Fragrance market “robust,” says Coty CEO, as mass beauty declines

Coty's Prestige Fragrance division grew by 6% in the quarter and this included prestige, premium and mass fragrances. The figure also included the 2% negative impact from the divestiture of the Lacoste fragrance licence.  

In a financial results call, Coty's CEO Sue Nabi spoke about the fragrance category and said that new consumers are entering the category, people are using fragrances more often, and are also exploring a variety of concentrations and formats 

“Within the broader beauty backdrop, fragrances remain a top performing category,” she said. “The prestige fragrance category continues to be supported by structural growth drivers, which will allow it to continue to grow inline to ahead of the underlying beauty market in the coming quarters and years,” stated Nabi.  

Nabi said that Coty’s prestige fragrance portfolio continues to perform strongly, particularly in EMEA, and that in the US market, “both our sell-out and sell-in growth is impacted by the very elevated comparisons of the prior year, which included the blockbuster launch of Burberry Goddess.” 

Consumer Beauty division sales drop ​

Over at the company's Consumer Beauty division, it was a different story. Q1 2025 sales declined by 3% on a reported basis for this division. 

Nabi said that these figures were now “consistent with pre-Covid levels, as the global market has generally slowed from FY24 levels.”  

“Within this backdrop, we see outperformance in the mass fragrances and bodycare categories, which are both growing strongly in the high-single-digits,” she said and added that mass colour cosmetics has now “moderated to flattish to slightly negative performance, with the weakness concentrated in the US.” 

For Nabi, there were two main factors causing this slowdown:  

“First, unit demand growth remains positive but has moderated to a low single digit level, as consumer demand normalises following the post-COVID surge,” she said. 

“Second, pricing is no longer the strong positive building block of the last few years.” 

EMEA and emerging markets show most promise for Coty​

EMEA net revenues increased 8% on both a reported basis and LFL basis for the multinational, which is listed on both the New York and Paris stock exchanges. 

The business said the growth was “driven by continued growth across nearly all markets and the Travel Retail channel in combination with a 2% FX benefit, partially offset by a 2% headwind from the divestiture of the Lacoste license.” 

The Americas region saw mid-single growth, while APAC saw mid-single-digit decline, which Coty stated: “was a result of the ongoing pressure in China and the regional Travel Retail channel.” 

Nabi noted that “growth engine markets” for Coty now included Brazil, Mexico, the rest of LATAM, India, China, Southeast Asia, Africa, and the Middle East.  

Combined, these markets accounted for approximately 21% of the company’s Q1 sales and grew by 15% LFL in Q1. 

Travel-retail sales also grew by 4% LFL in the quarter, with good performances from the Americas and EMEA.  

However, results in Asia were “challenged by tight inventory management by retailers,” said the business.  

Coty is ‘futureproofing’ ​

Overall, Nabi pointed out that although Coty had “moderately lower than expected growth in Q1” the business “continued to outperform leading global beauty companies.” 

In nine out of the last 13 quarters, we have delivered LFL growth which is ahead of global peers like L'Oréal,​ Estee Lauder Companies​, Shiseido, and LVMH's Perfumes & Cosmetics division,” she said. 

However, despite the strong results for fragrances, the company’s CFO Laurent Mercier announced on the call that due to the current “dynamic beauty market” Coty is now “future proofing.” 

Mercier noted that while Prestige fragrances remains an outperforming category for Coty, mass beauty is now growing in the low-single-digits and mass colour cosmetics is seeing a flattish performance. 

“Within this backdrop, slower end demand and significant channel shifts in US mass beauty and in Asia, are continuing to weigh on order levels into Q2, with sell-in tracking well below sell-out,” he stated.