth. EMEA sales expanded 20%, helped by growth across most markets and Travel Retail.

The prestige division saw revenues rise 23%, making up 65% of the group's total sales. This was supported by "strong" momentum in prestige beauty demand, which led to double-digit percentage growth across all regions.

The consumer beauty division achieved revenue growth of 10%, making up the remaining 35% of the group's total sales. This was led by growth in colour cosmetics, mass fragrance and mass skincare and bodycare.

Coty said its "strong" sales momentum translated into "significant" profit expansion. While gross margins declined as anticipated, on the back of elevated inflation and normalization in fragrance gift sets as part of the mix, Coty's reported operating income grew 15% year-on-year to £160 million ($197.5 million).

Adjusted EBITDA increased 17% to £293 million ($360.3 million) in Q1.

Looking ahead, the group now expects revenue growth of 9-11% for FY24 against its recently raised guidance of 8-10%. It is also targeting adjusted EBITDA margin expansion of 10-30 bps for the fiscal year.

Sue Nabi, CEO of Coty, said: "We are proud of our great Q1 results, with sales growth once again amongst the best in our peer set and ahead of the beauty market.

"Coty continues to deliver on our balanced growth agenda, with strong growth across both divisions and all regions, with growth contribution from volumes and premiumised mix, complemented by targeted pricing, and from our key categories including fragrances, cosmetics, and skincare."