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Coty (COTY) Gains on Strategic Pillars & Solid Brand Portfolio
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Coty Inc.’s (COTY - Free Report) focus on its six strategic pillars along with gains from alliances has been adding a gleam to its performance. The six strategies include stabilizing Consumer Beauty make-up brands and mass fragrances, accelerating luxury fragrances and setting up Coty as a core player in prestige make-up, establishing a skincare portfolio in prestige and mass channels, strengthening e-commerce and Direct-to-Consumer (DTC) capabilities, growing presence in China via the Prestige and certain Consumer Beauty brands as well as setting Coty as an industry leader in sustainability.
The impact of these strategies was reflected in Coty’s first-quarter fiscal 2022 results, wherein the top and bottom lines increased year over year and surpassed the Zacks Consensus Estimate. COTY gained from the strong performance across the Prestige and Consumer Beauty segments. Coty witnessed a combination of strong brick-and-mortar and e-commerce sales growth. The company gained from solid growth in the United States and China along with a revival in Travel Retail.
Delving Deeper Into 6 Strategies
For stabilizing the consumer beauty brands, the company is on track with repositioning campaigns and disruptive advertising. Coty’s efforts to reposition its key Consumer Beauty brands — COVERGIRL, Rimmel and Max Factor — are on track. Under the COVERGIRL banner, the company has been coming up with clean, vegan and cruelty-free beauty products. The company has also been on track with product launches under the prestige unit. During the first quarter, the company launched Gucci Flora Gorgeous Gardenia, Burberry Hero, Calvin Klein Defy among others. It also relaunched Kylie Cosmetics. During the quarter, the company benefited from the impressive performance across Burberry, Marc Jacobs, Gucci and Chloe.
Management is on track to boost its leading brands through innovations and renovations of key icons for the fragrance business. It is also making strong progress with the expansion of its skincare portfolio.
Image Source: Zacks Investment Research
Gains From Alliances, E-Commerce Strength
Coty has made several strategic partnerships to enhance its brand portfolio. It entered into a multi-channel agreement with Perfect Corp., a well-known beauty tech solutions provider. The partnership will help Coty’s customers to shop in the most convenient and personalized manner both online and offline. Further, the company acquired a 20% stake in Kim Kardashian West's business in January 2021. Further, Coty and Kylie Jenner unveiled their long-term alliance in January 2020 aimed at further building upon Kylie’s beauty business, which includes Kylie Skin and Kylie Cosmetics. Apart from this, the company’s buyout of the iconic Burberry brand has been yielding favorably. This acquisition has been supporting growth in the Prestige segment.
Coty’s e-commerce business has been performing impressively for a while now. In the first quarter of fiscal 2022, the company’s e-commerce sales rallied 23%. COTY’s e-commerce penetration reached the mid-teens percentage of revenues in the first quarter. In the reported quarter, e-commerce sales in the prestige segment rose 21% year over year and surged 27% year over year in the Consumer beauty unit. The company is on track to strengthen its e-commerce and DTC capabilities with its focus on the digital-first omnichannel.
Will Growth Continue?
Coty has been seeing a volatile environment across markets, stemming from the pandemic. Industry-wide headwinds, such as inflationary pressure, supply-chain bottlenecks and shortages, continue to remain a worry for Coty.
However, the abovementioned upsides are likely to help the cosmetics giant to keep its impressive performance going. Shares of this Zacks Rank #3 (Hold) company have increased 7.5% in the past six months against the industry’s decline of 22.3%.
Helen of Troy, a designer, developer, marketer, importer and distributor, carries a Zacks Rank #1 (Strong Buy) at present. Shares of Helen of Troy have moved up 5.7% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Helen of Troy’s current financial-year sales and earnings per share (EPS) suggests growth of 0.8% and 0.6%, respectively, from the year-ago reported number. HELE has a trailing four-quarter earnings surprise of 19.1%, on average.
The Estee Lauder Companies, which manufactures, markets and sells skincare, makeup, fragrance and hair care products, carries a Zacks Rank #2 (Buy) at present. Shares of The Estee Lauder Companies have moved up 1.9% in the past six months.
The Zacks Consensus Estimate for The Estee Lauder Companies’ current financial-year sales and EPS suggests growth of 15.5% and 15.2%, respectively, from the year-ago reported number. EL has a trailing four-quarter earnings surprise of 37%, on average.
Nu Skin, which develops and distributes personal care and wellness products worldwide, currently carries a Zacks Rank #2. Shares of NUS have gained 3.5% in the past six months.
The Zacks Consensus Estimate for Nu Skin’s current financial year’s sales and EPS suggests growth of 3.7% and 9.6%, respectively, from the year-ago reported figure. NUS has a trailing four-quarter earnings surprise of 16.6%, on average.
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Coty (COTY) Gains on Strategic Pillars & Solid Brand Portfolio
Coty Inc.’s (COTY - Free Report) focus on its six strategic pillars along with gains from alliances has been adding a gleam to its performance. The six strategies include stabilizing Consumer Beauty make-up brands and mass fragrances, accelerating luxury fragrances and setting up Coty as a core player in prestige make-up, establishing a skincare portfolio in prestige and mass channels, strengthening e-commerce and Direct-to-Consumer (DTC) capabilities, growing presence in China via the Prestige and certain Consumer Beauty brands as well as setting Coty as an industry leader in sustainability.
The impact of these strategies was reflected in Coty’s first-quarter fiscal 2022 results, wherein the top and bottom lines increased year over year and surpassed the Zacks Consensus Estimate. COTY gained from the strong performance across the Prestige and Consumer Beauty segments. Coty witnessed a combination of strong brick-and-mortar and e-commerce sales growth. The company gained from solid growth in the United States and China along with a revival in Travel Retail.
Delving Deeper Into 6 Strategies
For stabilizing the consumer beauty brands, the company is on track with repositioning campaigns and disruptive advertising. Coty’s efforts to reposition its key Consumer Beauty brands — COVERGIRL, Rimmel and Max Factor — are on track. Under the COVERGIRL banner, the company has been coming up with clean, vegan and cruelty-free beauty products. The company has also been on track with product launches under the prestige unit. During the first quarter, the company launched Gucci Flora Gorgeous Gardenia, Burberry Hero, Calvin Klein Defy among others. It also relaunched Kylie Cosmetics. During the quarter, the company benefited from the impressive performance across Burberry, Marc Jacobs, Gucci and Chloe.
Management is on track to boost its leading brands through innovations and renovations of key icons for the fragrance business. It is also making strong progress with the expansion of its skincare portfolio.
Gains From Alliances, E-Commerce Strength
Coty has made several strategic partnerships to enhance its brand portfolio. It entered into a multi-channel agreement with Perfect Corp., a well-known beauty tech solutions provider. The partnership will help Coty’s customers to shop in the most convenient and personalized manner both online and offline. Further, the company acquired a 20% stake in Kim Kardashian West's business in January 2021. Further, Coty and Kylie Jenner unveiled their long-term alliance in January 2020 aimed at further building upon Kylie’s beauty business, which includes Kylie Skin and Kylie Cosmetics. Apart from this, the company’s buyout of the iconic Burberry brand has been yielding favorably. This acquisition has been supporting growth in the Prestige segment.
Coty’s e-commerce business has been performing impressively for a while now. In the first quarter of fiscal 2022, the company’s e-commerce sales rallied 23%. COTY’s e-commerce penetration reached the mid-teens percentage of revenues in the first quarter. In the reported quarter, e-commerce sales in the prestige segment rose 21% year over year and surged 27% year over year in the Consumer beauty unit. The company is on track to strengthen its e-commerce and DTC capabilities with its focus on the digital-first omnichannel.
Will Growth Continue?
Coty has been seeing a volatile environment across markets, stemming from the pandemic. Industry-wide headwinds, such as inflationary pressure, supply-chain bottlenecks and shortages, continue to remain a worry for Coty.
However, the abovementioned upsides are likely to help the cosmetics giant to keep its impressive performance going. Shares of this Zacks Rank #3 (Hold) company have increased 7.5% in the past six months against the industry’s decline of 22.3%.
Hot Cosmetic Bets
Some better-ranked stocks are Helen of Troy (HELE - Free Report) , The Estee Lauder Companies Inc. (EL - Free Report) and Nu Skin Enterprises (NUS - Free Report) .
Helen of Troy, a designer, developer, marketer, importer and distributor, carries a Zacks Rank #1 (Strong Buy) at present. Shares of Helen of Troy have moved up 5.7% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Helen of Troy’s current financial-year sales and earnings per share (EPS) suggests growth of 0.8% and 0.6%, respectively, from the year-ago reported number. HELE has a trailing four-quarter earnings surprise of 19.1%, on average.
The Estee Lauder Companies, which manufactures, markets and sells skincare, makeup, fragrance and hair care products, carries a Zacks Rank #2 (Buy) at present. Shares of The Estee Lauder Companies have moved up 1.9% in the past six months.
The Zacks Consensus Estimate for The Estee Lauder Companies’ current financial-year sales and EPS suggests growth of 15.5% and 15.2%, respectively, from the year-ago reported number. EL has a trailing four-quarter earnings surprise of 37%, on average.
Nu Skin, which develops and distributes personal care and wellness products worldwide, currently carries a Zacks Rank #2. Shares of NUS have gained 3.5% in the past six months.
The Zacks Consensus Estimate for Nu Skin’s current financial year’s sales and EPS suggests growth of 3.7% and 9.6%, respectively, from the year-ago reported figure. NUS has a trailing four-quarter earnings surprise of 16.6%, on average.