Coty Achieved Gross Margin High to 64.6% in its Q3 of FY2022

American multinational beauty company Coty Inc., which owns brands including Gucci, Chloe, Hugo Boss and Lancaster, etc, reported third quarter results for the fiscal year 2022 with a net income of $1.186 billion and its adjusted gross margin was as high as 64.6%. Sue Y. Nabi, Coty’s CEO emphasized that in China, during January and February, though the onset of COVID-related restrictions has weighed on the business exiting March.

On May 9, local time, Coty Inc. reported third quarter results for the fiscal year 2022 (i.e., January – March 2022). Coty’s net income for the third quarter was $1.186 billion, up 15 percent year-over-year; adjusted operating income was $113.6 million, up 11 percent year-over-year, and adjusted gross margin was 64.6 percent.

Coty Inc. said in its financial reports that its sales were driven by strong results in both Prestige and Consumer Beauty, with overall revenue growth in line with sell-out performance.

The report shows that in the third quarter, Coty’s Prestige beauty division reported net revenues of $726.4 million, or 61% of Coty’s total net revenues, up 21% year-over-year. The growth was driven by the recovery in EMEA (Europe, Middle East and Africa), the U.S. market and travel retail markets, as well as growth in sales of premium fragrances.

Its Prestige fragrance sales continued to accelerate, increasing over 20% in Q3, with particularly strong growth from Gucci Beauty, Chloe, Burberry, and Hugo Boss. This was driven by the continued in-market success of Coty’s Q1 fragrance innovations, Gucci Flora Gorgeous Gardenia and Burberry Hero, combined with the success of Q3 launches of Hugo Boss The Scent Le Parfum and Burberry Her EDT. The two strong female fragrance launches this fiscal year demonstrate clear progress on Coty’s strategy to further elevate its position in the large female fragrance market. Prestige cosmetics nearly doubled YoY in both Q3 and fiscal year-to-date, led by the continued momentum of Gucci Beauty, as well as solid performances by both Burberry and Kylie Cosmetics.

Coty Inc. Said: “we maintained outstanding trends within our Prestige fragrance business, even as we further reduced low-quality sales, as consumers globally continue to gravitate towards the fragrance category, and our recent innovations continued to resonate with consumers. Meanwhile, we are as confident as ever regarding our expansion into prestige cosmetics, as Gucci Beauty, Burberry, and Kylie continue to deliver great results with plenty of room ahead to further build out both distribution and the product portfolios.”

In its Consumer Beauty segment, the revenues increased 8% as reported and 10% LFL in Q3, with strong performance across color cosmetics, mass fragrances, and body care. While the global mass beauty market was moderately positive in the quarter, Coty continued to outperform the market and grow its share on a global basis for the past 5 consecutive months.

Its digital momentum also gained good results, which is its fourth strategic pillar. It continued to build, including double-digit e-commerce sales growth, global momentum in brand live streaming and social commerce, viral activations on TikTok, and the initial deployment of virtual try-on capabilities across markets.

In particular, Coty also saw the Chinese market, its fifth pillar, performing well. Its brand Lancaster had an outstanding quarter in both Hainan and mainland China, with Lancaster’s iconic 365 Serum resonating with Chinese consumers and rapidly becoming the hero SKU in the portfolio.

During January and February, though the onset of COVID-related restrictions has weighed on the business exiting March in China, importantly, Coty’s Prestige business was once again the fastest growing amongst the leading prestige beauty companies in China, with double-digit sell-out growth in a flat market backdrop.

Meanwhile, Gucci Beauty has also seen exceptional success since opening the brand’s Tmall flagship store making it one of the top four luxury beauty brands to open on Tmall since 2018. Coty also noted significant growth opportunities for artisanal fragrance brands including Chloe, Tiffany & Co. and Baudrillard.

Commenting on the operating results, Sue Y. Nabi, Coty’s CEO, said: “Our Q3 earnings mark the seventh consecutive quarter of Coty reporting results inline to ahead of expectations. I am extremely proud of the organization for delivering these results and outperforming the overall beauty market, in an increasingly volatile environment. This confirms that Coty has the brands and the people to win in the beauty market, guided by our strategic priorities of delivering above-market sales growth and expanding gross margin, allowing for brand reinvestment, profit expansion and continued deleveraging.”




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