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COTY Benefits From Core Priorities & Strategic Partnerships
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Strength in the brand portfolio and impressive momentum in the global beauty market keeps Coty Inc. (COTY - Free Report) well-positioned for growth. The beauty products provider is on track with its strategic pillar, which is yielding. The company undertakes strategic partnerships to grow its presence. That being said, COTY is not immune to a rising cost environment.
Let’s delve deeper.
Market Trends Drive Growth
The beauty space continues to stand out and Coty is well-positioned to capitalize on this favorable market environment. Management is benefiting from momentum in its core categories while achieving impressive results with product launches and gaining success in untapped areas. Consumers’ demand for fragrances, cosmetics and skincare products and their engagement in physical stores and online have been drivers.
These upsides boosted Coty’s second-quarter fiscal 2024 results, with the top and the bottom line increasing year over year and surpassing the Zacks Consensus Estimate. For the fiscal 2024, management anticipates Like-for-like (LFL) revenue growth of 9-11%. Coty envisions fiscal 2024 adjusted earnings per share (EPS), excluding equity swap, in the band of 44-47 cents, indicating growth of 16-25% year over year.
Image Source: Zacks Investment Research
Core Priorities & Partnerships
Coty is benefiting from its focus on six strategic pillars that are 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 (DTC) capabilities; growing presence in China via Prestige and certain Consumer Beauty brands; and setting Coty as an industry leader in sustainability.
Management made several partnerships to enhance its brand portfolio. In its last earnings call, management highlighted that it had signed a license with Marni, an Italian luxury brand, which complements the prestige portfolio. In the Consumer Beauty space, the company extended two key licenses — bruno banani and Mexx. In January 2023, Coty and Jil Sander unveiled that they have renewed their license deal and are in for a long-running collaboration. The renewed deal is likely to solidify the ongoing business alliance while laying the foundation for a new strategic project stretching over 10 years.
High Costs a Trouble
Coty is witnessing dynamic inflation and a supply chain environment. In the fiscal second quarter, the company’s cost of sales increased to $603.5 million from $525.3 million reported in the year-ago quarter. Quarterly adjusted gross margin came in at 65.1%, contracting 40 basis points from increased excess and obsolescence, inflation and tough comparison with some benefits realized in the year-ago period.
Coty is committed to optimizing the overall cost structure amid cost hurdles. Management 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.
Shares of the Zacks Rank #3 (Hold) company have increased 5.4% in the past six months compared with the industry’s 4.8% growth.
The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal-year sales and earnings suggests growth of 8.7% and 4.7%, respectively, from the year-ago reported numbers.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2. VITL has a trailing four-quarter average earnings surprise of 155.4%.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 18.6% and 35.6%, respectively, from the year-ago reported numbers.
Utz Brands Inc. (UTZ - Free Report) , which manufactures a diverse portfolio of salty snacks, currently carries a Zacks Rank #2. UTZ has a trailing four-quarter earnings surprise of 2.6%, on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year earnings suggests growth of 17.5% from the year-ago reported numbers.
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COTY Benefits From Core Priorities & Strategic Partnerships
Strength in the brand portfolio and impressive momentum in the global beauty market keeps Coty Inc. (COTY - Free Report) well-positioned for growth. The beauty products provider is on track with its strategic pillar, which is yielding. The company undertakes strategic partnerships to grow its presence. That being said, COTY is not immune to a rising cost environment.
Let’s delve deeper.
Market Trends Drive Growth
The beauty space continues to stand out and Coty is well-positioned to capitalize on this favorable market environment. Management is benefiting from momentum in its core categories while achieving impressive results with product launches and gaining success in untapped areas. Consumers’ demand for fragrances, cosmetics and skincare products and their engagement in physical stores and online have been drivers.
These upsides boosted Coty’s second-quarter fiscal 2024 results, with the top and the bottom line increasing year over year and surpassing the Zacks Consensus Estimate. For the fiscal 2024, management anticipates Like-for-like (LFL) revenue growth of 9-11%. Coty envisions fiscal 2024 adjusted earnings per share (EPS), excluding equity swap, in the band of 44-47 cents, indicating growth of 16-25% year over year.
Image Source: Zacks Investment Research
Core Priorities & Partnerships
Coty is benefiting from its focus on six strategic pillars that are 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 (DTC) capabilities; growing presence in China via Prestige and certain Consumer Beauty brands; and setting Coty as an industry leader in sustainability.
Management made several partnerships to enhance its brand portfolio. In its last earnings call, management highlighted that it had signed a license with Marni, an Italian luxury brand, which complements the prestige portfolio. In the Consumer Beauty space, the company extended two key licenses — bruno banani and Mexx. In January 2023, Coty and Jil Sander unveiled that they have renewed their license deal and are in for a long-running collaboration. The renewed deal is likely to solidify the ongoing business alliance while laying the foundation for a new strategic project stretching over 10 years.
High Costs a Trouble
Coty is witnessing dynamic inflation and a supply chain environment. In the fiscal second quarter, the company’s cost of sales increased to $603.5 million from $525.3 million reported in the year-ago quarter. Quarterly adjusted gross margin came in at 65.1%, contracting 40 basis points from increased excess and obsolescence, inflation and tough comparison with some benefits realized in the year-ago period.
Coty is committed to optimizing the overall cost structure amid cost hurdles. Management 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.
Shares of the Zacks Rank #3 (Hold) company have increased 5.4% in the past six months compared with the industry’s 4.8% growth.
Top Staple Bets
The Chef’s Warehouse (CHEF - Free Report) , which engages in the distribution of specialty food products, currently carries a Zacks Rank #2 (Buy). CHEF has a trailing four-quarter earnings surprise of 3.2%, on average. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal-year sales and earnings suggests growth of 8.7% and 4.7%, respectively, from the year-ago reported numbers.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2. VITL has a trailing four-quarter average earnings surprise of 155.4%.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 18.6% and 35.6%, respectively, from the year-ago reported numbers.
Utz Brands Inc. (UTZ - Free Report) , which manufactures a diverse portfolio of salty snacks, currently carries a Zacks Rank #2. UTZ has a trailing four-quarter earnings surprise of 2.6%, on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year earnings suggests growth of 17.5% from the year-ago reported numbers.