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Coty beats sales estimates on strong demand for luxury beauty products

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News Tech: Aug 25 (Reuters) – Coty Inc (COTY.N) on Thursday beat Wall Street expectations for fourth-quarter revenue, as consumers undeterred by inflation-induced steeper prices splurge on luxury skin care and fragrance.

Lipstick and foundations are flying out of shelves with higher-income consumers indulging in smaller luxuries as decades-high inflation renders their plans for bigger purchases unattainable- a phenomenon known as the “lipstick effect”. read more

Shares of the company were up about 4% in premarket trade, after having fallen 30% this year.

This comes as an opportunity for luxury beauty companies that have struggled with sales due to pandemic lockdowns that had kept people at home and their cosmetics requirements limited.

“We are offsetting quite strongly the effect of the inflation on cost of goods,” Nabi said, adding that supply chain costs have been easing from pandemic-highs.

Coty has also been accelerating marketing investments such as livestreaming and promotions on social media sites such as TikTok, which play a big part in influencing young consumers’ shopping decisions. Net revenue in the fourth quarter ended June 30 rose 10% to $1.17 billion, beating analysts’ average estimate of $1.14 billion, according to IBES data from Refinitiv.

RegisterReporting by Ananya Mariam Rajesh in Bengaluru; Editing by Shinjini Ganguli Source: Reuters Trust Principles.

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