By Ananya Mariam Rajesh
(Reuters) -Coty Inc on Tuesday beat Wall Street estimates for quarterly revenue and profit as higher prices and sturdy demand for its fragrances and cosmetics helped soften the hit from a strong U.S. dollar and the company’s exit from Russia.
Shares in the company rose about 4% in premarket trading, after having fallen 34% this year.
Consumers heading out more after lockdowns are indulging in smaller luxuries such as makeup and perfumes even as they put off bigger purchases because of rising inflation and risks of a recession.
Coty (NYSE:)’s prestige division, home to cosmetics and fragrances from the Calvin Klein and Gucci brands, saw revenue fall 1% due to macroeconomic headwinds. But Chief Executive Officer Sue Nabi told Reuters that the company does not “see any slowdown or trading down in the prestige division.”
In fact, consumers are trading up from lower-priced consumer beauty labels to its prestige division, she said.
The Hugo Boss perfume maker will also increase prices further, by mid-single digits around winter, as it combats higher freight and labor costs.
The beauty category is “more resilient than ever”, Nabi said, after Coty reiterated its annual profit forecast.
European peer L’Oreal had also reported strong third-quarter sales growth as robust demand in Europe and the United States offset disruptions caused by strict lockdowns in China.
China’s zero-COVID policy impacted Estee Lauder (NYSE:) as well, prompting it to slash annual forecasts, but Coty’s smaller exposure to the Chinese market has helped the CoverGirl parent shield itself.
Excluding items, the company earned 15 cents per share, surpassing estimates of 11 cents, according to IBES data from Refinitiv.
Its net revenue rose 1% to $1.39 billion in the first quarter ended Sept. 30, compared with estimates of $1.37 billion.