February 8, 2018 / 11:58 AM / a year ago

Coty shares sparkle as profit beats on newly acquired brands

(Reuters) - Beauty products maker Coty Inc (COTY.N) reported quarterly results on Thursday that beat analysts’ estimates, driven by strong demand for its recently acquired makeup and hair styling appliance brands, sending its shares up 12 percent.

Once a pure-play fragrance maker, Coty entered the beauty space in earnest with its acquisition of nearly 40 brands from Procter & Gamble Co (PG.N) last year.

That acquisition gave it well-known brands such as Clairol, Wella, Max Factor and CoverGirl, that were popular with baby boomers but not so much with millennials.

To bolster its offerings for a younger demographic, the company added cosmetics brand Younique and hair appliance brand ghd to its portfolio.

These new brands helped boost revenue by about 15 percent to $2.64 billion for the second quarter ended Dec. 31. High-end fragrances from Tiffany & Co (TIF.N) and Gucci also gave a fillip to sales.

Analysts on average had expected the company to report revenue of $2.48 billion, according to Thomson Reuters I/B/E/S.

Organic net revenues rose 2.8 percent on a constant currency basis in the reported quarter.

“Q2 was another quarter with solid results that gives us tangible signs that our strategy is starting to bear fruit,” Chief Financial Officer Patrice de Talhouët said on a conference call adding that the company was on track to post modest organic net revenue growth in the second half of 2018.

The company had previously anticipated revenue growth to be flat for the same period.

The company's shares rose as much as 15.8 percent to $20.24. The stock was also the top percent gainer on the S&P 500 index .SPX.

The company on the conference call also said it was rebranding its CoverGirl, Clairol and Max Factor products, to attract younger spenders and compete with affordable and Instagram-popular brands like NYX, Winky Lux and ColourPop.

Coty is also partnering with Amazon.com Inc (AMZN.O) to launch a personalized beauty tool that will help users choose products from its consumer beauty segment.

Net income more than doubled to $109.2 million, or 15 cents per share, in the second quarter, from $46.8 million, or 6 cents per share, a year earlier.

Excluding items, the company earned 32 cents per share, beating analysts’ estimates of 23 cents.

Reporting by Karina Dsouza and Indranil Sarkar in Bengaluru; Editing by Shounak Dasgupta

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