Basking in the afterglow of its Wall Street forecast, Coty Inc. held an earnings call Thursday morning announcing it had beat Q2 sales figures for the fiscal year 2024 ending December 31. The company, which counts Burberry, Gucci, Chloe, and Marc Jacobs among its prestige fragrances, reported net revenues of $1.73 billion — a 13% increase year-over-year, exceeding the $1.68 billion forecasted by Wall Street — with adjusted earnings per share at $.25, representing an increase from $.22 in the previous year. Coty anticipates full-year earnings between $.44 and $.47 per share.

Coty saw balanced Q2 growth across both its prestige and consumer beauty portfolio, which includes makeup, mass fragrance, skin care, and body care. Sue Nabi, Coty’s Chief Executive Officer, and Laurent Mercier, Chief Financial Officer, co-hosted the earnings call during which several prestige brand highlights were discussed.

To start, Coty’s prestige fragrance portfolio outperformed during the quarter. Revenue expanded by 17% like for like in Q2, with Burberry Goddess stealing the scent show and setting new records (the company says it has become its top fragrance launch, across multiple markets). “It’s a very good quarter, specifically driven by the prestige performance,” said Nabi. “This has been achieved thanks to a very good balance of new launches and strong performance of the business. Burberry Goddess is the biggest launch ever at Coty, while, at the same time, Burberry Her, which is a few years old, and Burberry Hero, are also growing. This outstanding performance behind our innovation is also benefiting other brands. Some other brands in our portfolio — I’m thinking about Calvin Klein, or Davidoff — are also growing in double digits, without innovation.”

Nabi attributes the company’s confidence that this performance will continue, even as the market normalizes, to “a lot of capabilities we have been able to build during the last three years: to build blockbusters, in terms of creating winning juices, creating winning mixers, finding the right balance between influencer marketing, classical media, sampling … All this is a know-how that’s here to stay and here to develop.”

Mercier said the decision to implement some price-per-unit increases at the beginning of the fiscal year 2024 had paid off. “It was very successful and went very smoothly,” he reported. “It translated, in that we are still growing volumes. It was very precise, very granular. Looking ahead, we will continue with very targeted price increases.” 

In addition, Mercier said Coty is looking to “review the full value that we are giving to retailers and for consumers,” citing the example of Burberry Goddess being an eau de parfum. “Eau de perfum is 30% higher price than eau de toilette,” he pointed out. 

Nabi stressed Coty’s focus is on “giving consumers value for money, but not discounted value for money. For me, that is the key element that changes between the story of the last 20 years and the future.”

Nabi also hat-tipped the success of Chloé in prestige scents. “Chloé Atelier de Fleurs has for several quarters been a bestselling line, specifically in Asia and travel retail,” she said. “And the Boss collection is doing fantastically well in the Middle East, and Asia. Burberry Signatures is doing very well in different areas around the world.” She described the new Infiniment Coty Paris premium project as “the pride of the company — from the packaging, to the box, the longevity of the scent,” praising its originality and refillable bottles. “Everything we’re doing behind this brand is the best of our know-how,” she said. “This area is going to be the new playground of the company.”

Coty’s prestige makeup brands, including Burberry, Gucci and Kylie, also delivered double-digit growth, and Lancaster performed well in skin care. Of its prestige skin care portfolio — which also includes Philosophy, Kylie Skin, Orveda and SKKN, Kim Kardashian’s range — Nabi shared: “When I saw how much we were over-performing in fragrances, which is growing the business of the company, I decided intentionally to slow down our skin care openings. I want to do it perfectly … not to go fast, but to do the right thing.” Describing skin care as “still our biggest opportunity ever, both in terms of growth, white space and profitability”, she said it will remain a “number one obsession of the company for the next years.”

Coty’s consumer category — which includes Max Factor, CoverGirl, Rimmel, Bourjois, Katy Perry and Sally Hansen cosmetics, and David Beckham and Vera Wang scents — saw a 7% growth in Q2. 

Mercier cited CoverGirl’s Simply Ageless Skin Perfector Essence Foundation as a “great innovation … a high quality, very premium product with a price that is 30% higher than the base business, but it is the number one on Amazon.” Nabi highlighted the product as a social media success story. “You can see capsules of pigment in the serum and they burst on the skin when you apply them, so this is typically the kind of product that TikTok or any kind of social media is crazy about because it’s very visual,” she enthused. “There is a transformation on your skin — something happens — and the result is that it is the number one on Amazon just after a few weeks. It has been given into the hands of a media influencer, we had 95 million views — can you imagine? One post, 95 million views.”

Coty reported that 40% of the growth in both prestige and consumer divisions came via e-commerce. “This is really an unprecedented level of performance,” admitted Nabi, who stressed the power of advocacy. “We’ve moved from 200 influencers with whom we were working a year ago to 5000 today,” she said. “The intention is to double this. At the end of the day, this is just a starting point and for me this is, next to fragrances, the biggest white space opportunity for our cosmetics brands in the U.S., but also all around the world.”

Mercier added that “the ROI is much stronger compared to the traditional medium. It’s definitely a strong asset. Now we have a very strong digital team, so we are equipped.”

“We have been gaining market share in travel retail for a few years now in a row,” said Nabi, noting that Burberry Goddess started out as travel retail exclusive. “Also, we are moving from a business that was solidly prestige fragrance-focused into a triple access business today, with fragrances, makeup and skin care,” she said. 

Turning to China, Nabi said Coty have “a very good performance — driven specifically by prestige, which is immense majority of our net revenue. We just got our figures and Coty is 30 points above the market, driven mainly by our fragrances.” Nabi also highlighted the opening of the first La Maison Orveda in Shanghai. “Its a different strategy,” she said. “It’s a place to experience products, have facials … but also to discover how to eat, how to take care of your skin and also to maybe discover pieces of art. We believe it is the next frontier for the beauty industry.”

“The best ROI we have is on the most disruptive products,” said Nabi. “It’s our job to create exciting, desirable, innovative, new and better products. And once you have this in the hands of your consumers, you really start to have a very high level of ROI and the rest is all-around expertise.” She maintained Coty will launch products only “when we are ready and we are 100% sure of success”. 

Having already shared that it will be working with Marc Jacobs to launch a prestige beauty collection within the next few years, Coty most recently inked a license with Marni, to create fragrances and beauty products. “This is a very premium fashion brand,” said Nabi. “It’s very young, it’s colourful, it’s avant-garde … it’s one of the coolest brands today in Asia and Europe. As you can imagine, this is going to be part of our agenda to really bring on the market very creative juices. Stay tuned!”