Coty forecasts return to sales growth betting on fragrance, makeup rebound

Aug 26 (Reuters) - Cosmetics maker Coty Inc said on Thursday it expects to return to annual sales growth for the first time in at least three years as people splurge on fragrances and beauty products following the easing of coronavirus restrictions.

As schools, colleges and offices reopen, people are dressing up and wearing makeup as well as fragrances after they snubbed them for skincare and wellness products in 2020. That is benefiting companies like Coty, the maker of Hugo Boss and Burberry perfumes.

Coty has cashed in on the change in customer behavior by rolling out new fragrances, including Burberry Hero and Calvin Klein Defy, marketed by actors Adam Driver and Richard Madden, respectively. It has also started making its perfumes more sustainable to cater to eco-conscious customers.

“Coty is clearly strongly benefiting from a surge in fragrance consumption in two key markets (China and the United States),” Chief Executive Officer Sue Nabi told Reuters in an interview.

Nabi said its cosmetics brand CoverGirl had gained market share for three consecutive months for the first time in five years, as its efforts to target Gen Z and Hispanic consumers through advertisements pay off.

Coty estimated its fiscal 2022 sales will increase in the low teens percentage range even as it flagged some uncertainty from the COVID-19 Delta variant.

Nabi, however, added that the fast-spreading variant had not had any impact thus far.

Net revenue in the fourth quarter ended June 30 increased 90% to $1.06 billion, beating estimates of $1.01 billion, according to IBES data from Refinitiv.

The company reported a smaller net loss attributable to common stockholders of $210.2 million compared with $772.8 million last year. Excluding items, Coty posted a loss of nine cents, as it spent heavily on advertising and product launches to drive sales growth.

Reporting by Praveen Paramasivam in Bengaluru; Editing by Amy Caren Daniel