Cosmetics manufacturer Coty Inc has raised its full-year profit forecast due to strong demand for its luxury fragrances and skincare products, bucking the trend of rising inflation rates in many countries. Coty’s prestigious division, which houses renowned brands like Hugo Boss, Gucci, and Burberry, saw a 21% revenue increase to $726.4 million for the third quarter ending on March 31.

Despite the global economic challenges and inflationary pressures, the demand for luxury goods remains sturdy, as the purchasing power of affluent consumers remains unaffected by the rising prices of everyday essentials. Other industry players, such as cosmetics group L’Oreal and luxury bag maker Hermes, have also observed this trend in their recent updates.

CEO Sue Nabi highlighted the exceptional growth of Coty’s prestige brands, indicating that consumers are still confident in purchasing their products. The company’s overall revenue for the third quarter rose by 15% to $1.19 billion, surpassing the estimated $1.15 billion.

Unlike its rival Estee Lauder, which recently lowered its earnings forecast due to lost sales from pandemic-related lockdowns in China, Coty’s strong performance is a positive sign. While Coty only generated 4% of its sales from China last year, it is heavily investing in expanding its brands in the country as a top priority. However, for the fourth quarter, Coty predicts a per-share loss between 1 cent and 5 cents, citing challenges from raw material inflation, the ongoing Ukraine conflict, and COVID-19 restrictions in China. Analysts initially expected a fourth-quarter profit of 1 cent per share.

Coty’s ability to weather economic challenges demonstrates the enduring appeal of luxury cosmetics and fragrances, as well as the company’s strategic focus on growth markets. With its revised profit forecast, Coty aims to continue catering to its affluent customer base while navigating the complexities of the global market.

Useful links:
Coty Inc Official Website
L’Oreal Official Website