Despite inflationary fears, Coty ( NYSE: COTY ) managed to post a positive quarterly result and maintain full year-forecasts.
For its fiscal first quarter earnings results, both EPS and revenue came essentially in-line with analyst expectations . While the Prestige segment saw modest revenue declines due to the company's exit from Russia and lockdowns in China, the consumer beauty business boomed to a 5% jump in revenues as management said the company continues to pick up market share. Meanwhile, gross margins expanded 70 basis points from the prior year as pricing actions wee able to offset higher input costs.
"We delivered robust growth across all of our regions, each of our key categories including fragrances, cosmetics, skincare and bodycare, and across both divisions. This has allowed us to again report sales growth well above the underlying beauty market and among the best in our competitive set,” CEO Sue Nabi said. “Our strong topline delivery and gross margin expansion has enabled us to maintain our reinvestment in working media, and we remain committed to continuing this trajectory, particularly during the crucial Q2 holiday period.”
As such, Coty maintained EPS growth forecasts in the mid-teen percentage range to $0.32 to $0.33, double the consensus expectation of $0.16. Profits are expected to accelerate into 2023 despite recession fears weighing on the outlook.
“Coty continues to expect modest gross margin expansion in both Q2 and in FY23, despite the elevated inflationary environment,” the earnings release added. “In addition, the Company continues to target leverage towards 4x exiting CY22 based on CY22 adjusted EBITDA approaching $950M, and continues to expect leverage of approximately 3x exiting CY23 and 2x exiting CY25.”
Shares of the New York-based cosmetics retailer rose 3.44% in premarket hours.
Read management’s earnings presentation .
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Coty shares carry higher on strong fragrance, consumer beauty sales