Q3 financial results show Coty advancing as a global beauty industry leader

10-May-2018 - Last updated on 10-May-2018 at 17:06 GMT

The multinational fragrance, cosmetics, and personal care company released its 2018 third-quarter financials this week. With net revenue up nearly 10% for the quarter, CEO Camillo Pane calls Coty’s performance “steady…with modest positive organic top line growth.”

Coty’s luxury and professional businesses are doing best. Consumer beauty is a bit of struggle for the company; but CEO Camillo Pane and his team expect strategic brand relaunches will help get this division back on track.

Late last year, the company relaunched the consumer makeup brand Cover Girl, updating the brand’s tag line, adding new brand ambassadors, and announcing plans for new packaging and product designs. Read more about that rebranding here on Cosmetics Design.

And the company made changes to its Nice’n Easy brand recently too: the Cosmetics Design article Coty updates Nice/n Easy At-Home Hair Color with ME+ technology acquired in P&G deal outlines how the company is leveraging the ME+ formulation technology across hair brands.

“the Consumer Beauty division continued its uneven performance, but with encouraging signs of stability,” Pane says in Coty’s Q3 announcement. “We continued to reshape our growth profile by strengthening our iconic global brands, supported by recent relaunches,” he affirms.

And going forward, there will be more adjustments to the company’s portfolio of brands. As Pane describes it, “We are also fueling smaller brands with high growth potential and stabilizing the remaining portfolio including the conclusion of our previously communicated portfolio rationalization program. This streamlining of our portfolio is an important milestone that will allow us to focus on those brands where we believe we are particularly suited to drive long term revenue growth.”

Luxury and Pro

Where the consumer beauty business is up only 3% year-over-year, luxury is up 19% (with reported revenue at $752.5m) and professional beauty is up 10% (to $448.5m reported revenue). In Pane’s view, “the Luxury division continued to deliver very strong results, while our Professional Beauty division once again demonstrated consistent solid growth.”

Fragrance gets much of the credit for Coty’s success in luxury. Growth this past quarter as led by the Tiffany & Co fragrance as well as by Gucci Bloom. CK One and Chloe Nomade contributed as well, according to the company’s announcement.

In professional beauty “the 1.9% growth [in constant currency terms] in the underlying business reflects higher net revenues from OPI due to on-going success of the gel restage as well as strength in lacquers,” according to the company. “Wella Professionals also continues to benefit from the successful Wellaplex product launch.”

Regionally

Coty’s business in North America is doing well. Reported revenue is up 4% year-over-year, from $685.1m in 2017 to $712.8m this year.

Coty acquired a majority stake in the mobile-first ecommerce company Younique in early 2017, as Cosmetics Design reported. And the company’s $600m cash investment in the engaging, scalable retail platform is paying off.

Growth in the region’s business the quarter came thanks to Younique, Burberry, Tiffany & Co, and Gucci Bloom. And, Coty credits mass fragrance sales with offsetting a drop in the US color business.

“Though there is still much work to be done, including the continued integration of the P&G Beauty business,” acknowledges Pane. Still, he's “encouraged by how far we have come since embarking on our journey to transform Coty into a challenger in the global beauty industry.”

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Deanna Utroske, CosmeticsDesign.com Editor, covers beauty business news in the Americas region and publishes the weekly Indie Beauty Profile column, showcasing the inspiring work of entrepreneurs and innovative brands.