Coty’s Shares Surge on Solid Luxury Performance and Update on Strategy but Remain Undervalued
While no-moat Coty’s second-quarter results weren’t particularly impressive, with just 0.7% organic sales growth (paling in comparison to the roughly 9% comparable sales growth both wide-moat Estee Lauder and L’Oréal chalked up over the same period) and adjusted operating margin contracting 40 basis points to 12.8%, two developments bolstered our confidence in the firm’s long-term prospects. First, the luxury segment (41% of revenue) posted strong like-for-like sales (up 10.8%), driven by streng...Coty and its subsidiaries are a beauty company. The company manufactures, markets, sells and distributes beauty products, including fragrances, color cosmetics, hair care products and skin and body related products. The company is organized into three divisions, which is also its operating and reportable segments: Consumer Beauty, Luxury and Professional Beauty. Consumer Beauty is primarily focused on color cosmetics, retail hair coloring and styling products, body care and mass fragrances. Luxury is primarily focused on fragrances, skincare and cosmetics. Professional Beauty is primarily focused on hair and nail care products for salon personnel.
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