We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
COTY Poised on Strategic Pillars & Cost Saving Efforts
Read MoreHide Full Article
Coty Inc. (COTY - Free Report) is benefiting from its focus on six strategic pillars aimed at sustainable growth. The beauty products provider is committed to strategic partnerships to enhance its brand portfolio. The company is committed to optimizing the overall cost structure.
The above-mentioned aspects were evident in the company’s fourth-quarter fiscal 2022 results, with the top and the bottom line increasing year over year. Management expects fiscal 2023 revenues and profit to grow in line with medium-term targets.
Let’s delve deeper.
Robust Performance & View
In the fourth quarter of fiscal 2022, Coty benefited from strong performance across the Prestige and Consumer Beauty segments. The company saw solid trends in the Prestige fragrance portfolio. The Consumer Beauty unit delivered a robust performance with growth in all product categories and almost every key brand. Quarterly results also gained from the booming Travel Retail business, with Travel Retail sales more than doubling year over year. Coty’s quarterly net revenues came in at $1,168.3 million, up 10%. LFL revenues rose 16% on growth in the Prestige and Consumer Beauty business segments.
On its last earnings call, management stated that at the start of the first quarter of fiscal 2023, it witnessed continued prestige fragrance market momentum worldwide and solid demand growth in Europe, global travel retail, the Middle East and Africa and Brazil. Along with this, the company’s impressive launch pipeline of Prestige and Consumer Beauty keeps management optimistic about its fiscal 2023 core business projections.
Adjusting for the impact of the Russia exit, management expects 6-8% LFL revenue growth, in line with the medium-term growth algorithm during fiscal 2023. Management anticipates fiscal 2023 adjusted earnings per share (EPS) growth in the mid-teens. Further, management highlighted that it expects fiscal first-quarter and fiscal 2023 first-half revenue and EBITDA growth trends to be in line with the annual growth targets.
Image Source: Zacks Investment Research
Factors Favoring Coty
Coty is benefiting from its focus on six strategic pillars aimed at sustainable growth. These 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 capabilities; growing presence in China via Prestige and certain Consumer Beauty brands; and setting Coty as an industry leader in sustainability.
In its last earnings call, management highlighted that its global mass beauty market continued to grow in the mid-single digits year on year in the fourth quarter of fiscal 2022. The successful repositioning of many key brands has helped Coty outperform the market. Coty’s e-commerce business continued to deliver solid performance, registering double-digit sales growth in the quarter. Management is on track to expand its presence in Hainan, China by opening several counters for key prestige fragrance, cosmetics and skincare brands.
Coty has made several strategic partnerships to enhance its brand portfolio. On Nov 18, 2021, Coty signed a licensing agreement with Orveda — an ultra-premium skincare brand made in France. Prior to this, Coty 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 online and offline.
Will Hurdles be Countered?
Coty’s international presence keeps the company exposed to the risk of adverse currency fluctuations. Management expects unfavorable currency rates to affect revenues by 4-5% in fiscal 2023. In addition, Coty continues to witness dynamic inflation and supply chain environment. The company expects the cost of goods sold inflation to remain at over 2% in fiscal 2023.
That being said, Coty is on track to mitigate the impact of inflation via cost savings. It is progressing well with the All In to Win transformation program across five key work areas, driving notable improvement in cost, gross margins, sales growth and cash. Going into fiscal 2023, Coty will see several new savings initiatives like savings from the closure of its fragrance factories in Germany, savings from material value analysis and a significant drop in depreciation, among others. Management expects to achieve nearly $170 million of savings in fiscal 2023.
Shares of the Zacks Rank #3 (Hold) company have increased 15.8% in the past three months compared with the industry’s 4% growth.
Inter Parfums is engaged in the manufacturing, distribution and marketing of a wide range of fragrances and related products. IPAR currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales and EPS suggests growth of 15% and 18.6%, respectively, from the year-ago period’s reported figures. IPAR has a trailing four-quarter earnings surprise of 31.1%, on average.
e.l.f. Beauty, a cosmetic company, currently has a Zacks Rank #2 (Buy). ELF has a trailing four-quarter earnings surprise of almost 77%, on average.
The Zacks Consensus Estimate for e.l.f. Beauty’s current financial year sales and EPS suggests growth of 16.8% and almost 6%, respectively, from the year-ago period’s reported figures.
Nomad Foods, which manufactures and distributes frozen foods, currently has a Zacks Rank of 2. NOMD has a trailing four-quarter earnings surprise of 11.2%, on average.
The Zacks Consensus Estimate for Nomad Foods’ current financial year sales suggests a decline of 2.9% from the year-ago period’s corresponding reported figures.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
COTY Poised on Strategic Pillars & Cost Saving Efforts
Coty Inc. (COTY - Free Report) is benefiting from its focus on six strategic pillars aimed at sustainable growth. The beauty products provider is committed to strategic partnerships to enhance its brand portfolio. The company is committed to optimizing the overall cost structure.
The above-mentioned aspects were evident in the company’s fourth-quarter fiscal 2022 results, with the top and the bottom line increasing year over year. Management expects fiscal 2023 revenues and profit to grow in line with medium-term targets.
Let’s delve deeper.
Robust Performance & View
In the fourth quarter of fiscal 2022, Coty benefited from strong performance across the Prestige and Consumer Beauty segments. The company saw solid trends in the Prestige fragrance portfolio. The Consumer Beauty unit delivered a robust performance with growth in all product categories and almost every key brand. Quarterly results also gained from the booming Travel Retail business, with Travel Retail sales more than doubling year over year. Coty’s quarterly net revenues came in at $1,168.3 million, up 10%. LFL revenues rose 16% on growth in the Prestige and Consumer Beauty business segments.
On its last earnings call, management stated that at the start of the first quarter of fiscal 2023, it witnessed continued prestige fragrance market momentum worldwide and solid demand growth in Europe, global travel retail, the Middle East and Africa and Brazil. Along with this, the company’s impressive launch pipeline of Prestige and Consumer Beauty keeps management optimistic about its fiscal 2023 core business projections.
Adjusting for the impact of the Russia exit, management expects 6-8% LFL revenue growth, in line with the medium-term growth algorithm during fiscal 2023. Management anticipates fiscal 2023 adjusted earnings per share (EPS) growth in the mid-teens. Further, management highlighted that it expects fiscal first-quarter and fiscal 2023 first-half revenue and EBITDA growth trends to be in line with the annual growth targets.
Image Source: Zacks Investment Research
Factors Favoring Coty
Coty is benefiting from its focus on six strategic pillars aimed at sustainable growth. These 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 capabilities; growing presence in China via Prestige and certain Consumer Beauty brands; and setting Coty as an industry leader in sustainability.
In its last earnings call, management highlighted that its global mass beauty market continued to grow in the mid-single digits year on year in the fourth quarter of fiscal 2022. The successful repositioning of many key brands has helped Coty outperform the market. Coty’s e-commerce business continued to deliver solid performance, registering double-digit sales growth in the quarter. Management is on track to expand its presence in Hainan, China by opening several counters for key prestige fragrance, cosmetics and skincare brands.
Coty has made several strategic partnerships to enhance its brand portfolio. On Nov 18, 2021, Coty signed a licensing agreement with Orveda — an ultra-premium skincare brand made in France. Prior to this, Coty 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 online and offline.
Will Hurdles be Countered?
Coty’s international presence keeps the company exposed to the risk of adverse currency fluctuations. Management expects unfavorable currency rates to affect revenues by 4-5% in fiscal 2023. In addition, Coty continues to witness dynamic inflation and supply chain environment. The company expects the cost of goods sold inflation to remain at over 2% in fiscal 2023.
That being said, Coty is on track to mitigate the impact of inflation via cost savings. It is progressing well with the All In to Win transformation program across five key work areas, driving notable improvement in cost, gross margins, sales growth and cash. Going into fiscal 2023, Coty will see several new savings initiatives like savings from the closure of its fragrance factories in Germany, savings from material value analysis and a significant drop in depreciation, among others. Management expects to achieve nearly $170 million of savings in fiscal 2023.
Shares of the Zacks Rank #3 (Hold) company have increased 15.8% in the past three months compared with the industry’s 4% growth.
Stocks to Consider
Some better-ranked stocks are Inter Parfums (IPAR - Free Report) , e.l.f. Beauty (ELF - Free Report) and Nomad Foods (NOMD - Free Report) .
Inter Parfums is engaged in the manufacturing, distribution and marketing of a wide range of fragrances and related products. IPAR currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales and EPS suggests growth of 15% and 18.6%, respectively, from the year-ago period’s reported figures. IPAR has a trailing four-quarter earnings surprise of 31.1%, on average.
e.l.f. Beauty, a cosmetic company, currently has a Zacks Rank #2 (Buy). ELF has a trailing four-quarter earnings surprise of almost 77%, on average.
The Zacks Consensus Estimate for e.l.f. Beauty’s current financial year sales and EPS suggests growth of 16.8% and almost 6%, respectively, from the year-ago period’s reported figures.
Nomad Foods, which manufactures and distributes frozen foods, currently has a Zacks Rank of 2. NOMD has a trailing four-quarter earnings surprise of 11.2%, on average.
The Zacks Consensus Estimate for Nomad Foods’ current financial year sales suggests a decline of 2.9% from the year-ago period’s corresponding reported figures.