Core Insights - Coty reported quarterly earnings of $0.11 per share, missing the Zacks Consensus Estimate of $0.22 per share, and down from $0.25 per share a year ago, representing an earnings surprise of -50% [1] - The company posted revenues of $1.67 billion for the quarter ended December 2024, missing the Zacks Consensus Estimate by 2.65%, and down from $1.73 billion year-over-year [2] - Coty shares have underperformed the market, losing about 2.9% since the beginning of the year compared to the S&P 500's gain of 2.5% [3] Earnings Outlook - The current consensus EPS estimate for the coming quarter is $0.08 on revenues of $1.4 billion, and for the current fiscal year, it is $0.51 on revenues of $6.18 billion [7] - The estimate revisions trend for Coty is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Cosmetics industry, to which Coty belongs, is currently in the top 29% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - European Wax Center, Inc., another company in the same industry, is expected to report quarterly earnings of $0.05 per share, reflecting a year-over-year change of -50% [9]

Financial Performance - Coty Inc. reported financial results for the fiscal year ended June 30, 2024, with a focus on strategic transformation and revenue growth initiatives [172]. - Net revenues for the three months ended December 31, 2024, decreased by 3%, or $57.7 million, to $1,669.9 million from $1,727.6 million in the same period of 2023 [203]. - Prestige segment net revenues decreased by 1%, or $6.5 million, to $1,116.1 million, while Consumer Beauty segment net revenues decreased by 8%, or $51.2 million, to $553.8 million [206][208]. - The overall decrease in net revenues was attributed to a 3% decline in unit volume and a negative foreign currency exchange impact of 2%, partially offset by a positive price and mix impact of 2% [203]. - Net income for the three months ended December 31, 2024, was $30.6 million, a decrease of 84% compared to $186.0 million in the same period of 2023 [224]. - Net income attributable to Coty Inc. for the three months ended December 31, 2024, decreased by 87% to $23.7 million from $180.9 million in the same period of 2023 [242]. - Net revenues for the six months ended December 31, 2024, decreased by 1% to $3,341.4 million from $3,369.0 million in the same period of 2023 [244]. - The net income for the six months ended December 31, 2024, was $121.3 million, a decrease of 38% compared to $196.2 million in 2023 [262]. Revenue Growth and Market Trends - The company aims to stabilize consumer beauty brands through innovation and improve execution, targeting a significant expansion in prestige fragrance and cosmetics markets [175]. - The fragrance category experienced mid-single digit percentage net revenue growth in the first half of fiscal 2025, driven by high-single digit percentage growth in the overall fragrance market [189]. - Net revenues from Prestige fragrances increased by a mid-single digit percentage in the first half of fiscal 2025, reflecting a deceleration in growth compared to the prior year [189]. - Net revenues in the Asia Pacific region declined by high-single digit percentage in the first half of fiscal 2025, impacted by challenging economic conditions in China [189]. - The Americas region saw a mid-single digit percentage decline in net revenues during the first half of fiscal 2025, driven by softness in the color cosmetics market in the United States [189]. - The skincare portfolio contributed a low single digit percentage of the first half fiscal 2025 net revenue, with ongoing expansion efforts [187]. Cost Management and Efficiency - The company is implementing cost efficiency and restructuring initiatives to improve gross margin and reduce debt levels [175]. - The annual gross margin is anticipated to remain in the mid-sixties, allowing for funding of new product initiatives and advertising investments [190]. - The company is re-accelerating cost reduction efforts to deliver savings above approximately $120 million in anticipation of a more uncertain demand backdrop [190]. - Cost of sales decreased by 8%, or $47.8 million, to $555.7 million, resulting in a gross margin increase of approximately 160 basis points [211]. - Selling, general and administrative expenses decreased by 4%, or $36.1 million, to $797.3 million, with expenses as a percentage of net revenues decreasing to 47.7% [212]. Strategic Initiatives and Future Outlook - Coty plans to enhance its skincare portfolio and digital capabilities, with a particular emphasis on direct-to-consumer channels and growth in China [175]. - Future product launches and rebranding efforts are anticipated, particularly in skincare and prestige cosmetics, with associated costs and marketing strategies being closely monitored [176]. - Coty is facing challenges related to global supply chain disruptions and inflationary pressures, which may impact pricing strategies and consumer demand [176]. - The company is committed to sustainability initiatives and aims to establish itself as an industry leader in this area, addressing climate change concerns through innovative practices [176]. - Coty emphasizes the importance of adapting to changing consumer preferences and market trends to maintain competitive positioning in the beauty industry [175]. Capital Allocation and Financial Strategy - Coty is evaluating its capital allocation strategy, including potential changes to dividend policies and stock repurchase plans [176]. - The Board of Directors suspended the payment of dividends on Common Stock until a Net debt to Adjusted EBITDA target of 2x is approached [301]. - Dividends on Convertible Series B Preferred Stock are expected to be paid in cash on a quarterly basis, subject to Board declaration [302]. - The company is focused on deleveraging its balance sheet and improving the maturity mix of its debt through refinancing and repayment initiatives [289]. Tax and Interest Expenses - The effective income tax rate rose to 45.9% in Q4 2024 from 27.7% in Q4 2023, influenced by losses on forward repurchase contracts and fair value losses related to investments [234]. - Net interest expense decreased to $54.4 million in Q4 2024 from $60.1 million in Q4 2023, attributed to lower debt balances and interest rates [230]. - Net interest expense decreased to $116.2 million in the six months ended December 31, 2024, from $129.9 million in 2023 due to lower debt balances and interest rates [270]. Other Financial Metrics - Adjusted operating income for the total company was $333.7 million for the three months ended December 31, 2024, compared to $309.3 million in the same period of 2023 [222]. - Adjusted operating income increased by 8% to $333.7 million in Q4 2024 from $309.3 million in Q4 2023, with an adjusted operating margin of 20.0% [224]. - Adjusted EBITDA rose by 7% to $390.7 million in Q4 2024, compared to $366.4 million in Q4 2023, with an adjusted EBITDA margin of 23.4% [224]. - The adjusted EBITDA for the six months ended December 31, 2024, increased by 3% to $750.8 million from $726.7 million in 2023 [262].

Financial Performance - In 1H25, Coty's reported net revenue decreased by 1% year-over-year, impacted by a 2% negative effect from foreign exchange (FX) and a 1% headwind from the divestiture of the Lacoste license[2]. - The reported operating income for 1H25 was $506.0 million, reflecting a 17% increase year-over-year, with an operating margin of 15.1%[8]. - Coty's reported net income for 1H25 was $100.0 million, down from $175.9 million in the prior year, resulting in a net income margin of 3.0%[9]. - Year-to-date net revenues decreased by 1% to $3,341.4 million, with a 6% decline in Consumer Beauty net revenue[35]. - Year-to-date reported operating income increased by 17% to $506.0 million, reflecting a 15.1% operating margin[35]. - Year-to-date adjusted EBITDA is projected to grow in the low single digits to $1,115-1,125 million, with a 70-90 basis points margin expansion target[28]. - FY25 adjusted EPS is expected to be between $0.50-0.52, indicating mid-to-high single digit percentage growth[29]. - Year-to-date reported EPS of $0.11 declined from $0.20 in the prior year, primarily due to a negative impact from the equity swap mark-to-market of $0.15[38]. - Year-to-date adjusted operating income of $637.3 million increased by 4% from $611.5 million in the prior year, with an adjusted operating margin of 19.1%, up 90 basis points year-over-year[38]. - Year-to-date adjusted EBITDA of $750.8 million increased 3% from $726.7 million in the prior year, with an adjusted EBITDA margin of 22.5%, up 90 basis points[38]. Revenue Trends - In Q2, Coty's reported net revenue declined by 3% on a reported basis, with a 2% headwind from FX, while LFL revenue decreased by 1%[2]. - The Americas region saw a reported net revenue decline of 7% in Q2, impacted by softness in the color cosmetics market and lower body care revenue in Brazil[5]. - Prestige net revenue of $2,230.2 million in 1H25 grew 2% on a reported basis, driven by Europe, the Middle East, and Latin America[40]. - Consumer Beauty net revenue of $1,111.2 million in 1H25 declined 6% on a reported basis, including a 4% negative impact from FX[42]. - EMEA net revenue of $1,627.6 million in 1H25 increased 4% on a reported basis, supported by broad-based mid-single-digit growth across most European markets[46]. Cost and Margin Analysis - Coty's gross margin expanded to 66.1% in 1H25, an increase of 180 basis points year-over-year, driven by supply chain savings and strong pricing discipline[7]. - Q2 adjusted gross margin expanded by 170 basis points year-on-year, reaching 66.8%[18]. - The company experienced a significant decrease in net income margin, dropping to 1.8% for the three months ended December 31, 2024, compared to 10.8% in the same period of the previous year[86]. - Gross profit margin improved to 66.7% for the three months ended December 31, 2024, compared to 65.1% in the prior year[75]. Cash Flow and Debt Management - Coty generated free cash flow of $419.0 million in Q2, with total debt at the end of the quarter amounting to $3,459.0 million[11]. - The company plans to purchase up to $300 million of its outstanding Senior Secured Notes to reduce total outstanding public debt as part of its deleveraging strategy[49]. - Total debt of $3,459.0 million on December 31, 2024, decreased from $4,002.2 million on September 30, 2024, resulting in a total debt to net income ratio of 100.3x[38]. - Free cash flow for the six months ended December 31, 2024, was $411.1 million, compared to $487.0 million in 2023, indicating a decrease of 16%[96]. - Cash and cash equivalents decreased to $249.6 million as of December 31, 2024, down from $300.8 million as of June 30, 2024[106]. Strategic Initiatives - Coty signed a new beauty license with Swarovski to develop and distribute fragrances, with the first offering expected to launch in 2026[14]. - The company is focused on implementing a multi-year strategic transformation agenda aimed at revenue growth, cost control, and gross margin improvement[52]. - The company anticipates ongoing expansion into prestige cosmetics and building a comprehensive skincare portfolio[52]. - The company aims to enhance its digital and direct-to-consumer capabilities, particularly in growth engine markets like China[52]. - The company is committed to sustainability initiatives and aims to establish itself as an industry leader in this area[52]. Market Challenges - The company is facing challenges related to global supply chain disruptions and inflationary pressures, impacting its operational performance[54]. - The company is evaluating the impact of geopolitical risks, including the war in Ukraine and conflicts in the Middle East, on its business operations[54]. - The company is experiencing increased competition and shifts in consumer preferences, necessitating agile responses to market trends[53]. Non-GAAP Measures and Financial Definitions - The Company presents adjusted operating income, adjusted EBITDA, and adjusted net income, which exclude restructuring costs, amortization, and acquisition-related expenses, providing a clearer view of core operating performance[62]. - Adjusted EBITDA margin for the Company is calculated by dividing adjusted EBITDA by net revenues, reflecting the operational efficiency[63]. - The Company defines free cash flow as net cash provided by operating activities less capital expenditures, highlighting cash available for strategic measures[67]. - Financial Net Debt is defined as total debt less cash and cash equivalents, while Economic Net Debt further excludes the value of the Wella Stake[67]. - The Company operates globally, with most net revenues generated outside the U.S., and presents results in constant currency to assess underlying business performance[67].

An Estee Lauder counter is seen on the floor of a department store in Brooklyn on Feb. 5, 2025 in New York City.Several beauty stocks posted major losses this week, as companies like E.l.f. Beauty and Estee Lauder reported disappointing earnings and cut guidance.E.l.f. closed out its worst week since August 2018, with shares cratering nearly 29% over the five-day period. The cosmetics brand on Thursday posted a revenue beat for its fiscal third quarter, but missed on adjusted earnings per share and cut its ...

Coty Inc. (COTY) is likely to register a decline in its top and bottom lines when it reports second-quarter fiscal 2025 earnings on Feb. 10.The Zacks Consensus Estimate for revenues is pegged at $1.72 billion, suggesting a decrease of 0.7% from the prior-year reported figure. The consensus mark for earnings has declined a penny in the past seven days to 20 cents per share, indicating a decrease of 20% year over year. COTY has a trailing four-quarter negative earnings surprise of 46.9%, on average.Stay up-to ...

Analysts on Wall Street project that Coty (COTY) will announce quarterly earnings of $0.20 per share in its forthcoming report, representing a decline of 20% year over year. Revenues are projected to reach $1.72 billion, declining 0.7% from the same quarter last year.The current level reflects a downward revision of 0.6% in the consensus EPS estimate for the quarter over the past 30 days. This demonstrates how the analysts covering the stock have collectively reappraised their initial projections over this ...

The market expects Coty (COTY) to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended December 2024. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.The earnings report, which is expected to be released on February 10, 2025, might help the stock move higher if these key numbers are bett ...

Coty Inc. (NYSE: COTY ) has beaten its peers in nine of the last thirteen quarters. At the same time the company has been reducing its debt to a more manageable level. Despite this, the stockWith a professional background spanning multiple industries, from logistics, construction to retail, I bring a diverse perspective to investing. Originally from Central America, I pursued my graduate studies there before studying a master’s degree in Spain, where I now reside. My international education and career exper ...

Coty (NYSE: COTY ) shares have been such a disappointment for its shareholders since the beginning of 2023. Together with comparable legacy competitors like L'Oréal ( OTCPK:LRLCY ), and Estée Lauder ( EL ), the company has not been able toI am a dedicated financial risk manager and investor specializing in financials, consumer, and technology industries. I have been involved in the investing world for over seven years, making deep analyses and managing different types of portfolios.I believe in deep researc ...

Coty Inc. (COTY) has faced significant challenges in an evolving beauty market, which has led to a notable 42.7% drop in its share price over the past year. The beauty industry, which previously experienced exceptional growth, is now entering a more normalized phase, creating hurdles for Coty. The company is grappling with rising operational costs, poor performance in key international markets, such as China, and unfavorable currency fluctuations.Coty’s decline is steeper than the 39% drop in the industry a ...