By Liz Moyer
Investing.com -- While cash-strapped households hold back on buying clothing and home goods because inflation is forcing them to spend more on food and basics, affluent shoppers are boosting the beauty segment.
The return to offices and large social events is helping, analysts said.
Coty Inc (NYSE:COTY), which sells Cover Girl and Max Factor cosmetics among other brands upgraded its outlook after beating expectations on revenue in the recent quarter. The company’s fragrance business, especially, is growing market share.
Coty shares rose 8% on Thursday but are down 24% for the year.
Analysts are hoping to see similar trends at Ulta Beauty Inc (NASDAQ:ULTA), which reports earnings after tonight’s closing bell. Deutsche Bank recently raised its price target on Ulta Beauty to $563 from $548, with a buy rating, saying its recent quarterly report demonstrated favorable trends.
Ulta shares are up 1.4% this year. They jumped 2.5% in after-hours trading after earnings and revenue beat expectations and the company projected 2022 fiscal year revenue to come in ahead of expectations.
Higher income Americans, those with annual incomes of over $100,000, spent nearly $9 billion on beauty products in the first half of 2022 and beauty sales to them rose 14% from last year, according to data tracking firm NPD Group.
NPD says there are more people buying products and they are spending more, led by Generation X and Millennials. The data company said higher-income households account for over 40% of beauty sales revenue.
At Nordstrom Inc (NYSE:JWN), women’s clothing and beauty notched double-digit gains last quarter and Macy’s Inc (NYSE:M) said same store sales rose nearly 6% at its Bloomingdale's department stores and nearly 8% at its upscale beauty stores Bluemercury.
Shares of Nordstrom are down 18% this year, while Macy's shares are down 27%.