|
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".
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.
Bigger rival Estee Lauder also beat fourth-quarter results, but
forecast full-year sales and profit below estimates last week
due to a larger exposure to China, where recent COVID-19
lockdowns hit traffic at retailers.
While Coty's smaller China exposure has it better placed, Chief
Executive Officer Sue Nabi told Reuters in an interview the
company would undertake further price increases this year,
following an initial round in fiscal 2022, to boost profit
margins.
"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.
For fiscal 2023, it expects to increase spending on media and
marketing by over 20% from last year.
Net sales 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.
The Hugo Boss perfume maker expects full-year 2023 adjusted
profit per share to increase in the mid-teens compared to a year
earlier.
(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by
Shinjini Ganguli)
[© 2022 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|
|
