Core Insights - Coty Inc. reported third-quarter fiscal 2025 results with both net sales and earnings missing Zacks Consensus Estimates, reflecting year-over-year declines [1][4][21] - The company's performance was affected by foreign exchange headwinds and broader market challenges, but it remains strategically positioned for fiscal 2026 with plans for innovation and operational efficiency [2][19] Financial Performance - Adjusted earnings were 1 cent per share, missing the estimate of 5 cents, and down from 5 cents in the prior year [4] - Net revenues were $1,299.1 million, a 6% decline year-over-year, with a 3% adverse impact from foreign exchange [4][21] - On a like-for-like basis, net revenues decreased by 3%, with a 3% decline in Prestige and a 5% decline in Consumer Beauty [5] Segment Analysis - **Prestige Segment**: Net revenues were $829.4 million, a 4% drop, with a 1% foreign exchange headwind. Adjusted operating income increased to $158.8 million, with a margin of 19.1% [8][9] - **Consumer Beauty Segment**: Net revenues were $469.7 million, a 9% decline, primarily due to weaker color cosmetics and body care performance. The segment reported an adjusted operating loss of $10.9 million [11][12] Regional Performance - **Americas**: Net revenues of $529.7 million, a 10% decline, impacted by lower Prestige revenues and market softness [15] - **EMEA**: Generated $610 million in net revenues, a 3% decline, with lower revenues in both segments [16] - **Asia Pacific**: Reported $159.4 million in net revenues, a 5% decline, primarily due to lower Prestige revenues in mainland China [17] Future Outlook - Coty is focusing on resetting its baseline in fiscal 2025, with plans to align retailer inventories and prioritize high-margin categories [19][20] - The company anticipates a high single-digit like-for-like sales decline in the fiscal fourth quarter, projecting a 2% decline for fiscal 2025 [21] - Coty expects gross margin expansion to approximately 65% and EBITDA margin growth of about 70 basis points for fiscal 2025 [22]

Financial Data and Key Metrics Changes - The company anticipates a sharp sales deceleration in Q4, primarily due to a strategic cleanup in the Prestige division rather than worsening market conditions [6][7] - The Consumer Beauty division is expected to continue experiencing a mid-single-digit decline in the cosmetics category globally [8][7] - The company is focused on maintaining gross margin despite the challenges in the Consumer Beauty segment [24][39] Business Line Data and Key Metrics Changes - The Prestige fragrance category continues to grow at a mid-single-digit rate, particularly strong in the U.S. and most European markets, while facing challenges in China [12][14] - The Consumer Beauty division shows diverging trends, with color cosmetics under pressure while mass fragrances are growing at high single digits [18][19] - The company is reallocating resources to support mass fragrances, which are more profitable compared to color cosmetics [21][22] Market Data and Key Metrics Changes - Retailers are tightening inventory management, leading to a disconnect between sell-in and sell-out trends, particularly in the U.S. [46][70] - The mass market is experiencing a low single-digit decline, with color cosmetics negatively impacted while mass fragrances are performing well [94][96] Company Strategy and Development Direction - The company is implementing a "glocalization" strategy, empowering regional teams to make decisions that cater to local market dynamics [49][50] - A focus on innovation and strategic revenue management is being emphasized to navigate the current market challenges [39][56] - The company is committed to improving EBITDA margins through structural changes and ongoing productivity initiatives [86][84] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current macroeconomic uncertainties but remains optimistic about gradual improvement in sales trends throughout fiscal 2026 [27][28] - The company is confident in the resilience of the beauty market and its ability to adapt to changing consumer preferences and competitive pressures [100][101] Other Important Information - The company is facing tariff impacts, particularly in Prestige Fragrance, but has taken proactive measures to mitigate these effects [34][35] - A mid-single-digit price increase is planned for the Prestige portfolio, with expectations of inelastic demand [38][74] Q&A Session Summary Question: Q4 sales outlook and consumer demand - Management clarified that the anticipated sales deceleration is due to strategic actions in the Prestige division rather than a decline in market conditions [6][7] Question: Growth sustainability in the prestige fragrance category - Management believes mid-single-digit growth in the U.S. and Europe is sustainable, driven by increased penetration among younger consumers [12][14] Question: Consumer Beauty business and profitability - The company is focusing on increasing profitability in the Consumer Beauty division by reallocating resources and emphasizing mass fragrances [18][21] Question: FY '26 phasing and sales trends - Management expects continued declines in H1 but anticipates gradual improvement throughout the year [27][28] Question: Tariff impact and pricing strategy - The company is implementing pricing strategies to offset tariff impacts, with a focus on maintaining gross margins [34][38] Question: Retailer replenishment and inventory management - Retailers are tightening inventory, leading to a new pattern of low inventory levels, which the company is actively managing [46][70] Question: Organizational changes in the U.S. - The company is empowering regional teams to enhance agility and responsiveness to local market conditions [49][50] Question: Cost savings initiatives and structural changes - Management emphasized that the cost-saving measures are structural and aimed at optimizing the organization for current market volatility [55][86] Question: Current market conditions for prestige vs. consumer beauty - The prestige division is seeing stable growth, while the consumer beauty segment is facing challenges, particularly in color cosmetics [90][94]

Financial Data and Key Metrics Changes - The company anticipates a sharp sales deceleration in Q4, primarily due to a strategic cleanup in the Prestige division rather than worsening market conditions [5][6] - The Consumer Beauty division is expected to continue experiencing a mid-single-digit decline in the cosmetics category globally [6][7] - The company reported a high single-digit decline in sales, which could have been a low single-digit decline without the cleanup efforts [7] Business Line Data and Key Metrics Changes - The Prestige fragrance category continues to grow at a mid-single-digit rate, particularly strong in the U.S. and most European markets [10][12] - The Consumer Beauty division shows diverging trends, with color cosmetics under pressure while mass fragrances are growing at high single digits [16][19] - The company is reallocating resources to focus on more profitable mass fragrances while still supporting color cosmetics [19][20] Market Data and Key Metrics Changes - The U.S. market is experiencing significant pressure in color cosmetics, while mass fragrances are performing well [19][92] - Retailers are tightening inventory management, impacting both the Consumer Beauty and Prestige divisions [42][70] - The company sees a normalization in the Prestige division, with growth in fragrances but continued pressure in color cosmetics [88][90] Company Strategy and Development Direction - The company is focusing on cleaning up the baseline in the Prestige division to stimulate demand and prepare for a strong pipeline of innovation in fiscal 2026 [6][7] - There is a strategic shift towards prioritizing mass fragrances due to their higher profitability compared to color cosmetics [19][20] - The company is implementing organizational changes to enhance agility and responsiveness to local market conditions [45][46] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about the operating environment, expecting some sales decline in the first half of fiscal 2026 but gradual improvement later in the year [25][26] - The company is confident in its ability to manage tariff impacts and is taking proactive measures to mitigate risks [34][36] - Management emphasizes the resilience of the beauty industry and the company's strong fundamentals despite current challenges [98] Other Important Information - The company is implementing mid-single-digit price increases in the Prestige category to offset costs, with expectations of inelastic demand [36][72] - The company is actively evaluating its brand portfolio and may exit underperforming brands [63][64] Q&A Session Summary Question: Q4 sales outlook and consumer demand - Management clarified that the anticipated sales deceleration is not due to worsening market conditions but rather a strategic cleanup in the Prestige division [5][6] Question: Growth sustainability in the prestige fragrance category - Management believes mid-single-digit growth in the U.S. is sustainable, driven by increased penetration among new consumer segments [10][12] Question: Consumer Beauty business profitability and potential brand exits - Management is focused on increasing profitability in the Consumer Beauty division and is evaluating the future of brands like CoverGirl [15][19] Question: Impact of tariffs and pricing strategies - Management indicated that tariff impacts are expected to be more significant in fiscal 2026, with proactive measures already in place [34][36] Question: Retailer inventory management trends - Management noted that retailers are tightening inventory, which is affecting both divisions, and they are working to reconcile sell-in and sell-out trends [42][70] Question: Organizational changes and agility - Management discussed the restructuring aimed at enhancing local decision-making and agility in response to market dynamics [45][46] Question: Cost savings initiatives and their impact on the bottom line - Management confirmed that the cost savings initiatives are structural and aimed at creating headroom for investment in brand growth [81][84] Question: Current market conditions for prestige versus consumer beauty - Management observed that the prestige fragrance market continues to grow, while the Consumer Beauty segment is facing challenges, particularly in color cosmetics [88][92]

COTY 3Q FY25 EARNINGS CALL May 6, 2025 CURRENT BACKDROP SUE NABI CHIEF EXECUTIVE OFFICER CHALLENGES FROM SLOWER CATEGORY TRENDS, ELEVATED PRESTIGE COMPARISONS AND RETAILER DESTOCKING, AND RECALIBRATED CB EQUATION COTY FOCUSED ON PROTECTING PROFITABILITY, CASH FLOW AND DELEVERAGING PATH COTY MORE STRONGLY POSITIONED TO WEATHER CURRENT TARIFF AND MACRO UNCERTAINTY 2 3 Q3 SALES -2.5% WITH LFL VOLUMES -3%, INCLUDING FRAGRANCES +1% -4.8% PRESTIGE CONSUMER BEAUTY WITH VOLUMES FLAT Notes: All figures refer to LFL ...

Core Insights - The event "2025 China Listed Company Brand Value List Release Conference" aims to explore brand elevation paths amid digital transformation, emphasizing the role of international brands in enhancing consumer experience and stimulating market vitality in China [1][9] - Coty, a global beauty company, has been actively expanding in the Chinese market, representing a successful case of foreign brands growing alongside China [1][9] Company Overview - Mathieu Dufresne, the General Manager of Coty China, has extensive experience in the beauty and fragrance industry, focusing on understanding the evolving Chinese consumer landscape and enhancing brand influence [6][7] - Under Dufresne's leadership, Coty is prioritizing high-end fragrance product development, digital engagement, and retail expansion to achieve growth in the competitive Chinese beauty market [6][7] Market Dynamics - Coty's financial report for the first half of fiscal year 2025 shows a net revenue of $3.341 billion (approximately 24.1 billion RMB), with a year-on-year growth of 2%, driven by the performance of high-end and mass fragrance segments [9] - The global beauty market is experiencing slower growth compared to previous years, but fragrance products are outperforming other categories, indicating resilience in this segment [9][10] - The Chinese fragrance market, characterized by low penetration, is becoming increasingly competitive, with both international and local brands vying for market share [9][10] Strategic Approaches - Coty has developed three effective methodologies for localizing its brand in China: connecting brand spirit with local culture, creating emotional resonance, and leveraging local ambassadors to drive consumer engagement [7][8] - The rise of domestic beauty brands and changing consumer preferences pose challenges for international high-end beauty brands, necessitating a shift towards localized competition strategies [10]

Core Insights - Coty reported $1.3 billion in revenue for the quarter ended March 2025, reflecting a year-over-year decline of 6.2% and an EPS of $0.01 compared to $0.05 a year ago, indicating a significant drop in earnings [1] - The revenue fell short of the Zacks Consensus Estimate by -0.43%, while the EPS surprise was -80.00% against the consensus estimate of $0.05 [1] Financial Performance Metrics - Coty's shares returned +5.3% over the past month, underperforming the Zacks S&P 500 composite's +11.5% change, with a Zacks Rank 4 (Sell) suggesting potential underperformance in the near term [3] - Geographic revenues showed varied performance: - Americas: $529.70 million, down -10.1% year-over-year and below the estimated $546.01 million [4] - Asia Pacific: $159.40 million, a -5.5% change year-over-year, exceeding the estimate of $146.69 million [4] - EMEA: $610 million, a -2.9% change year-over-year, slightly below the estimate of $617.96 million [4] - Net revenues by segment: - Prestige: $829.40 million, down -4.4% year-over-year, slightly below the estimate of $833.25 million [4] - Consumer Beauty: $469.70 million, down -9.4% year-over-year, also below the estimate of $471.58 million [4] - Adjusted Operating Income (Loss) metrics: - Consumer Beauty: -$10.90 million, better than the estimate of -$11.85 million [4] - Prestige: $158.80 million, exceeding the estimate of $141.62 million [4] - Corporate: -$169.60 million, significantly worse than the estimate of -$69.77 million [4]

Core Viewpoint - Coty reported quarterly earnings of $0.01 per share, missing the Zacks Consensus Estimate of $0.05 per share, representing an earnings surprise of -80% [1]. Financial Performance - The company posted revenues of $1.3 billion for the quarter ended March 2025, missing the Zacks Consensus Estimate by 0.43%, and down from $1.39 billion a year ago [2]. - Over the last four quarters, Coty has not surpassed consensus EPS estimates and has consistently missed revenue estimates [2]. Stock Performance - Coty shares have declined approximately 25.9% since the beginning of the year, compared to a -3.9% decline in the S&P 500 [3]. - The current Zacks Rank for Coty is 4 (Sell), indicating expected underperformance in the near future [6]. Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.05 on revenues of $1.3 billion, and for the current fiscal year, it is $0.36 on revenues of $5.95 billion [7]. - The trend for estimate revisions ahead of the earnings release has been unfavorable, which may impact future stock performance [6]. Industry Context - The Cosmetics industry, to which Coty belongs, is currently ranked in the bottom 5% of over 250 Zacks industries, suggesting a challenging environment for stock performance [8].

Coty Reports Q3 Results And Shares Multi-Pronged Plan of Attack to Fuel Momentum in FY26 and Beyond 2025 remains a transition year for Coty. In Prestige, we are absorbing the triple-headwind of a slowing fragrance market, lapping a blockbuster innovation year, and depleting elevated retailer inventory, all of which was particularly acute in the U.S. We are laser focused on entering FY26 with alignment between sell-in and sell-out, to create a healthy baseline for growth. In Consumer Beauty, we have begun re ...

Core Viewpoint - Coty Inc. is expected to report a decline in revenues for the third quarter of fiscal 2025, with estimates at $1.3 billion, reflecting a 5.8% decrease from the previous year [1] Revenue and Earnings Estimates - The consensus estimate for earnings has decreased by one cent to 5 cents per share, consistent with the same quarter last year [2] - Coty has experienced a trailing four-quarter negative earnings surprise averaging 65.7% [2] Business Challenges - Coty is facing significant challenges in key markets, including China, Travel Retail Asia, Australia, and Consumer Beauty in the U.S., with expectations of continued pressure into the upcoming quarter [2] - Organic like-for-like revenues are anticipated to decline by 1.5% for the third quarter of fiscal 2025 [2] Currency and Cost Pressures - Currency headwinds are expected to impact results, with a projected foreign exchange headwind of approximately 3% to 4% in the second half of the fiscal year [3] - Increased advertising and consumer promotions (A&CP) spending has been noted, with A&CP costs remaining in the high 20s percentage-wise, which may further affect margins and profitability [4] Strategic Initiatives - Despite challenges, Coty's strategic priorities, such as expanding its prestige fragrance portfolio and enhancing digital and direct-to-consumer capabilities, are expected to support performance and margin resilience [5] Earnings Prediction - The current model does not predict an earnings beat for Coty, with a Zacks Rank of 4 (Sell) and an Earnings ESP of -41.20% [6]

An updated edition of the February 26, 2025 article.The beauty and cosmetics space has evolved from ancient natural remedies to today's advanced, science-backed skincare and makeup solutions. Beauty standards and preferences have changed over time, shaped by cultural influences, technological innovations and shifting societal values. Now a multi-billion-dollar global industry, beauty continues to redefine self-expression and personal identity through a diverse range of products — from skincare and makeup to ...