CoverGirl parent Coty, opens new tab on Monday estimated first-quarter like-for-like sales growth below its prior forecast due to a slowdown in the U.S., sending its shares down 6% in after-market trading.

The cosmetics maker projected sales growth on a like-for-like (LFL) basis of between 4% and 5% for the three months ended September, compared to 6% it previously forecast. Coty said very tight order and inventory management by retailers resulted in weakness in certain markets such as the U.S., Australia and China.

The company and rivals including Estee Lauder, opens new tab and L’Oreal, opens new tab have signaled strained consumer spending for beauty and cosmetics products, widely considered an affordable luxury and recession-proof.

Coty now expects second-quarter LFL sales to grow moderately with some acceleration in the second half of the year.

The company said it was re-accelerating its cost-reduction efforts to deliver savings well above the initial target of about $75 million in fiscal 2025 in anticipation of “a more uncertain demand backdrop, including cautious retailer behavior and a complex macroeconomic environment.”

The company, which maintained its annual core profit target, will report first-quarter results on Nov. 6.

By Aishwarya Venugopal and Neil J Kanatt.

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Coty Misses Revenue Estimates on Cautious Retail Orders, Lacoste License Sale

Coty’s fourth-quarter net revenue rose nearly 1 percent to $1.36 billion, missing LSEG estimates of $1.38 billion.

All companies looking to sell shares in London will face scrutiny over workers’ rights, UK Prime Minister Keir Starmer told Bloomberg Television, in response to questions about whether his new Labour government would welcome a listing by online fashion giant Shein.

“I’m not going to get into individual businesses. What I will say — let me be very clear about it — standards and high standards do matter to us,” Starmer said in an interview with Bloomberg’s Head of Economics and Government Stephanie Flanders at the International Investment Summit in London on Monday. “Of course we’ll be looking at any issue,” he continued, “with a particular feature on the rights of the workforce.”

Shein’s possible initial public offering could help rebuild momentum in London after a string of defections from its stock markets. Valued at $66 billion in its last funding round, Singapore-headquartered Shein confidentially filed papers in June for a possible London IPO, Bloomberg News reported at the time.

A Bloomberg study in 2022 found that garments shipped to the US by Shein were made with cotton from China’s Xinjiang region, where the US State Department has alleged human rights abuses against the Uyghur people, which China denies. Though the firm has said it has a “zero-tolerance policy for forced labor,” an earlier plan to list in New York was met with opposition from US lawmakers.

A share sale in London would also be controversial, after Starmer’s party made boosting protection for workers a key pledge in its election manifesto. The government published draft legislation last week seeing to balance the competing demands of trade unions and business leaders, including greater entitlements to sick pay and protection against unfair dismissal.

“We’ve been really clear that we see that as two sides of the same coin when it comes to growth, good employment rights and protections,” Starmer said. “They’re not a drag on growth. They’re fundamental for growth, and I think pretty well all good businesses understand that.”

By Alex Morales, Irina Anghel and Alex Wickham

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Shein: Fashion’s Biggest Polluter in Four Charts

The ultra-fast-fashion giant’s planet-warming emissions have nearly tripled in the last three years as its growth far outpaced other major fashion companies. In Shein’s latest sustainability report, CEO Sky Xu says tackling emissions is “particularly critical.”

For centuries, Africa has been a source of inspiration and botanicals for the world’s biggest beauty companies. (Think of Byredo’s best-selling fragrance Bal d’Afrique, or Diptyque’s use of Madagascan vanilla in its scents.)

Now, the continent’s homegrown brands — including Senegalese perfume brand Réserve en Afrique, South African-born Niche Parfums and Nigeria’s Catherine Omai — are ready to step into the spotlight, using Africa’s rich reserves of ingredients to build brands with niche appeal at a premium price point.

“Africa has been key to the perfumery world for centuries. But there’s not many of us [perfumers],” said Réserve en Afrique co-founder Etienne Haddad. “We’re really trying to create something special that can resonate with consumers both on the continent and abroad.”

But while there’s no shortage of innovation, local players have yet to unlock the market’s full potential. Heavyweights such as Coty, Revlon and Puig dominate the market thanks to their extensive distribution channels, continental-wide marketing efforts and strong brand recognition. Other affluent domestic consumers prefer cult brands, creating a market for niche perfume stores dedicated to providing African consumers with access to global brands such as Le Labo and Maison Crivelli.

“In Africa, international brands are still seen as a status symbol and as an aspirational purchase,” said Rubab Abdoolla, a consultant at market research firm Euromonitor International.

African brands also face limited access to suppliers and manufacturers on the continent and a competitive retail environment, making growth and scale difficult. Plus, the region lacks a known scent profile in the way the Middle East is associated with the dark and woody oud, added Abdoolla.

Despite the headwinds, local players see real opportunity. The South African fragrance market is expected to grow 7.6 percent to reach $672 million, while the Kenyan, Angolan and Nigerian markets are all expected to grow this year, reaching a collective $183 million, per Euromonitor.

To cash in, African perfumers are building the region’s scent profile, leaning on botanicals from across the continent such as Egyptian jasmine, Nigerian ginger and black pepper from Côte d’Ivoire, while also crafting nimble retail and marketing strategies to reach the growing consumer group that wants to invest in high-end beauty products in Africa.

The Smell of Success

In Africa, smelling good (or “expensive”) is a subtle indicator of social status, said Thamani Thothe, founder of Botswana-based White Label Fragrances, which incorporates African ingredients like myrrh and marula oil.

“A lot of people here spend close to $200 on just [one] bottle of fragrance,” said Thothe, describing those purchases as a monthly re-up. “We’ve found success locally because we’ve tapped into that psyche,” she added, pointing to countries within southern Africa — including South Africa, Botswana, Zimbabwe — where the growing middle class are increasingly investing in luxury fragrances.

The dissemination of trends and taste through social media has also been “a game changer”, said South Africa-based Zesipho Mcwango, founder of the fragrance discovery Instagram account The Official Perfume Plug. “Before that, our proximity to luxury and niche brands was zero.”

Despite an increased appetite for luxury fragrances, getting products into consumers hands remains difficult from nation to nation. High shipping costs, custom charges and delays make continental trade near impossible — especially for emerging brands with limited cash flow.

“We should be able to trade amongst ourselves [African countries], but it’s expensive to ship from Botswana to Ghana or Botswana to Kenya; that’s been really challenging,” said Thothe. “If you’re selling a unit for $50, and shipping is $100, it doesn’t make sense.”

There are workarounds. Due to a limited number of physical fragrance stores in countries like Ghana, Côte d’Ivoire and Angola, Accra-based fine fragrance brand Scent of Africa and its founder Tanal Ghandour are betting on travel retail to help expand the brand’s footprint. Those who are catching flights in African countries could likely afford a Scent of Africa perfume (a 50ml fragrance costs $70), said Ghandour. To boot, “everything at the airport represents quality — especially in duty free next to all these international brands,” he said.

A travel retail presence also offers protection against brand dilution — contraband products are a significant challenge in the region, said Euromonitor’s Abdoolla, which she cites as a particular issue in markets such as Cameroon. For emerging brands, being stocked in trusted retail stores is key to boosting consumer confidence.

“Consumers… feel comfortable buying it [in travel retail] because they know they’re not buying a fake product,” said Ghandour.

Another option is to go global – particularly as interest in African-inspired fragrances grows. In Senegalese capital Dakar, Réserve en Afrique’s Kozhevnikov and Haddad believe the niche perfume market in Africa is small and nascent; there’s more opportunity outside its borders.

“For us the goal is to get out globally. We would definitely sell in different African countries where there is opportunity,” said Kozhevnikov, adding that the business currently sells direct-to-consumer in Europe and the US, as well as in select retailers in South Africa.

Hometown Glory

Historically, African perfume brands have not taken up much shelf space, both at home and abroad, which has hindered their growth, particularly when compared with larger brands. As Olaseinde Olusola, co-founder of Nigerian speciality boutique Seinde Signature, said: “People are not going to buy a niche perfume if they’ve never heard of it or if they’ve never experienced it.”

New retailers are surfacing to cater to the growing demand for luxury and niche perfume. International beauty brands are inking deals with well-established African retailers such as The Foschini Group, Lintons Beauty World and Edgars, meanwhile niche perfume brands are finding a new home in smaller dedicated retail stores.

Skins Cosmetics, the Dutch-owned luxury boutique specialising in niche and luxury perfume, is a market leader in South Africa, having opened its first store in 2017. Now, it has six, and its portfolio has jumped from 50 to 75 international brands including cult favourites like Byredo, Maison Francis Kurkdjian and Frederic Malle – as brick-and-mortar is still the preferred shopping method in the region, said Max Priebatsch, director of ASCO, Skins Cosmetics’s parent company.

The retailer’s pre-existing relationship with niche and luxury fragrance brands was key to kickstarting momentum and securing big brands, but some brands were hesitant to make the pivot into Africa. “When we first opened Skins, some brands didn’t join. They came in later after the concept was realised,” said Priebatsch.

Building a robust and competitive fragrance market requires the participation of international brands. “These brands enjoy being adjacent to each other,” said Priebatsch.

For example, in order to stock Creed, Skins Cosmetics had to have other luxury brands including Le Labo, Diptyque and Frederic Malle in its portfolio. “These brands tend to move together in terms of the retail environment.”

Educating consumers is also key. Seinde Signature is currently running a campaign around the idea of “niche perfume,” said co-founder Olaseinde Olusola, adding that the store is investing heavily in sampling, which is already proving successful.

As a small — but growing number — of perfume fans are waking up to the local fragrance scene, they’re also becoming more open to the idea of trying new African brands.

“A lot of Nigerians prefer something that is foreign,” said Olusola. “There’s a preconceived notion that the quality wouldn’t be good, but after experiencing African perfumes, they’ll change their minds.”

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Joseph Altuzarra is ushering in a new chapter for his business.

The designer’s 16-year-old namesake womenswear label announced on Tuesday that it had received a minority investment from P180, a new venture capital fund headed up by former Vince chief executive Brendan Hoffman and tech entrepreneur Christine Hunsicker. Terms of the deal were not disclosed.

As part of the deal with P180, Altuzarra will move its e-commerce operations, including inventory management and handling returns, to software platform CaaStle, where Hunsicker serves as chief executive, as well as adding on the ability to rent Altuzarra apparel, bags and more. The goal is for Altuzarra’s e-commerce business to drive profits for the overall brand.

Altuzarra — which last received outside funding from fashion conglomerate Kering for an undisclosed sum in 2013 — is among a growing number of luxury labels investing in their direct selling channels. But while some brands are reducing their reliance on wholesale, in handing its e-commerce operations to CaaStle, Altuzarra will be able to focus on growing its retail partnerships and further developing its assortment, said Shira Sue Carmi, Altuzarra’s chief executive.

“In a lot of ways, this feels like such a great partnership because it really allows us as a team to not have to worry about this part of the business as much,” Altuzarra said. “We’re able to really concentrate on other aspects of the business and for me, be able to concentrate more on design.”

P180 will also help Altuzarra grow its bottom line. The firm, which launched in May and has also invested in multi-brand retailer Elysewalker, is focussed on fashion brands and retailers as investment activity in the sector has softened amid a luxury slowdown. Hoffman argues that P180′s approach reduces risk by allowing portfolio companies to use CaaStle to improve inventory planning, helping them to chart a clear path to profitability.

“We needed to bring a different lens to the business in order to create that value,” Hoffman said. “We’ve been evaluating inventory wrong as an industry … so we feel like we’re bringing a different tool set technology, methodology that will turn these brands and retailers profitable.”

Beyond its investment from P180, Altuzarra is also looking to expand the brand’s visibility. Earlier this month, Joseph Altuzarra was named a designer-in-residence at Victoria’s Secret, where he will design four ready-to-wear collections for the brand. A few of those pieces are set to appear at the Victoria’s Secret fashion show on Tuesday in New York City.

“Victoria’s Secret is a huge machine with incredible marketing capabilities,” Altuzarra said. “That is great for Altuzarra because we’re still growing, and it’s important that we continue to reach new consumers.”

Angelo Baque says he never envisioned opening a store for his 12-year-old, New York-based streetwear label Awake because of how challenging it is to run a brick-and-mortar business in Manhattan.

But in June last year, Awake opened the doors to its first physical shop, on the hot retail strip of Orchard Street on New York’s Lower East Side. Baque said that, aside from once being personally told by the late Virgil Abloh to open a store, he was able to finance it with an investment from Lightwork and was attracted to the negotiable commercial rents in New York post-Covid. He also wanted a physical store to address how his brand and its customers were changing.

“The stuff that we were making at the time, cut-and-sew pieces, were more difficult to sell on a website. At that point, we became a more touchpoint brand, and I started noticing that Kith and Dover Street Market were selling our cut-and-sew pieces [in-store] better than us,” said Baque. “It was also becoming really difficult to show who we were on an Instagram account.”

Awake is part of a wave of menswear brands opening stores across downtown Manhattan at a moment when young consumers are eager for in-person shopping, social-media marketing feels stale and less effective and menswear and streetwear brands are trying to appeal to a changing customer looking for something new. Streetwear brands such as le Père and Fugazi also opened storefronts on Orchard Street within the past year. Stüssy is opening a new flagship on Prince Street and Stòffa opened its first flagship on Grand Street in May. Steven Alan, which closed all its U.S. retail stores in 2019, made a return to Manhattan retail with the opening of a Chelsea store in September. Other young labels, including Denim Tears and Vowels, have opened physical locations this year as well.

Between 2020 and 2023, New York City became a hotbed for first-time retailers, primarily apparel brands, which inked 74 deals during the period, according to the commercial real-estate services and investment company CBRE. While CBRE reports leasing in Manhattan has slowed this past quarter, with fewer vacancies available and post-pandemic rents rising, new-to-market brands are still signing the most deals. And for new menswear retail specifically, downtown New York remains foundational.

“There’s this history of menswear and apparel located in downtown destination environments where the male customer will come and shop,” said CBRE’s senior vice president Joe Hudson. “There’s a number of retailers that have [opened stores] recently that are new names to the neighbourhoods.”

It takes more than finding a space to be successful, however. Baque, a fixture of New York’s menswear ecosystem since his days working retail at Canal Jean Company and Nom de Guerre before serving as Supreme’s brand director for several years, said the time of just opening a store, releasing products and expecting people to show up are long gone.

“If you’re still operating like that, you’re not going to last long,” he said. “You have to constantly activate, communicate and offer a different experience for customers that want to come back.”

Why Menswear Brands Are Embracing New York Retail

Even streetwear brands born online, such as Fugazi, are opening stores to fuel growth beyond social marketing. Although Fugazi’s founder, Trevor Gorji, credits the past seven years of his “internet” brand’s rise to social platforms like Instagram and YouTube, he opened Fugazi’s Lower Manhattan flagship in April to “legitimise” his label. There’s a stigma against “Instagram brands,” he said, and he wanted to show his brand was “serious and real.”

For Vowels creative director Yuki Yagi, the new store, which opened near Manhattan’s Chinatown in May, was a way to infuse his “alternative-luxury” streetwear label — whose graphic t-shirts alone cost $135 — with a sense of prestige. The store doubles as an appointment-only research library filled with 2,000 archival books and magazines curated by Yagi. He compared it to the experience of being offered champagne at Hermès.

To justify the high commercial rents, however, brands often need to figure out how to distinguish themselves in a competitive market where another option for a shopper’s dollars is a short walk away.

Fugazi is attempting to open the next buzzy streetwear cafe with “Le Gaz,” following in the footsteps of retailers like Ralph Lauren, Dover Street Market and Aimé Leon Dore that have used cafés to turn their spaces into destinations for more than shopping. Awake’s store, meanwhile, doubles as an community space with free events.

When managed successfully, these stores can be lucrative. Hudson at CBRE pointed out that the financial returns from a physical store can be more favourable these days than relying entirely on expensive digital marketing and e-commerce, which is seeing an industry-wide slowdown. A strong retail presence can also create a feedback loop that drives shoppers back to a brand’s e-commerce business.

Awake’s physical space, for example, seems to be working for the brand. Baque said that while the global reach of wholesale accounts remain important for Awake’s business, its DTC sales in-store and through e-commerce are now its strongest revenue streams.

“Do you spend $250,000 on Instagram for a whole year of social [marketing] or do you want to put that towards a brick-and-mortar [store] and get some kind of return on investment,” said Yagi. “I think people just want to see something live and more real.”

The Challenges of Running a Store

Managing physical retail does come with adjustments, however, especially when it comes to keeping a space stocked with inventory. Opening Awake’s first store felt like a reset for the brand that took him back to “year one,” according to Baque. He hasn’t only invested heavily in store events to introduce a new generation of customers to Awake, but even re-evaluated the clothing his brand releases.

“I [previously] just designed what I like and didn’t really consider how it would merchandise on the floor,” he said. “Now, that has played a big part into how I design — how it lays out in the shop and how I want it to flow.”

Gorji has found designing and presenting new products in-store consistently more challenging than just dropping products online whenever they’re ready. The brand’s in-store cafe was also opened by three of his friends who are splitting the rent with Gorji.

Yagi has his own unique dynamics to deal with. He described Vowels as a start-up that’s accountable to investors. Last month, the brand tweaked its appointment-only approach by opening a section of the store to the public.

For Gorji, even with the challenges of running a physical space, the opportunity to open a New York store was one he couldn’t pass on.

“I couldn’t wait another year,” Gorji said. “Now was the time to secure something like this; otherwise we’ll regret it.”

Baque, a native New Yorker, is pleased with New York’s menswear retail boom, likening it to a surge in retail shops that took place in Los Angeles about a decade ago. The same is now happening in New York, in his view.

“I’m happy when I see other stores open up because it just adds more to the landscape,” he said.