In this article, we will discuss the 15 Most Successful Celebrity Beauty Companies in the World.
The Past Financial Results Of Coty Inc. (NYSE:COTY): Should You Consider Buying Coty Inc. (NYSE: COTY)?
Coty Inc. (NYSE:COTY), one of the biggest beauty companies globally, offers a wide range of classic brands, ranging from skin and body care products to cosmetics and perfumes. Its renowned collection is divided into premium brands and consumer beauty brands. Its consumer beauty brands include Adidas, Beckham, Sally Hansen, and many more, while its prestige brands include Burberry, Kylie Jenner, Hugo Boss, Davidoff, and others.
COTY sold a 60% ownership stake in Coty’s Professional and Retail Hair division, which includes the Wella company, in fiscal year 2021. Prestige brands will make up around 60% of net sales by 2023, with consumer beauty making up the remaining 40%, per RL insights. Especially with brands like Burberry, Marc Jacobs, and Kylie Jenner, luxury scents are expanding by double digits globally.
Coty recently announced that it has inked a long-term license arrangement with Lena Gercke, a German television presenter and model, to create, produce, and market her debut fragrance. The partnership is a result of Coty’s ongoing efforts to grow and improve its line of business by introducing fresh products, labels, and technological innovations.
Stefano Curti, Coty’s Chief Brands Officer, Consumer Beauty, said:
“We are delighted to be collaborating with Lena Gercke to bring our shared vision to life in the beauty space. Lena’s fashion brand, LeGer, is one of the fastest growing personal fashion labels in Germany, creating unique yet timeless pieces that empower women through fashion. Together, we are excited to work with Lena in building her presence in the beauty market with a fragrance that is authentically her.”
Coty has consistently increased its annual revenue over the last three years. Net revenue was around $4.63 billion in 2021 and jumped to $5.3 billion in 2022, a 14.57% rise, as a result of stores reopening and a surge in leisure travel when COVID-19 limitations were eased. The demand and foot traffic in the consumer beauty and prestige divisions both grew, with the prestige category growing at the fastest rate.
With names like Calvin Klein, Burberry, Hugo Boss, Gucci, and Marc Jacobs in the fragrance category, as well as strong success in body care, skincare, and cosmetics, net sales increased to $5.55 billion in 2023, up 4.71% from 2022. Overall, the annual revenue has grown by 19.87% since 2021.
In comparison to rival cosmetics behemoth L’Oreal, growth in prestige divisions has improved the company’s position in the market. Unlike Coty, its European rival, L’Oreal, had reported challenges in the luxury segment in the same era.
Over the previous three years, the company’s adjusted EBITDA margin and adjusted net income margin both showed strong performance. In 2022, their adjusted EBITDA margin increased to 17.1% from 16.5% in 2021. The drop in fixed costs as a proportion of net revenue and the decline in marketing and consumer promotional expenses as a percentage of net revenue in 2023 were the main drivers of the margin growth. Furthermore, the adjusted net income margin attributable to COTY climbed from 4.4% to 8.2% in 2023. Its underlying net income has improved, which is the main driver of this robust increase. Higher operational income is the main factor driving the increase in net income.
The beauty company posted strong growth, exceeding Wall Street’s forecasts for operating income and net sales for the third quarter of FY2024. COTY’s net sales jumped 8% compared to the previous year in 3Q24, reaching $1.38 billion. Over the quarter, both of its revenue divisions increased. Net sales in the prestige market rose by 8%, while consumer beauty saw a 6% gain. Positive price effects and volume increases propelled the expansion in its premium sector. The net revenue gain for the consumer beauty market was also boosted by a favorable pricing effect and higher volume.
In terms of margins, COTY saw an increase from 62.9% to 64.8% for its gross profit margin. Reduced inflation, premiumization, and supply chain productivity gains were cited as the reasons for this improvement.
The quarter saw a 10% improvement in COTY’s adjusted EBITDA compared to the same quarter last year, due to higher sales and gross profit. The adjusted EBITDA margin climbed from 14.1% to 14.4%. Its adjusted net income margin, however, dropped from 13% to 3.2%.
According to Coty, the strong global demand for both mass-market and premium goods would likely allow it to achieve the upper end of its yearly goals. In aftermarket trading, the company’s shares rose by about 3%.
As per Circana’s US Beauty Industry research, the mass beauty market expanded by 6% year-over-year in 2023, while the US prestige beauty industry had double-digit growth, up 14%. Prestige perfumes and cosmetics, especially lip makeup, experienced notable developments. Coty has been growing its prestige business by entering the prestige cosmetics industry and developing a wide range of products to take advantage of this rapidly increasing market. Coty’s product offerings are elevated by strategic relationships with Kim Kardashian and Kylie Jenner, which utilize the impact of digital native superstars to propel development.
Coty has been attempting to improve its leverage ratio and reduce its net debt. In 2023, the leverage ratio was around 3 times, compared to 6.8 times in 2021. Coty still has a 25.8% interest in Wella, valued at around $1.08 billion. If Coty sells this stake, the leverage ratio may fall to around 2 times. Coty has around $3.9 billion in net debt at the end of Q3 FY2024. By expanding EBITDA, the company hopes to lower the leverage ratio to about 2.5x by the conclusion of 2024 and to 2x in 2025.
For the past four quarters, Coty has experienced substantial cash growth consistently. Free cash flow is $260.2 million, up 6.20% from the same quarter last year, and is predicted to remain stable in 2024 and increase in 2025, per analysts.
Due to the pandemic, Coty’s sales declined by the start of 2020, from $12.02 in February 2020 to $2.90 by October 2020. During the pandemic, as working from home and staying in became the new standard, makeup sales suffered, as per JP Morgan. L’Oréal reported that the global beauty market had shrunk by 13-14% in the first half of the year, with sales of cosmetics, fragrances, professional beauty, and luxury beauty all down by about 25%. However, efforts were made by Coty in 2020 to combat the pandemic crisis. Its stock price dropped 70% during the pandemic, and the business attempted to win back investors, unlike Estee Lauder. The latter was able to raise prices throughout the pandemic. Its share price, therefore, doubled.
After the pandemic, Coty’s sales have improved annually, but the company’s stock price ($10) is still low when compared to Estee Lauder and L’Oreal. As of June 31, 2024, Coty’s stock had dropped more than 17% last year and 18% YTD, underperforming the 16% gain made by the S&P 500.
Coty has become more reliant on a smaller number of important merchants as retailers in the United States and Western Europe have developed. Brick and mortar stores have closed as a result of internet shopping’s surge and declining in-store visitation. This might be detrimental to Coty if retailers restrict its product selection or offer rival companies more shelf space. For instance, shelf space for Coty’s CoverGirl brand has already decreased.
However, with a 12-month upside of $13.04, 12 analysts recommend buying Coty, suggesting an increase of more than 30.47% from the current stock price of $10.00. DA Davidson, an investment banking company, has modified its Coty Inc. outlook, keeping a “Buy” rating although cutting its price target from $17.50 to $16.50. DA Davidson expects an acceleration in Q1 FY2025 and underlines Coty’s successful execution and financial leverage reduction, while marginally decreasing its projections for the fourth fiscal quarter of 2024 owing to difficult year-over-year comparisons.
In Q1 FY 2024, 22 hedge funds reported holding shares in Coty Inc. (NYSE:COTY), up from 21 funds the previous quarter, indicating bullish sentiments among investors. John Hockin’s Sea Cliff Partners is the largest stakeholder in the company, with 2,434,296 shares worth $29.11 million.
Conclusion:
Notwithstanding the difficulties, Coty’s net revenue has increased steadily over the previous three years due to expansions in profitability margins and growth in both revenue areas. Both the prestige and mass market beauty channels in the US saw an increase in 2023 compared to the previous year, with the prestige channel growing at a faster rate. Coty is concentrating on its prestige division by entering the prestige cosmetics market and developing a strong portfolio in order to take advantage of this trend.
While we acknowledge the potential of Coty as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an Al stock that is as promising as Coty but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
With that said, here are the 15 Most Successful Celebrity Beauty Companies in the World.
A close-up of a woman’s face wearing a beauty product, highlighting the company’s range of luxury items.
Methodology:
To pick out the 15 Most Successful Celebrity Beauty Companies in the World, we searched the internet for the most successful celebrity beauty companies and ranked them based on their number of social media followers (Instagram). We believe that social media following reveals a company’s reach and is the best metric to gauge success in the absence of reliable financial indicators for all of these companies. We have used 2023 estimated annual revenue figures for these companies as tie-breakers in cases where two or more companies had a similar scale of social media following. Please note that these figures are estimated, and we don’t guarantee their accuracy.
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15. FLOWER Beauty
No. of Social Media Followers: 601K
In 2013, American actress, producer, talk show host, and author Drew Barrymore founded FLOWER Beauty, one of the most successful celebrity beauty companies globally. One of its best-selling items is the Eyes Liquid Eyeliner.
14. Victoria Beckham Beauty
No. of Social Media Followers: 1.1 million
Annual Revenue (Estimated): $70 million
The English fashion designer and singer Victoria Beckham launched Victoria Beckham Beauty, a clean premium skincare and makeup company, in 2019. The most popular and well-liked items from Victoria Beckham Beauty, include EyeWear, Posh Lipstick, Vast Lash Mascara, Bitten Lip Tint, and Satin Kajal Liner.
13. JLO Beauty
No. of Social Media Followers: 1.1 million
Annual Revenue (Estimated): $340 million
The company made its international debut in 2001 and was founded by popular American singer and actress Jennifer Lopez. THAT Blockbuster Cream, is a cult favorite JLO Beauty product, that has a combination of hydrating ingredients with olive oil. On Instagram, JLO Beauty has 1.1 million followers.
12. Haus Labs by Lady Gaga
No. of Social Media Followers: 1.1 million
Annual Revenue (Estimated): $141.7 million
The American vegan and cruelty-free cosmetics company Haus Labs by Lady Gaga was established by an American singer-songwriter and actress. When it first launched in 2019 as an Amazon store partner, it was the first major beauty company to make its debut exclusively on the platform. Later, in 2022, it was relaunched alongside Sephora as a new retail partner.
11. Kay Beauty
No. of Social Media Followers: 1.4 million
Started in 2019, Kay Beauty is a collaborative effort between Bollywood star Katrina Kaif and Nykaa, the leading platform for specialty beauty and personal care in India. It has cosmetics for lips, eyes, the face, and nails, the four main makeup categories.
10. Goop
No. of Social Media Followers: 1.8 million
The American actress Gwyneth Paltrow launched the wellness and lifestyle company Goop in 2008. It offers clean beauty products. Among the renowned products from Goop are the GOOPGENES Clean Nourishing Lip Balm Trio, Tower 28 Mascara, Crown Affair The Renewal Mask, and GOOPGLOW Dark Spot Exfoliating Sleep Milk.
9. Rhode
No. of Social Media Followers: 2 million
Hailey Beiber, an American actress, established and owns Rhode. With two million Instagram followers, it is among the world’s most successful celebrity beauty companies. In 2022, Rhode made its debut with a line of lip balms, moisturizers, and serums. Peptide Lip Treatment, Peptide Glazing Fluid, and Barrier Restore Cream are among Rhode’s bestsellers.
8. r.e.m. Beauty
No. of Social Media Followers: 2.2 million
The brain behind r.e.m. Beauty Ariana Grande is an American singer-songwriter and actress. In 2022, the cosmetics company was introduced. High-demand items from r.e.m. Beauty include the plumping lip gloss, matte lipstick, lustrous liquid eyeshadow, and highlighter popper.
7. Florence by Mills
No. of Social Media Followers: 3.2 million
Millie Bobby Brown, a British actress, founded Florence by Mills, which sells makeup and skincare products. Founded in 2019 with a small line of goods, it has expanded to become one of the world’s most successful celebrity beauty companies, with 3.2 million followers on Instagram. Some of the best-selling Florence by Mills products include Plump To It, Be A VIP Velvet Liquid Lipstick, Eye Candy Eyeshadow Sticks, Clear The Way Clarifying Mud Mask, and Get That Grime Face Scrub. Hydrating Facial Moisturizer.
6. SKKN BY KIM
No. of Social Media Followers: 5.7 million
American media celebrity and socialite Kim Kardashian is the creator and CEO of SKKN BY KIM. SKKN BY KIM asserts that its products are pure, cruelty-free, and supported by science. In June 2020, Coty paid $1 billion for a 20% share of reality TV star Kim’s beauty line, SKKN by Kim.
5. Jeffree Star Cosmetics
No. of Social Media Followers: 6 million
American singer-turned-entrepreneur and makeup artist Jeffree Star is the company’s owner. Jeffree Star launched the company in 2013. On Instagram, it has six million followers. It produces and markets skincare, cosmetics, and nail color products.