Coty Inc. raised its outlook for the current quarter because of stronger-than-expected sales of more expensive fragrances and personal-care products, showing demand for higher-end items remains robust despite inflation. 

The owner of the CoverGirl and Max Factor brands now expects sales growth of 8 per cent to 9 per cent on a comparable basis in the fiscal first quarter, according to a statement. That’s up from the 6 per cent to 8 per cent the company projected at the end of August. 

“We are continuing to see expansion in terms of gross margin for the company,” Chief Executive Officer Sue Nabi said in an interview.

Shares of Coty climbed as much as 6.7 per cent in New York trading on Wednesday. The stock had fallen 26 per cent this year through Tuesday’s session.

Coty maintained its annual outlook, which calls for 6 per cent to 8 per cent sales growth on a comparable basis. The company also stuck with its full-year forecast for other metrics, including adjusted earnings of US$955 million to US$965 million before some items.

The company is sticking to its annual projections, Nabi said, because of “this very, very volatile environment.”

Coty and other personal-care companies have been raising prices during the past year to counter the highest inflation in decades in the US and other countries, and to encourage consumers to see their brands as higher end. Coty increased prices twice this year, and said in August it would roll out a low-single-digit price hike at the beginning of 2023. 

Nabi declined to say whether the company might tweak the magnitude of that planned hike or implement additional increases next year.

“Everything is open,” she said. 

Coty plans to meet Wednesday with investors and analysts to provide details on its strategy for skin-care products. The presentation starts at 8 a.m. New York time. 

The company is targeting skin-care sales of US$500 million to US$600 million by the end of the fiscal year that wraps up in mid-2025, according to the statement. That would represent a doubling of Coty’s skin-care revenue versus the fiscal year just ended. 

“This would seem ambitious, but at the same time it’s really a portion of what the big guys are doing,” Nabi said. “So it’s ambitious but super, super realistic.”