Financial Data and Key Metrics Changes - Fiscal year 2025 net revenues declined by 2% like for like, with Q4 revenues declining by 9% [17] - EBITDA grew at a CAGR of 9% from CHF 760 million in fiscal year 2021 to CHF 1.08 billion in fiscal year 2025, with an EBITDA margin expansion of 190 basis points to 18.4% [8][21] - Adjusted EPS for fiscal year 2025 was $0.50, reflecting a 4% growth despite lower operating income [22] - Free cash flow for fiscal year 2025 was CHF 278 million, slightly below the target of CHF 300 million [22] Business Line Data and Key Metrics Changes - Prestige Fragrance business grew to a £3.5 billion segment with a CAGR of 10% from fiscal year 2021 to fiscal year 2025 [6] - Consumer Beauty business achieved a 2% CAGR from fiscal year 2021 to fiscal year 2025, recovering from previous declines [7] - In Q4, Prestige sellout grew low single digits, while Consumer Beauty sellout declined high single digits against a modestly positive market [20] Market Data and Key Metrics Changes - The U.S. Prestige beauty market grew by approximately 4% in fiscal year 2025, but the company experienced a mid-single-digit percentage decline in like-for-like sales [13] - The mass beauty market in the U.S. declined by roughly 1% in fiscal year 2025, with the company's like-for-like sales declining by a mid-teen percentage [13] - In Asia, excluding China, sellout grew approximately four times ahead of market growth [58] Company Strategy and Development Direction - The company is refocusing on core strengths in fragrances, which represent over 60% of revenues, and aims to drive growth in structurally profitable beauty categories [36][37] - A strategic shift is underway to prioritize investment in high-return areas while rebalancing resources away from less profitable segments like mass cosmetics [45][66] - The company is implementing the "All in to Win" program to deliver CHF 130 million in annual fixed cost savings through fiscal year 2027 [23] Management's Comments on Operating Environment and Future Outlook - The management acknowledged challenges in fiscal year 2025, including retailer inventory buildup and execution weaknesses, which impacted performance [11] - There is an expectation of sequential improvement in sales and profit trends in fiscal year 2026, with a return to growth anticipated in the second half [30][73] - The company is actively preparing for multiple scenarios regarding tariffs and geopolitical uncertainties, with mitigation strategies in place [29][25] Other Important Information - The company has received 12 consecutive debt rating upgrades, positioning it just one notch below investment grade [9] - The company is committed to sustainability, achieving a Grand EcoVadis rating placing it in the top 5% of companies globally for sustainability performance [71] Q&A Session Summary Question: What are the expectations for sales trends in fiscal year 2026? - The company anticipates a like-for-like decline of 6% to 8% in Q1 and a decline of 3% to 5% in Q2, with sequential improvement expected throughout the year [31] Question: How is the company addressing the challenges in the U.S. market? - The company is taking decisive actions, including new leadership and a more agile regional structure, to address underperformance in the U.S. market [58] Question: What are the key initiatives for cost savings? - The company is targeting approximately CHF 200 million in combined fixed costs and productivity savings in fiscal year 2026 [50]

Core Insights - Coty's upcoming quarterly earnings report is projected to show earnings of $0.01 per share, reflecting a significant increase of 133.3% year-over-year, despite an anticipated revenue decline of 11.7% to $1.2 billion [1] Earnings Projections - There has been an 8.6% upward revision in the consensus EPS estimate over the last 30 days, indicating analysts' reassessment of their forecasts [2] - Changes in earnings projections are crucial for predicting investor reactions, with empirical studies showing a strong correlation between earnings estimate trends and short-term stock price movements [3] Revenue Estimates - Analysts estimate 'Net Revenues- Prestige' to be $721.85 million, representing a year-over-year decline of 10.1% [5] - The 'Net Revenues- Consumer Beauty' is projected at $477.45 million, indicating a year-over-year decrease of 14.8% [5] Operating Income Estimates - The consensus for 'Adjusted Operating Income (Loss)- Prestige' is $76.95 million, down from $87.80 million reported in the same quarter last year [5] - For 'Adjusted Operating Income (Loss)- Consumer Beauty', analysts predict a loss of -$1.36 million, a significant drop from the $20.20 million reported in the previous year [6] Stock Performance - Coty shares have increased by 1% over the past month, compared to a 3.3% rise in the Zacks S&P 500 composite [6] - With a Zacks Rank of 3 (Hold), Coty is expected to closely follow overall market performance in the near term [6]

Core Insights - Coty Inc. is expected to report a decline in revenue for the fourth quarter of fiscal 2025, with the Zacks Consensus Estimate at $1.2 billion, reflecting a 12% decrease from the previous year [1] - The earnings consensus has remained stable at two cents per share, indicating a recovery from a loss of three cents in the same quarter last year [2] - Coty's strategic initiatives, including expanding its prestige fragrance portfolio and enhancing digital capabilities, are anticipated to support performance despite challenges [3][4] Revenue and Earnings Performance - The fragrance segment continues to be a key revenue driver for Coty, with management focused on optimizing the cost structure [4] - However, the company faces significant challenges in markets such as China, Travel Retail Asia, and U.S. Consumer Beauty, with expected organic LFL revenue decline of 9.3% for the fourth quarter [5] - Higher advertising and promotional spending, along with currency headwinds, are likely to negatively impact the upcoming quarter's results [5][10] Earnings Predictions - The current model does not predict an earnings beat for Coty, with an Earnings ESP of 0.00% and a Zacks Rank of 3 [6] - Comparatively, other companies like Estée Lauder are also expected to see declines in both revenue and earnings, with a consensus revenue estimate of $3.4 billion, down 12.2% year-over-year [8]

Investors interested in stocks from the Cosmetics sector have probably already heard of Coty (COTY) and Estee Lauder (EL) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look. Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate ...

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks. Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional v ...

Core Insights - The beauty industry is experiencing a resurgence in the fragrance sector, with major brands and local companies expanding their offerings [2][3] - Interparfums has signed a fragrance licensing agreement with Longchamp, with the first fragrance expected to launch in 2027 [2] - The market is witnessing a trend of cross-industry brands entering the fragrance space, indicating a shift in consumer preferences towards emotional and everyday use of fragrances [8][10] Industry Developments - Interparfums is set to fully manage the Longchamp fragrance line, which will include the creation, development, production, and sales of the brand's perfumes [2] - Coty has launched a new mass-market fragrance brand, Origen, targeting the U.S. market with a focus on storytelling through scents [5] - TSG Consumer has acquired the independent fragrance brand Phlur, which emphasizes emotional resonance and affordability [7] Market Trends - The global fragrance market is projected to grow steadily, with estimates suggesting it will exceed $79.3 billion by 2027, driven by the demand for self-care and emotional healing [8][9] - The fragrance market is expanding at a compound annual growth rate of over 3%, with the Chinese market showing significant growth potential despite low penetration rates [9] - Fragrances are increasingly seen as everyday emotional consumption items rather than luxury goods, with younger consumers seeking emotional connections through scent [9][10] Financial Performance - Puig's latest half-year report indicates that its fragrance and fashion division generated €1.685 billion in revenue, accounting for over 70% of total revenue, with an 8.6% year-on-year growth [8] - The fragrance industry boasts a gross margin of approximately 70%, with low raw material costs and high product turnover rates contributing to its profitability [9]

Industry Overview - The beauty and cosmetics industry has evolved into a multi-billion-dollar global market, driven by innovation, cultural trends, and changing consumer values [2] - Skincare has become a dominant trend, with consumers prioritizing healthy skin over cosmetic coverage, leading to a surge in products featuring natural ingredients and dermatologist-recommended solutions [3][4] - Sustainability is increasingly important, with a focus on ethically sourced ingredients, sustainable packaging, and transparent business practices [5] Company Insights - Johnson & Johnson (JNJ) is making strides in sustainability through initiatives like reducing plastic usage and improving recyclability in its skincare and personal care lines [6] - Unilever PLC (UL) is integrating advanced technologies into its skincare brands, focusing on dermocosmetics that combine pharmaceutical research with skincare [8] - The Estee Lauder Companies Inc. (EL) is undergoing a transformation with its "Beauty Reimagined" initiative, emphasizing digital agility and consumer-centricity [10] - Coty Inc. is redefining its position in the beauty landscape through innovation and digital acceleration, with a strong focus on prestige fragrances [15][16] - Ulta Beauty is enhancing its customer experience through digital innovation and a loyalty ecosystem, with over 45 million active rewards members [20][22] Technological Advancements - Technology is reshaping the beauty industry, with AI-powered diagnostics and augmented reality enhancing the shopping experience [7] - The Estee Lauder Companies is leveraging AI for demand forecasting and product development, partnering with Adobe and Microsoft for further innovation [13][14] - Ulta Beauty is utilizing mobile-first innovations and AI tools for personalized beauty experiences, enhancing its omnichannel strategy [21][22] Market Trends - The rise of K-beauty and J-beauty influences consumer preferences, leading to increased investment in hydration-focused and sun protection products [4] - Coty's online sales now contribute nearly 20% to total revenues, supported by partnerships with platforms like Amazon and TikTok Shop [17] - Ulta Beauty is seeing growth across multiple categories, particularly in fragrance and skincare, while also expanding its wellness offerings [19]

Group 1 - The article emphasizes the importance of earnings estimates and revisions in identifying winning stocks, while also considering various investment strategies such as value, growth, and momentum [1] - Value investing is highlighted as a popular and successful strategy across different market environments, utilizing traditional valuation metrics [2] - Zacks has created the Style Scores system to identify stocks with specific traits, particularly focusing on those with high grades in the "Value" category [3] Group 2 - Coty (COTY) is identified as a stock to watch, currently holding a Zacks Rank 2 (Buy) and a Value grade of A, with a Forward P/E ratio of 9.95 compared to the industry's average of 27.69 [4] - The P/S ratio is also mentioned as a preferred metric for value investors, with Coty having a P/S ratio of 0.72 against the industry's average of 1.25 [5] - The data suggests that Coty is likely undervalued, and its strong earnings outlook positions it as one of the market's strongest value stocks [6]

Group 1 - Coty Inc. has been facing significant challenges in the market, particularly in the beauty and self-care product sectors [1] - The company specializes in fragrances, cosmetics, and other beauty products, indicating a diverse product portfolio [1] Group 2 - The investment service mentioned focuses on cash flow and companies that generate it, highlighting the importance of financial health in investment decisions [2] - Subscribers to the service gain access to a stock model account and in-depth cash flow analyses, which can aid in identifying potential investment opportunities [2]

Industry Overview - The Zacks Cosmetics industry is experiencing a challenging macroeconomic environment, with rising external pressures dampening consumer demand and overall sector performance [1][4] - Weak sales trends are exacerbated by increasing production and operational costs, which are straining profitability and efficiency [1][4] Key Trends - The industry is facing challenges from ongoing trade tensions, reduced consumer spending, and inconsistent retail restocking cycles, leading to a shift in consumer behavior towards essential purchases [4] - Rising operational costs due to higher prices for packaging materials, ingredients, logistics, and promotional activities are putting pressure on profit margins [4] - International risk factors, including unfavorable foreign currency fluctuations and geopolitical tensions, are affecting market access and operational continuity [5] Innovation and Digital Transformation - Industry leaders like The Estee Lauder Companies, Coty, and European Wax Center are investing in digital transformation, product innovation, and omnichannel engagement to navigate the current challenges [2][6] - There is a growing consumer interest in organic and clean beauty products, prompting companies to innovate and expand their product portfolios through strategic acquisitions and partnerships [6] Industry Performance - The Zacks Cosmetics industry ranks 165, placing it in the bottom 32% of over 250 Zacks industries, indicating dull near-term prospects [7][8] - The industry has underperformed the S&P 500 and the broader Zacks Consumer Staples sector, declining 39.6% over the past year compared to the S&P 500's growth of 9.4% [10] Valuation Metrics - The industry is currently trading at a forward 12-month Price-to-Earnings (P/E) ratio of 25.69X, higher than the S&P 500's 21.71X and the sector's 17.4X [13] Company Highlights - **European Wax Center (EWCZ)**: Holds a Zacks Rank 1 (Strong Buy), focusing on long-term growth through franchise partnerships and operational efficiency. The consensus EPS estimate for the current fiscal year is 61 cents, with shares gaining 8.3% in the past six months [15][16] - **The Estee Lauder Companies (EL)**: Holds a Zacks Rank 3 (Hold), focusing on profitability and growth through product innovation and digital channels. The consensus EPS estimate is $1.47, with shares gaining 5% in the past six months [19][20] - **Coty**: Also holds a Zacks Rank 3, leveraging brand equity and digital transformation to enhance performance. The consensus EPS estimate is 29 cents, with shares losing 31.5% in the past six months [23][24]