By Dhirendra Tripathi
Investing.com – Coty stock (NYSE:COTY) climbed more than 8% in Monday’s premarket trading on stronger guidance, better-than-expected earnings and a balance sheet rejig.
Under a deal with KKR, Coty will sell around 4.7% in hair-care maker Wella to the PE giant, cutting its stake to 25.9%. In return, KKR will redeem a little over half of its remaining convertible preferred shares in Coty, reducing the company's share count. That deal will generate annual savings of around $65 million, Coty said.
The maker of CoverGirl cosmetics also rode a strong line-up of launches in the first quarter to drive sales higher as more people rediscovered their grooming habits after the pandemic. Gucci, Burberry, Hugo Boss, Marc Jacobs, Calvin Klein, and Chloe grew strongly.
Prestige cosmetics sales more than doubled year-on-year, led by Gucci makeup and the relaunch of Kylie Cosmetics. U.S. and China grew strongly, the company said. Travel retail was robust in Asia and Europe.
Margins were higher, driven by pricing and mix benefits, and higher production volumes.
First-quarter net revenue thus grew 22% to $1.37 billion. Adjusted profit per share of cents 8 was four times the expected EPS.
The company revised its annual sales growth outlook to around 15% from around 13% earlier.