Coty has warned of more price hikes across its product catalogue, despite reporting positive first quarter results for the 2023 financial period.
Prices are estimated to rise by single-mid digits this winter, with the aim of alleviating higher freight and labour expenses.
In light of the increased operation costs, the Gucci-owner managed to circumvent much of the current global macroeconomic difficulties during Q1.
This included the effects of Covid-19 lockdowns throughout China, with Coty returning to like-for-like growth in the country.
Revenues rose by 1% to US$1.39bn year-on-year and net income also jumped by 19% to $125.3m during the period.
The positive results were bolstered by a 5% boost in Consumer Beauty sales to $526.6m, which represented 38% of Coty’s sales for the quarter.
Make-up, mass fragrances, body care and skin care sales for the category were all highlighted as key contributors to the beauty giant’s earnings.
Prestige sales saw mixed results, however.
Revenues for the category declined by 1%, largely affected by Coty’s exit from the Russian market and industry-wide fragrance component shortages.
A lower number of blockbuster launches released in 2022 also impacted the division's performance.
"Our strong Q1 results, in the midst of a complex external environment including ongoing component shortages, confirm the strength and resilience of Coty's brands, teams, strategy and operating model,” said Sue Y. Nabi, CEO of Coty.
Asia Pacific net revenues were up by $173.1m, or 12% of Coty sales, with sales in China contributing to the geographies’ growth.
The pandemic in China has proved challenging for many luxury beauty brands, including rival beauty giant Estée Lauder Companies (ELC).
ELC slashed its 2023 outlook on 3 November after weak sales in China led to a 11% slump in Q1 2023 sales.
Coty recorded strong performance across the rest of its operating territories.
In America revenues reached $607.6m, with Prestige sales being fueled by particularly strong demand throughout the Latin American market.
Sales of Gucci Flora Gorgeous Jasmine, Marc Jacobs Daisy Ever So Fresh and Burberry Hero EDP on the Prestige also supported Coty’s US Consumer Beauty sales.
“While Coty has certainly benefited from a resilient beauty category, I am particularly pleased that our balanced growth strategy remains in full force,” added Nabi.
“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.”
