Coty, the parent company of popular cosmetics brand CoverGirl, reported strong second-quarter 2022 results, with a major boost coming from sales in China.
“In China, we have maintained double-digit growth, even as Covid restrictions weighed on market growth in the short term, with our prestige sell-out growth six times higher than the prestige beauty market,” the company said in a statement.
Coty’s CoverGirl and Max Factor brands came to China late, setting up shop only in 2016 – but have grown quickly. Total sales in China jumped 31% in fiscal 2021, and a further 50% in the first quarter of the 2022 fiscal year.
Coty’s China business has been particularly successful in what it calls the prestige beauty category, which accounts for some 85% of all sales in the market.
In a recent interview with a cosmetics trade magazine, Coty China CEO Guilhelm Souche said the company’s prestige brands are growing at four times the rate of other categories in China.
Souche said the company has also been moving away from its distribution model in China in favour of establishing its own retail and online presence, adding that online sales – mainly through Tmall – of prestige products jumped 246% in the first quarter of fiscal 2022 and the company expects online sales to represent half all China sales within the next three years.
The company also forecast fiscal 2022 sales growth will come in at the higher end of its prior low-to-mid teens range, while analysts expected a 15.5% increase.
Revenue from continuing operations rose 12% to $1.58 billion in the second quarter ended December 31, while analysts polled by Refinitiv expected $1.60 billion.
Adjusted per-share earnings rose by 4 cents to 17 cents in the quarter, beating analysts’ average estimate of 11 cents, according to Refinitiv IBES data.
- Reuters, with additional editing by Neal McGrath
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