By Aditi Sebastian and Praveen Paramasivam
(Reuters) – Cosmetics maker Coty Inc raised its forecast for annual organic sales on Monday, boosted by a revival in travel retail as shoppers in Asia and Europe bought more of its Gucci makeup and Burberry perfumes.
The Kylie Cosmetics seller said it is optimistic for the current holiday-quarter as demand for fragrances and foundations has picked up amid easing restrictions that have led to a phased return to offices, parties and social events.
Coty, whose sales had taken a hit from weak traffic at duty-free stores due to pandemic-induced restrictions for over a year, is now seeing a revival in its travel retail as shoppers start taking trips again, helping its prestige segment post quarterly net revenue of $870.7 million, up 35.1% from a year earlier.
“Travel retail is clearly back. It’s not at the level of pre pandemic (but)…this is clearly helping the prestige performance,” Coty Chief Executive Officer Sue Nabi told Reuters.
However, Coty, which is also grappling with industry-wide supply-chain bottlenecks and impact from inflation, said it was able to manage through cost cuts, localized sourcing and freight under contract.
The owner of CoverGirl said its net revenue from continuing operations rose 22% on a reported basis to $1.37 billion in the first quarter ended Sept. 30. Net income attributable to common shareholders from continuing operations rose 7% to $103 million, or 13 cents per share.
Coty forecast its fiscal 2022 organic like-for-like sales of low-to-mid teens percentage growth, above its previous forecast of low-teens growth.
Separately, Coty said it would sell a 4.7% stake in professional beauty business Wella in a deal valued at about $215.7 million to simplify its capital structure and reduce annual cash dividend by $14 million.
Following the sale, Coty will have a 25.9% stake in Wella.
(Reporting by Praveen Paramasivam and Aditi Sebastian in Bengaluru; Editing by Krishna Chandra Eluri)
