Q3 2024 Coty Inc Earnings Call

Participants

Laurent Mercier; CFO; Coty Inc.

Sue Y. Nabi; CEO & Director; Coty Inc.

Ashley Elizabeth Helgans; VP of Equity Research; Jefferies LLC, Research Division

Christian Junquera; Equity Research Analyst; BofA Securities, Research Division

Christopher Michael Carey; Senior Equity Analyst; Wells Fargo Securities, LLC, Research Division

Filippo Falorni; VP & Equity Research Analyst; Citigroup Inc., Research Division

Korinne N. Wolfmeyer; VP & Senior Research Analyst; Piper Sandler & Co., Research Division

Lauren Rae Lieberman; MD & Senior Research Analyst; Barclays Bank PLC, Research Division

Linda Ann Bolton-Weiser; MD & Senior Research Analyst; D.A. Davidson & Co., Research Division

Mark Stiefel Astrachan; MD; Stifel, Nicolaus & Company, Incorporated, Research Division

Oliver Chen; MD & Senior Equity Research Analyst; TD Cowen, Research Division

Olivia Tong Cheang; MD & Research Analyst; Raymond James & Associates, Inc., Research Division

Robert Edward Ottenstein; Senior MD and Head of Global Beverages & Household Products Research; Evercore ISI Institutional Equities, Research Division

Shovana Nafiz Chowdhury; Research Analyst; JPMorgan Chase & Co, Research Division

Presentation

Operator

Good morning and good afternoon, everyone. My name is Ashley, and I'll be your conference operator today. At this time, I would like to welcome everyone to Coty's Third Quarter Fiscal 2024 Question-and-Answer Conference Call. As a reminder, this conference call is being recorded today, May 7, 2024, at 8:15 a.m. Eastern Time or 2:15 p.m. Central European Time. Please note that on May 6, at approximately 4:30 p.m. Eastern Time or 10:30 p.m. Central European Time, Coty issued a press release and prepared remark webcast, which can be found on our Investor Relations website.
On today's call are Sue Nabi, Chief Executive Officer; and Laurent Mercier, Chief Financial Officer.
I would like to remind you that many of the comments today may contain forward-looking statements. Please refer to Coty's earnings release and the reports filed with the SEC, where the company lists facts that could cause actual results to differ materially from the forward-looking statements. In addition, except where noted, the discussion of Coty financial results and Coty expectations reflect certain adjustments as specified in the non-GAAP financial measures section of the company's release. With that, we will now open the line for questions.

Question and Answer Session

Operator

(Operator Instructions) And we'll take our first question from Filippo Falorni with Citi.

Filippo Falorni

So I have 2 quick questions. One, I understand that you're going to give guidance for fiscal '25 in August. But you mentioned in the release that you expect a sequential acceleration in like-for-like sales in the first half of '25. So maybe you can give us some color what drives that confidence and what are the drivers of the acceleration?
And then the second one on the Consumer Beauty business. You called out some softness in U.S. mass cosmetics. How long do you think that softness can last? And what are the offsetting parts of the business that drove the like-for-like sales in the business?

Sue Y. Nabi

This is Sue speaking. So again, thank you for giving us this opportunity to indeed comment on this 15 quarter of results that are in this time, above expectations and above our guidance for the third time this year.
Indeed, the performance we are seeing in Prestige, which is, as you know it, they're growing double digits, is giving us confidence to see and to continue to see an acceleration in the first half sequentially from Q4. We've been outperforming the market during this quarter, Q3.
The market is very dynamic. As you know it, the Prestige fragrance market is even accelerating sequentially versus last quarter, and this is a global phenomenon, not just in the U.S., it's also seen in big markets like in Europe.
So on a very dynamic market that we expect to continue to be dynamic because of the fragrance index structural drivers. We believe we are going to continue to outperform this market, which explains why we think we are going to sequentially accelerate from the Q4 numbers in terms of selling.
So what gives us this confidence. Number one, the track record of the company. We've being seeing a large number of our brands growing double digits last year, and this is continuing for most of these brands. Thinking about the top 7 fragrance brands growing double digits last year, most of them, the majority of them continue to grow at the same rate.
We have great highlights or great, I would say, superstars in the portfolio such as Burberry, Burberry Goddess is indeed confirming its huge potential, more than a potential. It's today the #1 innovation globally. It's today having a fantastic halo effect on the overall brand, pushing the other fragrance franchises but also the color cosmetics performance.
And on top of this Burberry Goddess that is continuing to build over time and with an increased penetration across the different markets around the world. We have also new stars arriving. I'm thinking about Cosmic Kylie Jenner a fragrance that started 1.5 months ago, which is the second innovation, the #2 innovation of the U.S. market this calendar year-to-date. And we have also another one, that's the #1 innovation in the U.S. market, which is Daisy Wild from Marc Jacobs.
So this, on top of other brands growing double digits. I'm thinking about Chloe, I'm thinking about Davidoff and of course, as I said it before, Burberry. So this is really what gives us the confidence that we are building launches that are going to stand the test of time, that are going to amplify and hopefully continuing to increase the number of successes, which we call a track record in this very competitive fragrance business.
We are also accelerating in Consumer Beauty. Consumer Beauty, as you remember, the story was about increasing the pace of innovation. This is happening now. The latest innovations are all becoming viral. They are potentially innovations that have this ability to speak to the influencers around the world. I'm thinking about CoverGirl Essence, I'm thinking about CoverGirl (inaudible) from last year that's continuing to do very well. CoverGirl LipStain, I'm thinking about Rimmel Wonder'Bond mascara, which is the first bonding mascara of the color cosmetics industry.
All these innovations are going to be amplified by other innovations. And I said to you in the previous earnings call, that we are going to increase the pace of innovation. So all these elements give us the confidence that things are going to get to continue to do well. And the beauty market, we believe, is going to continue to do well.
Prestige is structurally driven to become -- to continue to grow very strongly. And mass, we saw the -- mainly -- it's mainly in the U.S. that we see figures that are not what we want them to be. The rest of the world, mass market, especially color cosmetics, but also body care fragrances is booming. But in the U.S., last month's figures are a bit better than the months before. So we are optimistic, and we think that this will improve after the shock of the inflation, the shock of the price increases, et cetera, we believe consumers are going to see a clearer picture and hopefully, they will continue to buy this premium innovation, new categories, et cetera.
So what allowed us to offset this weakness in the U.S. market is indeed categories and regions. Categories because we are growing very, very strongly behind mass fragrances and that globally, we are growing very strongly behind body, skincare, as I'd love to call it. And this is also an area that is not only premiumizing, but also accelerating. It's skincare for the body, if you want to name it differently.
And we are also building in all the regions. Our -- what we call the growth engine market, new regions that represent almost 20%, is growing 2x faster than the rest of the company.
Last but not least, and I did on purpose a long answer so that the others also got maybe answers to the upcoming questions. Travel Retail is doing fantastically well and also e-com. So if you add the Travel Retail, e-com new regions, plus new categories, you have almost half of the business of the company that's growing 2x faster than the more classical businesses, heritage businesses in mature markets.

Operator

We'll take our next question from Oliver Chen with TD Cowen.

Oliver Chen

Sue and Laurent, the results continue to be really impressive. Was there opportunity to guide even higher given the momentum that you're seeing? And geographically, it looked very strong across markets. If you could help us contrast perhaps Europe versus Americas and what you're seeing with customers there?
And then as we think about the fragrance category, it looks like inventories are likely very clean at your retail partners given the sellout trends. What do you expect to happen with normalization if all the KPIs are so robust?

Sue Y. Nabi

Thank you, Oliver. I hope you are very well. I wanted to start maybe with the last part of the question, which is around the fragrance normalization as we call it. So indeed, this was something that everyone was referring to during last earnings call. And even since almost a year now, we hear this kind of when is the normalization, some people call it slowdown, other call it trade down, but it's not happening in fact. The reality is that it's accelerating. So we see this accelerating, thanks to volumes and thanks to premiumization.
So it's not just a question of pricing, it's also volumes that are growing. And we see this fragrance index across the full board. In a way, from our mass fragrances such as David Beckham, Vera wang, Adidas. To the most premium one, including the recent launch of Infiniment Coty Paris at the tip of the iceberg. You clearly see all these different price tiers continuing to grow, and consumers are continuing to use fragrances as a mood booster, as a social connector and as a feel good category more or less.
So we see this category probably going to be not as dynamic as it was 2 years ago, where we were talking about mid-teens growth in some markets. But still, it will continue to grow at levels that we believe are much higher than the historical levels.
So those who remember pre-pandemic, when fragrance business was growing 1% or 2%, it was already an achievement. So here, we are talking about mid- to high single-digit growth for the Fragrance business, which we believe is going to be something that is sustainable over time.
Now the second part of your question around the contrast between Europe and the U.S., I have to say that Europe is very dynamic in both divisions, in both markets, color cosmetics is doing very well in Europe. Prestige Fragrances are doing very well in Europe, skincare is doing also very well.
In the U.S., the picture is almost as good as the one in Europe, except as I said it before, regarding the mass color cosmetics category. But there, we believe that after the, I would say, these price increases that put some pressure on, I would say, the low-income consumers, the continuous innovation rate of this market, the continuous premiumization, the ability to connect with consumers on social media with -- in a way or another compensate this, I would say, more difficult moment. But we see this getting better during the last month compared to the month of the previous months where the figures were quite negative.
Now was there opportunity to guide even higher? I believe that guiding at the upper end of 9% to 11% for this fiscal is honestly an outstanding performance. It's probably the best in class among our peers now that almost everyone has finished.
So I believe this is really a performance that we are super proud of. And again, what we did tell you in terms of what we are starting to see around Q1 figures is also a good element of confidence for the company or for everyone who's looking at this.

Operator

We'll take our next question from Anna Lizzul with Bank of America.

Christian Junquera

You have Christian Junquera on for Anna Lizzul. You mentioned e-commerce was particularly strong in the quarter, now representing about 1/5 of your business. Can you talk about the drivers of this with greater innovation and marketing? And where do you see the potential for sales from e-commerce?
And also, do you expect to launch more products with e-commerce retailers similar to Estee's launch of Clinique on Amazon's Beauty Store?

Sue Y. Nabi

Yes. Thank you very much for the question. Indeed, you are totally right to call out the e-commerce performance, which is, for example, in Consumer Beauty, it's half of the growth of the division. In Prestige, it's a little bit under half of the growth of the division. So we are outstandingly performing on this channel. And we have a lot of room still to continue to grow compared to some of our peers. So this is really an area where we are doing the right things. We are accelerating, but still with a lot of room to continue to grow.
What explains this performance? If I take the Consumer Beauty division, where the growth has been astronomical this is really where our brands are winning in a big, big way, specifically CoverGirl in the U.S. It has to do a lot with the digitalization of our marketing needs. In a way, we were, as you remember, communicating in a traditional way just 2 years ago, still talking to the loyal base of our consumers, which where people above 35 years old. And this is a precious part of the market that CoverGirl is one of the only brands that is continuing to take care of in a way.
But we were not using the modern marketing tools such as influencer marketing, advocacy and all the funnel that goes with it with the retail media search et cetera, et cetera. The progress we have done in this area. And the latest EMV from CoverGirl in the U.S. where we moved from #6 a year ago to #3 in terms of EMV on the very competitive U.S. market.
Same thing, by the way, on Rimmel in U.K., where we moved from nowhere to #4 last month. This explains a lot why we are overperforming because as you can imagine, the bigger visibility of the brand online translates instantly into bigger sales online, as simple as this. So this is what explains the Consumer Beauty division, I would say, our performance.
And we are implementing this playbook into Prestige too. This is also an area where we are using the experiences we are doing with Consumer Beauty to drive the penetration in the different launches. Burberry Goddess was one of the first launches that really used powerfully the power of fragrance into one search, and you see it in the results and in the very, very quick buildup of the performance.
And we are doing more or less the same thing today with Daisy Wild. As you know, Marc Jacobs is the king of social media. So Daisy Wild will be, for sure, a key performer on this channel.
The same thing with Cosmic Kylie Jenner, as you can imagine, with a name that has more than 400 million followers online, you can imagine that the sales online are going to be very, very big.
So this is what extent the performance. Are we going to explore opportunities with the key retailers? The answer is yes. This is really driven by this brand strategies but we are, of course, doing a great job with Amazon, we will continue to do this great job and see which brands can sit with these retailers.

Operator

We'll take our next question from Rob Ottenstein with Evercore.

Robert Edward Ottenstein

So you kind of touched on some of this throughout the call, but it's important. So let me just kind of go through some of these again. So in terms of the fragrance market acceleration, how much of that has to do with Travel Retail? So that's kind of question number one.
Question number two, is -- and again, I know you just sort of touched on it, but I'd love to get a chance for you to elaborate more. There is increased competition in the fragrance area, but you guys continue to do incredibly well. Burberry has been a home run. Now you're #1, right, with the Marc Jacobs Daisy, #2 of Kylie Cosmic. You mentioned some of the stuff around that.
But maybe if you could just kind of unpack sort of your competitive advantages in the fragrance market versus the competition that allows you to continually do better than everybody else?
And then just finally, maybe talk a little bit about the timing on Etro and Marni.

Sue Y. Nabi

Thank you for your question. So first part, which is around how much is Travel Retail, how much is the rest. I would say that at the end of the day, it's really a performance that's based on core U.S. and Europe, mainly, the core is really U.S. and Europe, which are booming. And on top is Travel Retail. So Travel Retail is not specifically over driving this performance, but it comes on top. And indeed, you are totally right to call out Travel Retail, which represents now 9% of the company net revenue, coming from 8% just 1.5 years ago. So it's a channel where we are overperforming on the Fragrance business, but also on color cosmetics, but also in skincare.
Now when it comes to why we are doing good in a way in this very competitive market, I believe it's a mix of, first of all, finding ways to create ways of working, ways of creating what we call blockbuster fragrances, that use data, that use understanding of consumers that use ability to create juices that resonate globally, but also locally, ability to create advertising that's going to stand from the crowd and making sure this is not depending on individuals.
Traditionally, what happens in brands is that sometimes, from time to time, you have one or several individuals who understand the brand very well and take it to a new height. This is, of course, always happening, but what we try to do is to be independent from this and make sure the organization is done in a way that it will -- whatever, whoever are the people leading the brands, without again underestimating the power of individuals, which is super, super important. But still, it has to be both elements, and this is something we've been doing for the last 3 years, finding ways to understand what is going to resonate.
There is also a question of, I would say, ability to say this is going to be the big launch of the company. This is something that is intentionality. Intentionality is very important, but it's based, of course, on data. It's based on what you hear, what you see, how consumers are talking about our products when we test them, et cetera. So it's a mix of organizational capabilities, but also ability to be intentional and to be ambitious.
Last but not least, it's also a question more and more of technology. You've heard how much Infiniment Coty Paris, the latest launch of the company, uses for the first time the power of technology to have increased longevity for the fragrances. Each and every fragrance of this line last for 30 hours at minimum. And this is industry. This is science. This is technology, coupled with art and artistry and understanding of consumers.
Last part of your question, which is around Etro and Marni. Marni -- Etro has already a fragrance line. So we are integrating this fragrance line into 30 ecosystem, if I may say. And as soon as this integration and registrations are done, this existing fragrance line will instantly be launched all around the world, which will give the base to the brand in terms of net revenues.
And of course, in parallel, we are working on creating the, I would say, the upcoming fragrances that represent the brand equity.
And Marni same thing. There isn't a business that is existing today, but we started to work almost at the moment we made the announcement a few months ago. And we believe that in the next 2 years, we can see new things arising from these 2 brands.

Operator

We'll take our next question from Korinne Wolfmeyer with Piper Sandler.

Korinne N. Wolfmeyer

Congrats on the quarter. I'd like to touch on, first, the -- what you're seeing in the Middle East and if there's any kind of headwind you're baking into guidance and if there's any change in trends that you're seeing there? And then as we think about these new partnerships coming on and then the one announced this morning, how should we be thinking about the contribution of these to the longer-term growth algo?

Sue Y. Nabi

Okay. So when it comes to the first part of the question, again, this region, the Middle East accounts for a mid-single digit percentage of our revenues. And it's fairly broad-based. So this is the first element. At present, we are not seeing a change in the business. In fact, I have to say that we are seeing even a strong momentum in the Middle East, which is driven mainly by our Prestige, Fragrances well. So this is what we are seeing today in the Middle East, nothing that would be materially impacting our business over there.
Now when it comes to the new licenses, the idea is really to build businesses that are complementary to the current businesses of the company. These licenses have been chosen and chose also because they are incremental to our portfolio. They are bringing new visions, they are bringing new ways to talk to consumers. And these are the main regions where we end up working together. It's because we believe new brands can bring new audiences.
In the case of Marni, it's obvious in the case of Etro, it's also obvious. If you think about the extension of Marc Jacobs license to color cosmetics, it's also very obvious what a brand like Marc Jacobs can bring to the color cosmetics portfolio of a company like Coty. With this kind of (inaudible) brand, which is very unique positioning in the market.
So that's the way we see it. It's really all about bringing additionality, targeting new audiences that increased the reach of the company over time.

Operator

We will take our next question from Andrea Teixeira with JPMorgan.

Shovana Nafiz Chowdhury

This is Shovana Chowdhury on behalf of Andrea. I wanted to ask you for more color on consumption versus shipments. And more specifically, if you could please confirm if the now mid-single-digit headwind from restocking in the base period that is expected in the fiscal fourth quarter, it seems it is not -- if it's similar to fiscal third quarter? Because when you gave the guidance for second half last quarter, the hit was expected to be low to mid-single digit, but now it's been raised to mid-single digit.
And also, I wanted to ask you about your LFL growth of 6% in Consumer Beauty. Did you see some pull forward of inventory building in this segment that could have put a little bit of pressure in fiscal fourth quarter?

Laurent Mercier

So I mean, first of all, consumption and shipments are fully aligned, okay? So it's really that we are making sure that there is a strong correlation between our set out selling. And indeed, we are making sure that there is no inventory building at the retailer level. So this is a very healthy equation.
Now about a mid-single-digit headwind in Q4. I mean we shared several times and we share very clearly in the last earnings that indeed, there will be debalanced Q3 and Q4. And in fact the headwind in Q3, it was very minimal. But then indeed, the headwind is definitely located in Q4, and this is mid-single digits in Q4.
But again, as Sue explained during the earnings call, this is really purely base effect from shipments done last year, which was really service level recovery and also the pricing of great innovation. So this is definitely no change versus what we shared.
So indeed, as we explained, I mean, was low single digit, mid-single digit in H2. So -- and this is again what we have been saying for many months.

Operator

We will take our next question from Olivia Tong with Raymond James.

Olivia Tong Cheang

Great. My question is primarily around the mix between Prestige versus mass obviously, given the strength in procedure mix has shifted to about 60-40 Prestige from 50-50 pre-pandemic. So this has clearly helped you drive pricing on top of the volume growth that you've seen nicely, obviously nicely on target to get to your mid-60s gross margin target as well.
So how has that changed your management of the overall business? Can -- how much further can we go in terms of gross margin? And what are you embedding in terms of sort of a volume price mix going forward as you continue to push the premiumization?

Laurent Mercier

Yes. So indeed, I mean, mix, I mean Prestige weight has increased. But definitely, I mean what you can see is that overall, our gross margin has significantly improved over the last 4 years. So you remember that we were at a level which was below 60% of gross margin. And now we are reaching this level of 65%.
And I want to be very clear that this gross margin expansion is coming from both divisions, okay? So this is really all the actions that we put in place, productivity, and we share many examples of productivity initiatives that we put in place on standardization, platforming and this brought definitely a significant savings in gross margin. So that's number one.
Number two is the pricing. Definitely, we implemented really some very targeted price increase on both divisions. And you see the result in this Q3 with 190 basis point gross margin expansion. So this is what we did again on both divisions.
And last but not least is definitely on mix management. Same work, same playbook on both divisions. So it's really -- and you know in Prestige, all the work done that now we are selling more and more all the partner. We are -- the niche category is booming, and this is, of course, gross margin accretive.
But we have also in Consumer Beauty that all the new initiatives that we are launching in color cosmetics are strong and gross margin accretive, sometimes even at the level of Prestige. And also the new categories that we are pushing such as mass fragrance and so on, had a very strong gross margin.
So again, really keep in mind that this gross margin expansion is really coming from a strong improvement on both divisions. It's not a division mix effect. This is pretty minor.
So now looking ahead -- and you saw, you see again the results this year on the fiscal year-to-date. You see our volumes are low single digit, price is high single digit and mix is low single digit. So definitely, we are making sure in our algorithm that we keep this good balance between volume, mix and also pricing.
Definitely, pricing impact is going to lower because we will not be at the same level of price increase as we did the last 2 years. But I want to be clear that it will be really well balanced between these 3 items. And again, what Sue has explained, it gives you concrete example that volumes, I mean all the work we are doing on new initiatives, the growth engine market, so really growing volumes, mix is really again the continuous work we are doing on both divisions.
And pricing, we will continue pricing in a very targeted manner. Again, we are very well equipped. So again, very balanced between these 3 items in terms of top line growth and continue the gross margin expansion in both divisions.

Operator

We'll take our next question from Chris Carey with Wells Fargo Securities.

Christopher Michael Carey

So one follow-up on Consumer Beauty and then more of a global strategic question. On Consumer Beauty, I think e-commerce was up over 30% or -- and really was quite strong in the quarter. It does imply, I think, that the brick-and-mortar business was weak. Can you just contextualize how important U.S. brick-and-mortar is for the overall organization, the underlying trends that you're seeing in that business and perhaps a bit of your sequential outlook from here, specifically for U.S. brick-and-mortar?
And then, two, just a bit more globally, the Prestige market is driven by balanced growth, but Asia and Travel Retail are actually exceeding what we're seeing in Americas and EMEA, which are also solid, but certainly higher growth. You're so thoughtful about the sustainability of growth and the durability of growth. Are you seeing anything in these markets that might give you a little bit of pause about whether they're perhaps growing faster in areas that don't seem to give you multiyear returns as we've seen with some of your peers?
So just the concept of responsible growth globally and whether you're seeing any hotspots in Asia in Travel Retail that might give you some pause as far as your longer-term objectives?

Sue Y. Nabi

Yes. Thank you for the question, Chris. So indeed, e-com was indeed a top performer for the Consumer Beauty division. But you're right, the brick-and-mortar performance was not as high as the one from e-com.
But in a way, another way to say it is that among, I would say, a big player, among what we call historical brands and the U.S. market. CoverGirl, if we think about this brand, is the one that's resisting the best in a way, including in brick-and-mortar.
So we are in the middle of a transformation of this brand, as you know it. We are doing the, I would say, fastest part of the market, which is the online reinvention with new brand equities. CoverGirl is still the #1 brand equity in terms of score in the U.S., great rate of innovation, supported by advocacy marketing.
All this translating into a huge increase in terms of penetration online, but we are also taking care of our stores and we are working hand-in-hand with our key partners to reinvent what the shopping experience in brick-and-mortar could be for the color cosmetics brand, and there are beautiful things that I see in the work. So hopefully, this will help us to also make sure that both sides of the story are performing equally and well for both sides. So this is to answer your question about the brick-and-mortar versus the e-com for the Consumer Beauty division.
Now when it comes to Prestige, I have to say that the net revenues that we got for Prestige in the EMEA region, a very good double-digit growth during the quarter. The U.S. market remains very, very strong. So again, it's very balanced, and it's not tied to one region or another region.
But again, the best way to be ready for whatever can happen and could happen is that you multiply the number of growth engines, be it in terms of categories or in terms of regions.
If I start with regions, we were just a week ago, visiting the Southeast Asian region. We were in Vietnam, we were in Thailand, in China and many other countries. And these are markets where the fragrance penetration is also increasing, people are more and more looking for fragrances, specifically on both sides of the market, be very accessible price tiers or very high-end price tiers. And these are markets where the company is growing 2x faster than the rest of the portfolio, the rest of the regions.
So we are, in a way, preparing for the next growth engine but also in terms of categories, color cosmetics is accelerating like never before in the Prestige division, mid-teens growth.
And skincare, I didn't get the question for once, but I can answer it even if no one has asked, but skincare is accelerating. It's been a year in test, learn, correct, test, learn, correct. And now the brand equities of each of the 3 brands are quite clear. They are performing, and skincare is increasing by double digits inside the company. Some brands are the smaller, some even triple digits.
So what we are preparing for the future, and we are preparing in terms of categories, in terms of regions and using the power of both divisions. So that's the way I would answer your question about maybe growth coming from here and there, it's not a reality.

Operator

We'll take our next question from Ashley Helgans with Jefferies.

Ashley Elizabeth Helgans

Congrats on the nice quarter. We wanted to ask about the current promotional environment. And then just anything you can tell us about your expectations on promos as we head into holiday, especially here in the U.S.

Laurent Mercier

Yes. So I mean we are not seeing any major change definitely in terms of a promotional environment. So as we just explained, definitely, we are going through some adjustments. I mean the market is going through adjustment following some significant price increase, which was done over the last 2 years. But definitely, the last results we are seeing is really a slight recovery of the market.
And again, our brands are really, namely CoverGirl, is gaining market share omnichannel across brick-and-mortar and e-commerce. So it's really performing really well. And it's really -- the way also we do it is really through premium innovation in fact. So this is what matters, and this is also that coming with high-quality products. The launch of Simply Ageless Essence is a great success. And it's a pretty premium products.
So you see that really coming with high-quality product is giving really some munition and it's not about increasing promotions. And again, we are making sure that within Coty, we are not playing that game.

Operator

We'll take our next question from Lauren Lieberman with Barclays.

Lauren Rae Lieberman

Sue, you've offered a lot of perspective this morning, and so I may have lost a bit in the details. But I was just wondering if you could comment on why you think there's been the slowing in U.S. mass cosmetics, just kind of getting behind the why, not the fact that it's happened, but why? And then thoughts on why it may or may not impact other categories? What are the -- where are the consumers spending? Are they allocating differently? Are there pantries too full of stuff?
And then with that backdrop on category growth, just curious, when we look -- you called out in your slide last night, the expected acceleration into the first half of next year. I know you've got easier comparisons, obviously. But just curious if that's an expectation to be sort of on algorithm growth as we get into Q1 and the comp start to ease?

Sue Y. Nabi

Lauren. So again, let me start with the last part of your question, which is around the acceleration in the first half. And I have to correct something now, which is -- it's not easy comparatives at all, this Q1 of last year was double-digit growth, the high teens, mid-teens, if I'm not wrong, the Prestige division. This was the biggest quarter ever at Coty. It was the launch of Burberry Goddess, the launch of fragrance and Hugo Boss, the launch of fragrances under Gucci. All the brands were doing launches at that time. So you cannot say that we are getting into easy comparatives, I would love to, but it's not the case. So that's an important point to correct before answering your questions.
So let me now maybe move to the first part of your question. And I'm sorry, I'm going to give you even more details, so be ready. But when it comes to the U.S. weaker performance, when it comes to color cosmetics, we believe there are a few things at play. Number one, pricing, as you can imagine, was a contributor to the higher growth of the category in the last couple of years. And now the pricing benefit by definition, is moderating by several percentage points.
Number two, the mass cosmetics consumption in the U.S. was growing here again, like on fragrances above historical levels in the last years, and we are seeing now some easing in these dynamics since consumers are stocked on some products.
Related to that element of stock up at home, coupled with economic pressure, particularly on lower income, there has been some decline in cosmetic household penetration across age groups. This we see, but at the same time, and this is very important, the younger consumers are changing the dynamics of the market, including, number one, shifting to new channels, which are not captured by Nielsen, such as Ultra Amazon dollar stores.
Number two, shifting to new ways and new consumption when it comes to color cosmetics. I'm thinking about primers, I'm thinking about concealers, I'm thinking about highlighters, brow products, and this comes at the expense of traditional products like foundations and mascara, which used to be the queen categories.
Number three, these consumers are even trading up, and we see them trading up to masstige brands and to masstige channels because they are looking for what we call cool beauty, trending beauty, et cetera. And this has been seen in fact, that Prestige color cosmetics is benefiting from this. That's what explains the health of this part.
The good news for a company like Coty is that we are really adjusting -- actively adjusting in keeping with this changing consumer behaviors. Number one, as you've seen it with the performance of Consumer Beauty, we are doubling down on e-com, particularly Amazon, where our brands, I'm thinking about CoverGirl, I'm thinking about Sally Hansen are growing by close to 30%, 3-0 in the last quarter.
Number two, we are picking up distribution in growing channels. I'm thinking about channels like Dollar General or Five Below. We are also reallocating media on one hand towards advocacy to drive penetration with the younger consumers. But -- and this is a very important, but, we are also keeping the right level of media to continue to keep the consumption of consumers above 30 years old because they are a big part of the market.
Number four, we are also -- you've seen it launching products that are more and more disruptive, distinct, made to viralize on social media. We are amplifying the cool factor of our brands.
So at the end of the day, it's important to note that all these global trends as cosmetic demand in other parts of the world remain very solid, including strong category growth in Germany, in U.K., Poland and Brazil. So the American market will go in the same direction.
So in sum, this, again, reinforces the ability of the company in terms of multichannel, multicategory international portfolio to be in a way, a good differentiator and a point of strength versus competition.

Operator

We'll take our next question from Linda Bolton-Weiser with D.A. Davidson.

Linda Ann Bolton-Weiser

I was wondering if you could comment first, on fragrance, you called out different things that are really drivers like Goddess. But I was curious about Gucci and Hugo Boss, you didn't really call those out. So are there plans in the upcoming quarters there? And maybe you could comment on how, with Hugo Boss, just in general how men's fragrance is doing?
And then secondly, on Lancaster, I was curious what does it take to see before you kind of expand it beyond Asia in terms of making it a broader global anti-aging skin are brand?

Sue Y. Nabi

Thank you for the question. So let me start with the Lancaster. Indeed, the brand is not an Asian brand. The brand is mainly a European brand. Lancaster is the #1 photo aging or sun care brand in Europe in Prestige channels, and this is something that is important to remind everyone. So it's a big business in Europe. It's one of the fastest growing some sun brand in Europe. And we took the brand to China mainly to see how we can confront the super, very competitive market.
So you'd see Lancaster acting now on 2 legs, Asia on one side and Europe on the other side. On both categories, be it photo protection of skincare. So the brand will be double-sided photo aging and photo repair, which is skincare and UV protection, but also 2 legs, 1 European leg and 1 Chinese/Asian leg. So that hopefully answers your question, and this is going to happen in the calendar year that we are in, this year.
Now when it comes to the fragrance part, you are talking about entry Prestige fragrance brands. I can tell you that a brand like Davidoff, for example, is booming in the portfolio of Coty simply because this brand is a quality brand, at the same time, much more affordable than many other brands.
And this part of the market is doing well. Hugo Boss is also doing well. Again, it's part of our top 7 brands that have been growing double digits until the end of last year. And we see also all these brands accelerating more and more inside the portfolio.
Other plans there, of course, there are plans. I'm not going to reveal whatever is going to happen in the fall because of competitors listening to us. But this part is very important as a growth driver of the company and men's fragrances, indeed, Hugo Boss is a huge leader, specifically in the countries like France.
I have to tell you that the overperformance of Burberry, Chloé and Hugo Boss in a country like France, explains that Coty is one of the only 2 companies that are gaining market share on the very competitive French market during the last quarter.

Operator

We will take our final question from Mark Astrachan with Stifel.

Mark Stiefel Astrachan

Question on Fragrance. I guess maybe more specifically on the Prestige side, I wanted to ask how to think about the category broken out between designer brands, which is sort of the bulk of your portfolio, the Prestige beauty brands that also have fragrance extensions and those that are more or less pure-play ultra Prestige fragrance brands, where I feel like you're gaining obviously a lot of share relative to some others. And is it that some of those other segments are decelerating the designers or accelerating and what's driving that?

Sue Y. Nabi

Yes, that's a good question. Indeed, you perfectly described the 3 parts of the market, fragrance coming from beauty brands, fragrances coming from designer brands and including what we call collections, which is the high end of the designer brands and few players of the niche.
The part that's doing the best, the one that's accelerating is in these few players. So it's really fragrance brands that are not tied to fashion companies or to beauty companies more or less. And it's really pure players, some of them are not going to quote our competitors. But Infiniment Coty Paris is exactly this. It's a pure player. It's not tied to a fashion brand, and it's not neither coming from a beauty name, if I may call it like this.
This is the fastest-growing part of the market, and this is even representing in some regions like China, almost 1/3, if not 40% of the market. We believe this is going to be the fastest-growing part of the market for the next decade. And this is where more and more consumers are shopping.
Then you have designer brands with fragrance successes such as Burberry Goddess or Daisy Wild or Kylie Cosmic that we launched recently, some of these brands have collections which is a small portion of the business, is the fastest-growing part, but growing less than pure players.
And indeed, the path that we see not growing anymore, at least last time I looked at this, it was not the part that was growing and I would say, more than a decade trend is beauty brands doing fragrances, which is really, in a way, shrinking year after year and over the last decade. That's the way I would describe this fragrance market.
For us, we have a fantastic opportunity, as you can imagine, on niche pure players. This is an area where we are working very hard. And Infiniment Coty Paris is clearly one of these bets that we are doing in this area.
We are, of course, double-betting on designer brands. The successes -- the recent successes we've been posting are really a great testament to how much this category is something we understand well and in which we are going to complete more and more.
But also collections Chloé Atelier des Fleurs is one of the fastest-growing collection among the portfolio of the company, but also Hugo Boss le collection, which was launched a year ago with a more masculine audience. This one is also doing very, very well. So that's more or less the way I would answer your question.

Operator

And there are no further questions at this time. I'll turn the call to the speakers for closing remarks.

Sue Y. Nabi

Thank you very much, everyone. I think this is another quarter of results that are above expectations, 16 quarters, almost 4 years. So we are super, super happy, super proud, and we are going to continue to create the most innovative, the most exciting, the most -- the trendiest things that consumers are not expecting because this is the way the beauty industry works. And see you in August for the Q4 earnings. Thank you very much.

Operator

Thank you. This does conclude today's program. Thank you for your participation. You may disconnect at any time.