(Adds details on quarter, conference call, background and share price)
Nov 9 (Reuters) - Beauty products maker Coty Inc on Thursday posted a quarterly profit that beat Wall Street estimates, selling more high-margin products like Younique makeup and ghd hair care merchandise that are popular with millennials.
Coty, to keep pace with rivals Estee Lauder and LVMH's Sephora, has added brands that appeal to younger customers. Younique has beauty consultants who sell products only through social media and ghd offers haircare and styling items.
This past year, Coty became the third-largest beauty products maker after buying more than 40 brands, including luxury licenses Hugo Boss and Gucci, from Procter & Gamble .
Coty's shares rose 9 percent to $16.10 before the bell.
In the latest first quarter, Coty's luxury beauty unit sales rose 4 percent and consumer beauty, its biggest unit, saw a 2 percent increase.
Coty's adjusted gross margins rose 2.8 percent, gaining from the acquisition of higher-margin businesses, and integrating the supply-chain of the new units.
Even after expanding its portfolio of brands, Chief Executive Camillo Pane said some of the newer ones such as CoverGirl and Clairol, are facing waning demand as retailers cut back on inventories.
"Results are likely to be a bit uneven from quarter to quarter going forward," Pane said in a statement, adding on a conference call that sales in the second half would be roughly comparable with the previous year.
The company posted a net loss of $19.7 million, or 3 cents per share, in quarter ended Sept. 30, compared with break-even last year, on higher costs from the P&G deal.
Excluding items, Coty earned 10 cents per share, compared to analysts' estimates of a profit of 7 cents. Net sales more than doubled to $2.24 billion, but was in line with analysts' estimates, according to Thomson Reuters I/B/E/S.
Estee Lauder reported better-than-expected sales and profit last week and lifted its expectations for the holiday-quarter, banking on its newly-acquired Too Faced and Becca brands, which come in pastel colors and are popular with millennials. (Reporting by Gayathree Ganesan and Uday Sampath Kumar in Bengaluru; Editing by Anil D'Silva, Bernard Orr)