Core Viewpoint - A wave of brand sell-offs is sweeping through the beauty industry, driven by major companies facing performance pressures and a need to restructure their brand portfolios [2][3][6]. Group 1: Brand Sell-Offs - Coty is reportedly exploring the sale of several brands, including Gucci and Burberry, amidst market speculation [2]. - Kenvue, a spinoff from Johnson & Johnson, is also rumored to be considering the sale of its skin health and beauty division, with an estimated transaction value exceeding $500 million (approximately 3.59 billion RMB) [2]. - Natura & Co has been linked to ongoing rumors about selling Avon since last year, highlighting a broader trend of divestitures among beauty giants [2][3]. Group 2: Market Reactions - Despite the sell-off rumors, Coty's stock surged by 13% in a single day, reaching a three-month high, indicating a positive market reaction to the restructuring news [3]. - The performance pressures faced by these companies are evident, with Coty's mass beauty segment reporting a 9% decline in net revenue to $470 million (approximately 3.4 billion RMB) in Q3 of fiscal 2025 [8]. Group 3: Industry Trends - The beauty industry is experiencing a significant contraction, with Kenvue's skin health and beauty division reporting a 7.3% year-over-year sales decline in Q1 2025, the largest drop among its business segments [6]. - The Chinese market is reshaping the competitive landscape, with domestic brands capturing a growing market share, accounting for 55.2% of total sales in 2024, up 2.9 percentage points year-over-year [11][24]. Group 4: Strategic Shifts - Major beauty companies are shifting from aggressive acquisition strategies to a focus on efficiency and value, as evidenced by their divestiture of underperforming brands [19][21]. - The trend reflects a broader industry consensus that emphasizes streamlining brand portfolios and concentrating on core assets to enhance competitiveness [19][26]. Group 5: Future Outlook - The ongoing sell-off trend is expected to continue as companies adapt to the compressed industry cycle and intensifying competition [26]. - The future of the beauty industry will likely revolve around establishing competitive advantages in areas such as cutting-edge biotechnology, unique ingredients, and robust consumer data operations [26].

Core Viewpoint - Coty Group is actively seeking buyers or considering a split sale of its high-end and mass beauty divisions, with negotiations still in early stages. The potential transaction may take the form of a split rather than a complete sale, with strategic partnerships or mergers being more likely than traditional acquisitions [4]. Financial Performance - For the third quarter of fiscal year 2025, Coty Group reported net revenue of $1.2991 billion, a year-on-year decline of 6.24%, and a loss of $402 million. For the first three quarters of fiscal year 2025, net revenue was $4.6405 billion, down 2.4%, with a loss of $280.9 million [5]. - The financial struggles indicate that the news of potential sales is not unfounded, as many international beauty brands are facing cash flow pressures, including Coty [5]. Brand Portfolio and Risks - Coty Group's high-end beauty division includes brands like Burberry, while its mass beauty division includes Covergirl, Max Factor, and Rimmel. The company faces risks of losing licensing rights for several brands, such as Miu Miu, which will end its contract with Coty in 2024 [4][6]. - The high-end beauty division generates over 60% of Coty's revenue, with Gucci being a significant contributor. However, the licensing agreement for Gucci is set to expire in 2028, and the parent company, Kering, has indicated intentions to reclaim the brand [6]. Strategic Adjustments - Experts suggest that losing Gucci will impact Coty's brand structure and performance in the high-end market. However, Coty is expected to make strategic adjustments to seek more competitive and promising brands to maintain its market position [7]. - Coty is also attempting to mitigate risks by launching its own fragrance brand, Infiniment Coty Paris, which is seen as a significant initiative to create a new era in fragrances and scents [7].

Core Viewpoint - Coty is exploring the possibility of splitting and selling its high-end and mass beauty divisions, which could lead to a merger and acquisition scale of hundreds of billions to trillions of yuan, potentially reshaping the global beauty industry [1][4]. Company Overview - Founded in 1904 in Paris, Coty has developed a strong brand portfolio, including luxury brands like GUCCI and Burberry, and has grown to be one of the top ten beauty companies globally [2][4]. - Coty operates over 50 fragrance and beauty brands, divided into high-end and mass segments, with high-end beauty generating 277 billion yuan and mass beauty generating 162 billion yuan in revenue for the fiscal year 2024 [1][4]. Financial Performance - Coty's revenue for fiscal year 2024 was 439 billion yuan, reflecting a 10% increase from the previous year, but the company has faced significant fluctuations in performance [9]. - The company reported a net revenue decline of 2% to 333.3 billion yuan for the first three quarters of fiscal year 2025, with a net loss of 22.2 billion yuan [9][10]. Market Dynamics - The global beauty industry is undergoing significant challenges, including market growth slowdown and increased competition from emerging DTC brands, particularly affecting mass beauty brands [4][12]. - Coty is facing difficulties in finding suitable buyers for its mass beauty division, especially in Asia, due to economic slowdowns and trade tensions with the U.S. [5][4]. Strategic Moves - Coty is in discussions with Interparfums regarding the sale of its high-end beauty business, particularly brands like Burberry and Hugo Boss, which have shown strong growth [4][10]. - The company has initiated a transformation plan aimed at streamlining operations and focusing on key business innovations, with an expected savings of nearly 36 billion yuan between fiscal years 2025 and 2027 [12]. Industry Trends - The beauty industry is witnessing a shift towards high-end and luxury products, with major players like Shiseido and Unilever restructuring to enhance operational efficiency [12][14]. - Coty’s historical capital-driven development and frequent ownership changes have influenced its current strategy to seek a sale [11][12].

Company Overview - Coty shares have increased by approximately 9% over the past month, outperforming the S&P 500 [1] - The most recent earnings report is crucial for understanding the catalysts affecting Coty's stock performance [1] Earnings Estimates - Fresh estimates for Coty have trended downward, with the consensus estimate shifting by -65.85% in the past month [2] - The overall direction of estimate revisions indicates a downward shift in expectations for Coty [4] VGM Scores - Coty has a poor Growth Score of F, while its Momentum Score is rated C [3] - The stock received a grade of B on the value side, placing it in the top 40% for this investment strategy [3] - The aggregate VGM Score for Coty is D, which is significant for investors not focused on a single strategy [3] Industry Performance - Coty is part of the Zacks Cosmetics industry, where another player, Helen of Troy, has gained 14% over the past month [5] - Helen of Troy reported revenues of $485.89 million for the last quarter, reflecting a year-over-year decline of -0.7% [5] - For the current quarter, Helen of Troy is expected to post earnings of $0.91 per share, indicating a change of -8.1% from the previous year [6] - The Zacks Consensus Estimate for Helen of Troy has changed by -10.4% over the last 30 days, resulting in a Zacks Rank of 5 (Strong Sell) [6]

Industry Overview - The beauty and cosmetics industry has evolved into a multi-billion-dollar global market, driven by changing consumer preferences, cultural influences, and technological advancements [2] - Skincare has become a significant focus, with increased demand for products featuring natural ingredients and dermatologist-approved solutions, influenced by K-beauty and J-beauty trends [3] - Sustainability is shaping the future of the industry, with consumers prioritizing eco-friendly practices and transparency in ingredient sourcing [4] Technological Innovations - Technology is revolutionizing consumer interactions with beauty products through AI diagnostics, augmented reality try-ons, and biotech formulations [5] - The rise of dermocosmetics combines pharmaceutical-grade research with skincare, offering clinically proven results [5] Company Highlights Coty Inc. - Coty is strategically transforming its operations to enhance innovation and consumer-centric growth, focusing on prestige fragrances and skincare [7] - The company is expanding its fragrance offerings and targeting demographics like Gen Z and multicultural consumers, with a strong pipeline for fiscal 2026 [8] - E-commerce now represents nearly 20% of Coty's total sales, supported by partnerships with Amazon and initiatives on platforms like TikTok Shop [9] Ulta Beauty - Ulta Beauty leads the U.S. market through brand curation, digital innovation, and experiential retail, focusing on enhancing core operations and customer experiences [10] - The company is experiencing strong performance across fragrance, skincare, and wellness categories, with notable product launches and a growing interest in K-beauty [11] - Ulta's loyalty program and digital capabilities drive customer engagement, with over 45 million active loyalty members [12] Sally Beauty - Sally Beauty is adapting to market challenges through innovation and digital expansion, focusing on product innovation and omnichannel retail [13] - The company is enhancing its e-commerce presence through partnerships with major delivery services and offering virtual consultations [14] - Product innovation remains central to Sally Beauty's strategy, with new launches and revamped store formats to meet modern beauty trends [15]

Core Insights - The New York Society of Cosmetic Chemists (NYSCC) will host the 2025 Suppliers' Day on June 3-4 at the Javits Center in New York City, featuring Stacey House from Coty as the keynote speaker [1][4] - Stacey House's presentation titled "Change is Constant – Agility is Key" will focus on the importance of agility in the evolving beauty industry, highlighting Coty's AGILE Beauty approach as a standard for innovation [2][3] - The event will also include discussions on augmented beauty and advanced research by L'Oreal, showcasing how technology is transforming the beauty sector [4] Industry Trends - The beauty industry is experiencing continuous evolution driven by changing consumer needs and expectations, necessitating a nimble and innovative approach [2][3] - Educational programs at Suppliers' Day will cover various topics including dermabeauty, neuroaesthetics, hair care innovations, and sustainability in cosmetics, reflecting current industry trends [5] - The event will also feature a Future Chemists Workshop and a Career Fair aimed at supporting young professionals in the cosmetic science field [6] Organizational Highlights - NYSCC is dedicated to advancing cosmetic science and promoting high ethical and professional standards within the industry [7] - The Suppliers' Day is recognized as a leading North American event for beauty ingredients and formulation innovations, emphasizing the organization's role in the industry [7]

Core Viewpoint - Coty Inc. (COTY) is currently undervalued, trading at a forward P/E ratio of 10.57, significantly below its historical median of 13.30 and the industry average of 23.01, indicating potential for long-term growth and investment opportunity [1]. Financial Performance - Coty's shares have declined by 11.9% over the past three months, underperforming the industry and S&P 500, which saw declines of 8.6% and 0.9% respectively, suggesting challenges in the current market environment [4]. - The company achieved approximately $40 million in cost savings in the third quarter of fiscal 2025, with a target of $120 million in total productivity savings for the full fiscal year [7]. Growth Strategy - Coty is focusing on six strategic pillars for sustainable growth, including stabilizing Consumer Beauty brands, accelerating luxury fragrances, expanding into skincare, enhancing e-commerce capabilities, growing in China, and leading in sustainability [5]. - E-commerce now accounts for about 20% of Coty's total sales, with plans to launch a new brand on Amazon in fiscal 2026 and engage with emerging platforms like TikTok Shop [6]. Challenges - The U.S. operations have been a significant headwind, contributing to a decline in like-for-like sales in the third quarter of fiscal 2025, prompting leadership changes and organizational restructuring [10]. - The Prestige division faced multiple challenges, including a slowdown in the prestige fragrance market, lack of major product launches, and elevated inventory levels at retailers [11]. - Increased advertising and consumer promotions spending has remained high, potentially impacting margins and profitability if not managed effectively [12].

Core Insights - The event "2025 9th China Listed Company Brand Value List Release Conference" was held in Shanghai, focusing on the theme "Digital Intelligence Upgrade, Brand Resonance" [1] - Mathieu Dufresne, General Manager of Coty China, shared insights on localization strategies in the Chinese market, emphasizing the need for deeper connections rather than mere adaptations [2][3] Localization Strategies - Localization should go beyond simple adaptations like translating marketing materials; it should focus on creating connections with local consumers [2][3] - Dufresne highlighted three effective methodologies for localization: finding connections between brand spirit and local culture, establishing emotional resonance, and leveraging local ambassadors to drive consumer engagement [3][4] Emotional Engagement - Coty's approach to localization involves creating spaces that resonate emotionally with consumers, such as the opening of the first limited-time bookstore for the Chloe brand in China [4] - The company emphasizes emotional resonance as a key to building brand value and trust in the local market, rather than relying solely on traditional brand promotion [5][6]

Core Insights - Coty is experiencing a pivotal and transitional year in fiscal 2025, facing challenges in the consumer and retail environment, particularly in the third quarter [4] Group 1: Company Overview - Coty is taking proactive measures to clean up its business baseline in preparation for a healthier fiscal 2026 [4] - The company is focusing on multiple levers to improve trends moving into the next year and beyond [4] Group 2: Financial Communication - The presentation includes forward-looking statements, and stakeholders are advised to refer to Coty's earnings release and SEC filings for factors that could cause actual results to differ [2] - Discussions of Coty's financial results reflect certain adjustments as specified in the non-GAAP financial measures section of the company's release [3]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 001-35964 COTY INC. (Exact name of registrant as specified in its charter) Delaware 13-3823358 (State or other jurisdiction of incor ...