Perfume supply shortage, Coty's performance 'forced' to slow down

Affected by the shortage of global perfume materials, the growth of Coty's high-end cosmetics performance was limited, which led to the slowdown of the Group's sales growth in the first fiscal quarter. At the same time, Coty, which has already occupied a high place in the perfume market with great potential, continues to increase the layout of skin care brands in the Chinese market to create the second growth pole.

A few days ago, the financial report released by Coty Group showed that in the first fiscal quarter of fiscal year 2023 as of September 30, Coty's sales increased by 1% year-on-year to 1.39 billion US dollars (about RMB 10.066 billion), exceeding the analyst's expectation of 1.38 billion US dollars (about RMB 9.994 billion), but the growth rate slowed significantly compared with the previous quarter's 10% growth, and the net profit fell 41.2% to 134 million US dollars (about RMB 970 million).

During the financial reporting period, the sales of public cosmetics products of Coty Group increased by 5% to 526 million US dollars (about 3.809 billion yuan), while the high-end brand cosmetics business declined by 1% to 863 million US dollars (about 6.250 billion yuan). perfume products contributed the most revenue, accounting for 59.3% of sales.

It is reported that the sales growth of high-end departments is affected by the shortage of perfume materials in the whole industry. Nabi said that the purchase of pumps, bottles and caps needed for high-end perfume packaging was particularly affected. Part of the reason for these shortages is that supply exceeds demand. After the epidemic, people's demand for perfume continues to surge.

Burberry, Gucci and Kylie cosmetics are maintaining their influence in the beauty market. The recently launched Gucci Flora Gorgeous Jasmine, based on the momentum of last year's best-selling Gucci Flora Gorgeous Gardenia, promoted the sales of Flora series to the top 10 in North America and Europe. Similarly, the launch of Burberry Hero EDP has promoted the Hero series to rank among the top 10 sales in the United States and have the highest market share in the United Kingdom.

It is worth mentioning that Coty's flagship scientific skin care brand Lancaster has a strong momentum, with an increase of more than 20% compared with the same period last year.

In addition, Orveda, a high-end and cutting-edge skin care brand of Coty Group, made its debut in China at the Shanghai Expo. Constantin, the chief brand officer of Coty, once said: "Creating first-class skin care products is the focus of Coty, and adding Orveda to the product lineup is an important step to achieve the goal. We also saw the potential of Orveda in the Chinese market, which will be a strategic point of the Group."

Geographically, revenues in all regions grew at fixed exchange rates. The net income of the Asia Pacific region was 173.1 million US dollars (1.25 billion yuan), accounting for 12% of Coty's sales, up 6%. Both high-end departments and consumer beauty achieved steady growth.

Although the Chinese market was affected by the epidemic, its business still recovered its stable growth. Coty stressed that the view on the structural attractiveness of China's beauty market has not changed in the next few years, and high-end products will be the main growth engine of the Group.

The financial report shows that the sales in Europe, the Middle East and Africa, due to the strong momentum of tourism retail and double-digit growth in most markets, increased by 11% year-on-year at the fixed exchange rate, but declined by 3% due to foreign exchange. Brazil and Latin America in the Americas enjoyed strong momentum, while the continued strong demand in the United States was offset by supply constraints.

Coty also reiterated its annual profit forecast, which is expected to grow by 6-8% year-on-year. In addition, the withdrawal from the Russian market will have a negative impact on its sales of about 2% in fiscal year 2023.

Sue Y., Chief Executive Officer of Coty When commenting on the operating performance, Nabi said: "In the complex external environment, including the continuous supply shortage, our strong first quarter performance confirmed Coty's strength and resilience in brand, team, strategy and operation mode. This is the ninth consecutive quarterly report of Coty's performance better than expected. We have achieved strong growth in all regions, including perfume, cosmetics, skin care products and body care, and each key category, as well as the two departments have achieved strong growth Long. This makes our sales growth much higher than that of the potential beauty market again, and we are among the best in our competitors. "

Nabi is also optimistic about the growth potential of the Chinese market. At present, China does not account for a high proportion of the group's overall income. Coty still has great room for growth in the Chinese market in the future.