Coty posted net revenues of $713.5 million, or 47% of sales, in Europe, the Middle East, and Africa (EMEA) region, registering a 10% decline for the second quarter of the fiscal year 2023, the cosmetic maker said in its latest financial report.
EMEA financial performance
The decline was driven by “significant” foreign exchange headwinds but grew 2% like-for-like (LFL) in the three months that ended December 31, 2022, compared to the same period a year earlier.
“The exit from Russia negatively impacted LFL sales by approximately 500 bps,” the Hugo Boss perfume maker explained in a statement. “The performance was driven by strong increases in both prestige and consumer beauty across most markets, with particularly strong momentum in regional travel retail.”
In EMEA, the beauty giant recorded the biggest drop on a reported basis during the quarter, compared to Asia Pacific where net revenues declined by 5% as reported to record $185.8 million, or 12% of sales. Coty’s net revenues in the Americas were $624.3 million, climbing 6% on a reported basis, versus $587 million in the prior-year period.
Coty registered $1.5 billion in overall net revenues, a 3% year-over-year decline, compared to the same period a year ago.
It recorded $1.3 billion in EMEA net revenues in the six months that ended December 31, a 7% decline on a reported basis but climbed 6% on an LFL basis, compared to the same period last year, despite a 5% negative impact from halting operations in Russia since April 2022.
“This solid growth was fueled by significant travel retail momentum and growth across most markets,” Coty explained.
Outlook
CEO Sue Y. Nabi said in a statement that it is increasing its previous target to $90 million in the fiscal year 2024 and an additional $75 million in 2025. Coty added it continues to witness strong growth in demand across almost all markets, especially in prestige fragrances.
Key background
Founded in 1904 in Paris, Coty has a wide range of fragrances, color cosmetics, and skin and body care brands, that includes Lancaster, Miu Miu, Marc Jacobs, and Escada, in over 130 countries and territories.
Sisters Kylie Jenner and Kim Kardashian sold stakes in their respective makeup businesses to the fragrance and cosmetic company. In 2020, Kardashian sold a 20% stake in her cosmetics company KKW Beauty to Coty for $200 million in cash. That same year, the billionaire’s half-sister sold 51% of her Kylie Cosmetics to the publicly-traded firm in a deal that valued her makeup brand at $1.2 billion, Forbes estimates.
Last month, Coty announced the extension of its license agreement with luxury brand Jil Sander.