Coty Inc. COTY posted robust first-quarter fiscal 2022 results, with the top and the bottom line increasing year over year and surpassing the Zacks Consensus Estimate. The company gained from strong performance across the Prestige and Consumer Beauty segments.In the reported quarter, the company witnessed a combination of strong brick-and-mortar and e-commerce sales growth. The company gained from solid growth in the United States and China along with a revival in Travel Retail. Moreover, its cost savings initiatives have been yielding. The company is on track to achieve its savings target of $600 million for fiscal 2023.Management highlighted that the sturdy performance witnessed during the first quarter exemplifies the successful execution of the company’s key strategic growth pillars as well as its turnaround efforts. Coty’s efforts to reposition its key Consumer Beauty brands — CoverGirl, Rimmel and Max Factor — are on track. It is also undertaking efforts to boost brands like Gucci and Burberry among others. Going ahead, the company is confident regarding its business prospects and has therefore raised its sales outlook for fiscal 2022.Shares of the company were up nearly 9% during the pre-market trading session on Nov 8, following the quarterly results. The Zacks Rank #3 (Hold) company’s shares have increased 9.9% in the past three months against the industry’s decline of 15.4%.Image Source: Zacks Investment ResearchQuarter in DetailCoty posted adjusted earnings of 8 cents per share, which surpassed the Zacks Consensus Estimate of 3 cents. The bottom line improved significantly from a penny reported the year-ago quarter.Coty’s net revenues came in at $1,371.7 million, which surged 22% year over year. The metric surpassed the Zacks Consensus Estimate of $1,362 million. Currency translations had a 1.4% positive impact on the top line. LFL net revenues increased 20.6% backed by growth in Prestige and the Consumer Beauty business segments. The company’s top line was also supported by a 23% increase in e-commerce channel.Adjusted gross margin came in at 63.4%, which increased 480 basis points (bps) from 58.6% in the prior-year quarter. The upside was supported by improved volumes, positive mix-shift, improvement in excess & obsolescence as well as better absorption.Adjusted operating income came in at $200.5 million, rising significantly from $85.7 million in the prior year quarter. Further, adjusted EBITDA for the quarter amounted to $278.5 million, up 67% from $166.6 million in the prior year quarter. The increase was mainly driven by a higher gross margin and continued fixed-cost reductions. Management highlighted that its cost-reduction efforts have continued to remain robust with approximately $60 million of additional reductions during the quarter.Adjusted operating margin for the first quarter increased 700 bps to 14.6%, while the adjusted EBITDA margin increased 550 bps to 20.3%.Coty Price, Consensus and EPS Surprise Coty price-consensus-eps-surprise-chart | Coty Quote Channel-Wise DetailsPrestige: Net revenues in the segment advanced 35.1% to $870.7 million. The segment’s revenues were up 33.6%, on an LFL basis driven by continued strength in the United States and China as well as many key markets in the EMEA region and Travel Retail. In addition, LFL growth was broad-based across fragrances and makeup. Brand-wise, the company benefited from impressive performance across Burberry, Marc Jacobs, Gucci and Chloe. The unit’s e-commerce sales rose 21% year on year.Consumer Beauty: Net revenues rose 4.4% year over year to $501 million, while LFL sales jumped 3%. The channel benefited from growth in key brands across the United States and Europe. Coty has also been making significant progress in share stabilization in Consumer Beauty. Brand-wise the unit benefited from impressive performance of CoverGirl, Sally Hansen, Rimmel and Max Factor. In the reported quarter, the segment’s e-commerce sales grew 27% year on year.Segment ResultsNet revenues in the Americas surged 23.6% to $581.5 million. LFL revenues were up 22.9% driven by strong growth of Prestige, and to a lesser extent, sales growth in Consumer Beauty. Prestige fragrances gained from robust category trends in the United States, along with the company’s strong pipeline of fragrance innovations. CoverGirl rose in the double digits, with good market share momentum. Sally Hansen’s market share also improved.Sales in EMEA increased 18.2% year over year to $627.1 million, while it rose 16.6% on an LFL basis. The unit’s performance was mainly driven by strong growth in Prestige, while Consumer Beauty grew at a more moderate pace.Sales in the Asia-Pacific region rose 32.5% (up 29% at LFL) year on year to $163.1 million. LFL revenues were driven by solid growth across prestige brands. The unit’s performance was mainly driven by strong performance in China, particularly in Prestige fragrances, while skincare and cosmetics also delivered robust growth.Other Financial UpdatesCoty ended the quarter with cash and cash equivalents of $376.9 million and immediate liquidity of $2,526.8 million.The company’s financial net debt of $ 4,955.1 million as of Sep 30, 2021, declined from $5,228 million as of the end of the preceding quarter (Jun 30, 2021). Accordingly, the company’s financial leverage stands at 5.7x.During the quarter, cash provided by operating activities amounted to $285.7 million. Free cash flow during the first quarter were $240.7 million.Notable DevelopmentsOn Sep 27, 2021, Coty announced a multi-channel agreement with leading beauty tech solutions provider, Perfect Corp. The partnership will help Coty’s customers to shop in the most convenient and personalized manner both online and offline.On Oct 1, 2021, Coty announced a definitive agreement to sell nearly 9% stake in Wella to KKR. On Nov 8, 2021, Coty announced a definitive agreement to sell an additional 4.7% stake in Wella to KKR.OutlookThe company continues to witness strong growth in the beauty market, as it enters the second quarter of fiscal 2022. Management highlighted that the business is witnessing growth across the United States and China along with steady improvement in Western Europe. It is also seeing strong rebound in Travel Retail. Backed by such upsides and gains from the company’s product launches, management raised its LFL sales view for fiscal 2022. It now expects revenues to grow in the range of low-to-mid teens percentage, up from its previous guidance of a low-teens growth.For fiscal 2022, adjusted EBITDA is expected to come in at $900 million on a constant-currency basis, indicating solid year-over-year growth in EBITDA margin. The company expects adjusted earnings in the range of 19-23 cents per share.Consumer Staples Picks You Can’t MissMGP Ingredients, Inc. MGPI, flaunting a Zacks Rank #1 (Strong Buy), delivered an earnings surprise of 117.46% in the last four quarters, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.United Natural Foods, Inc. UNFI, also with a Zacks Rank #1, delivered an earnings surprise of 13.1% in the last four quarters, on average.The Chefs' Warehouse, Inc. CHEF, with a Zacks Rank #2 (Buy), delivered an earnings surprise of 279% in the last four quarters, on average. 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(CHEF): Free Stock Analysis Report Coty (COTY): Free Stock Analysis Report MGP Ingredients, Inc. (MGPI): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research