COTY's Listing Plans in Paris Look Good: Things Worth Noting
Coty Inc. COTY is on track with solidifying international operations. This cosmetics giant is moving ahead with its plans to be listed on the Paris Stock Exchange, per media reports. The listing may occur in the coming weeks. We believe that Coty’s listing in Paris, which is a house of fashion and beauty, is likely to prove beneficial.
Shares of the company were up 2.4% on Sep 21. The company’s shares have rallied 43.4% year to date against the industry’s decline of 24.4%.
What’s More?
Coty raised its guidance for the first half and fiscal 2024 on Sep 21. The company has been benefiting from the robust beauty demand across its core markets and categories, especially prestige fragrances. Additionally, COTY's recent introduction of the Burberry Goddess fragrance, known for its distinctive scent and innovative packaging, has seen remarkable success in the market.
This has positioned Burberry Goddess as the leading product launch in the United States in August, with sales easily surpassing recent competitive blockbuster launches. Coty now boasts three fragrance lines in the top ten best-selling products in the United States. These aspects are boosting the company’s volumes and sales, leading management to pull up its view.
Coty now expects a 10-12% increase in core like-for-like (LFL) sales for the first half of the fiscal year 2024. This marks an increase from its estimate of 8-10% projected in fourth-quarter fiscal 2022 earnings released last month. Consequently, the company now envisions overall fiscal 2024 core LFL sales growth of 8-10%, surpassing its earlier guidance to achieve the upper limit of its medium-term target range of 6-8%.
Management continues to expect a modest gross margin increase in fiscal 2024. The adjusted EBITDA margin is expected to expand 10-30 bps, indicating adjusted EBITDA to be nearly $1,075-1,085 million. Earlier, management projected the metric to come in the range of $1,065-1,075 million.
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A Focus on Growth
Coty has been committed to boosting its portfolio and brand strength through prudent partnerships. The company recently highlighted that it has entered into an expanded long-term license agreement to bring Marc Jacobs Beauty to its portfolio. Coty’s license with Marc Jacobs now extends for more than 15 years.
In January 2023, Coty and Jil Sander unveiled that they renewed their license deal and are in for a long-running collaboration. 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.
These actions place the Zacks Rank #3 (Hold) company well for continued growth.
Solid Cosmetic Picks
Inter Parfums IPAR, which manufactures, markets and distributes a range of fragrances and fragrance-related products, 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 indicates 19.7% growth from the year-ago reported figure. IPAR has a trailing four-quarter earnings surprise of 45.9%, on average.
Helen of Troy HELE, a provider of several consumer products, currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales suggests a decline of 2.9% from the year-ago reported numbers. HELE has a trailing four-quarter earnings surprise of 8.1%, on average.
e.l.f. Beauty ELF, a cosmetic and skin care product company, currently carries a Zacks Rank #2. ELF has a trailing four-quarter earnings surprise of 108.3%, on average.
The Zacks Consensus Estimate for e.l.f. Beauty’s current fiscal-year sales suggests growth of 64.6% from the corresponding year-ago reported figure.
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