Coty Q2 remains 'ahead of expectations' despite revenue drop

Coty has reported a 3% drop in revenue to £1.24 billion ($1.52 billion) for the second quarter ending 31 December 2022, with challenges from component shortages and foreign exchange rates. 

The group said its sales performance was "ahead of expectations, despite significant industry-wide constraints in key fragrance components".

Revenues grew in all regions on a constant currency basis. EMEA sales declined 10% as reported due to FX headwinds, but grew 2% LFL. This was driven by "significant travel retail momentum and growth across most markets".

Coty's prestige beauty division reported revenues of £786.9 million  ($957.7 million), a decrease of 5% on a reported basis versus Q2 2021 and up 3% on a LFL basis.

The prestige fragrance category across North America and Europe continued to experience "strong" demand, though it was impacted by the industry's shortage of glass and certain other components.

The consumer beauty division shared net revenues of £465 million ($565.9 million), down 1% as reported versus Q2 2021 and up 6% on a LFL basis.

Growth was driven by colour cosmetics, bodycare and skincare. The division also saw single digit to double digit revenue growth across CoverGirl, Rimmel, Max Factor, Adidas and Monange, fuelled by improving shelf productivity, impactful innovations and pricing execution.

For the second quarter, Coty also shared the following results:

• Gross profit down to £820.3 million ($998.3 million).
• Gross margin of 65.5%, compared to 64.4% in 2021.
• Adjusted EBITDA up 2% to £260.9 million ($317.6 million).

Sue Y. Nabi, CEO of Coty, said: "I am incredibly pleased by Coty's tenth consecutive quarter of delivering results inline to ahead of expectations, especially as most quarters surpassed expectations despite the highly complex external environment, with particular pressures this quarter from component shortages and FX.

"This delivery validates the strength of our brands, our teams, and the growing nimbleness of our organisation, positioning us for success in various macro scenarios. We continue on our journey to transform Coty into a true beauty powerhouse."