11.08.21
Coty Inc. has shared its financial results for the first quarter of fiscal year 2022, ended September 30, 2021.
In Q1, revenues increased 22%, or 20.6% LFL, with a combination of strong brick & mortar growth and 23% growth in e-commerce.
Prestige fragrance sales increased strongly across nearly all brands, with particularly strong performance from Gucci, Burberry, Hugo Boss, Marc Jacobs, Calvin Klein, and Chloe. This momentum was fueled by a very strong fragrance launch calendar in Q1 with particular standout results from Gucci Flora Gorgeous Gardenia and Burberry Hero.
At the same time, Prestige cosmetics sales more than doubled year-on-year, led by Gucci makeup and the relaunch of Kylie Cosmetics.
Regionally, the U.S. and China continued to deliver very robust performance, Travel Retail more than doubled led in particular by Asia and Europe, while trends in many Western European markets continued to improve.
During the quarter, Consumer Beauty revenues increased 4% as reported and 3% LFL, as the global mass beauty category returned to growth and Coty continued to make progress towards share stabilization.
“Q1 marks the fifth consecutive quarter of Coty delivering results inline to ahead of expectations,” commented Sue Y. Nabi, Coty’s CEO. “Importantly, our Q1 results exemplify the virtuous cycle that we have been working to create, where our strong topline performance coupled with sustained gross margin expansion and cost initiatives, fuel both profit expansion and targeted re-investments to support future growth.”
Nabi says she feels confident about the company’s prospects for the remainder of the year and is therefore raising the FY22 sales outlook to low-to-mid teens growth from the previous guidance of low teens growth.
As consideration for KKR’s purchase of shares in Wella from Coty, Coty will redeem approximately 56% of KKR’s outstanding convertible preferred shares and accrued dividends, or the equivalent of approximately 25 million shares of the company’s common stock, for approximately 4.7% of Wella held by Coty in a transaction valued at approximately $215.7 million. Upon completion of the transaction, KKR will continue to have a 2.4% ownership stake in Coty on an as-converted basis.
The latest transaction will further simplify Coty’s capital structure and result in an additional approximately $14 million in annual dividend cash savings, totaling approximately $65 million in annual cash savings when combined with the two previous transactions with KKR in September and October.
“Our strategy for unlocking value expansion in Coty has remained consistent, anchored on three key objectives: accelerating our sales and profit growth, deleveraging our balance sheet, and simplifying our capital structure,” Nabi stated. “This is another milestone in transforming Coty into a beauty powerhouse.”
The transaction is expected to close in the coming weeks.
In Q1, revenues increased 22%, or 20.6% LFL, with a combination of strong brick & mortar growth and 23% growth in e-commerce.
Business Segments
Coty's Prestige business delivered 35% reported and 34% LFL growth in the quarter, despite a low single digit negative impact from the continued reduction of sales in low quality channels.Prestige fragrance sales increased strongly across nearly all brands, with particularly strong performance from Gucci, Burberry, Hugo Boss, Marc Jacobs, Calvin Klein, and Chloe. This momentum was fueled by a very strong fragrance launch calendar in Q1 with particular standout results from Gucci Flora Gorgeous Gardenia and Burberry Hero.
At the same time, Prestige cosmetics sales more than doubled year-on-year, led by Gucci makeup and the relaunch of Kylie Cosmetics.
Regionally, the U.S. and China continued to deliver very robust performance, Travel Retail more than doubled led in particular by Asia and Europe, while trends in many Western European markets continued to improve.
During the quarter, Consumer Beauty revenues increased 4% as reported and 3% LFL, as the global mass beauty category returned to growth and Coty continued to make progress towards share stabilization.
“Q1 marks the fifth consecutive quarter of Coty delivering results inline to ahead of expectations,” commented Sue Y. Nabi, Coty’s CEO. “Importantly, our Q1 results exemplify the virtuous cycle that we have been working to create, where our strong topline performance coupled with sustained gross margin expansion and cost initiatives, fuel both profit expansion and targeted re-investments to support future growth.”
Nabi says she feels confident about the company’s prospects for the remainder of the year and is therefore raising the FY22 sales outlook to low-to-mid teens growth from the previous guidance of low teens growth.
Coty Sells Additional Stake in Wella to KKR
In other news, Coty has announced a definitive agreement to sell an approximate 4.7% stake in Wella to KKR in exchange for the redemption of approximately 56% of KKR’s remaining convertible preferred shares in Coty. This transaction reduces Coty’s total shareholding in the professional beauty company to approximately 25.9%.As consideration for KKR’s purchase of shares in Wella from Coty, Coty will redeem approximately 56% of KKR’s outstanding convertible preferred shares and accrued dividends, or the equivalent of approximately 25 million shares of the company’s common stock, for approximately 4.7% of Wella held by Coty in a transaction valued at approximately $215.7 million. Upon completion of the transaction, KKR will continue to have a 2.4% ownership stake in Coty on an as-converted basis.
The latest transaction will further simplify Coty’s capital structure and result in an additional approximately $14 million in annual dividend cash savings, totaling approximately $65 million in annual cash savings when combined with the two previous transactions with KKR in September and October.
“Our strategy for unlocking value expansion in Coty has remained consistent, anchored on three key objectives: accelerating our sales and profit growth, deleveraging our balance sheet, and simplifying our capital structure,” Nabi stated. “This is another milestone in transforming Coty into a beauty powerhouse.”
The transaction is expected to close in the coming weeks.