Coty says its brands grew 40% on Amazon in the most recent quarter

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Beauty products firm, Coty Inc. says its brands that are selling on Inc. saw 40% sales growth during fiscal first-quarter, providing a key to the company’s turnaround.

Coty COTY, +14.14%   stock is up nearly 14% in Wednesday trading after it reported profit that beat expectations, though sales missed.

The company announced on Oct. 21 that it is exploring strategic alternatives for its professional beauty business, which includes the Clairol and OPI brands, and its Brazilian operations. The move is part of a growth plan for the company.

Some of Coty’s well-known brands, including Covergirl, Sally Hansen and Rimmel are on Amazon AMZN, -0.65%  .

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“As we continue to focus on improving our fundamentals, both offline and online, we have seen very strong growth of our brands on Amazon both in the U.S. and globally,” said Pierre Laubies, chief executive officer, on the earnings call, according to the FactSet transcript.

“This strong growth has been supported by our close collaboration with Amazon as part of the global vendor management program.”

Laubies said Coty has merchandise “across most categories, which is a substantial change for us.”

Previously, Amazon, along with retailer Ulta Beauty Inc. ULTA, -1.28%  , was an untapped channel, Laubies added.

According to the 2019 U.S. Forecast on Beauty Shopping Trends published by digital consultancy Tinuiti, 72% of consumers prefer to shop for beauty products in stores, but when they go online, 26.6% say Amazon is their top choice. And 40% of the biggest beauty spenders are buying something online at least monthly.

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“Overall, stability appears to be returning to the story, and while we’d expect the stock to trade higher today, upside may be limited given the recent strength in shares,” wrote Wells Fargo analysts.

Wells Fargo rates Coty stock market perform.

Amazon has been making deeper inroads into the beauty category with the launches of Lady Gaga’s brand Haus Laboratories this summer and its Professional Beauty Store.

Coty stock has soared 98.7% for the year to date while the S&P 500 index SPX, -0.15%   is up 22.5% for the period.