Coty(COTY) - 2025 Q4 - Annual Results

Executive Summary & FY25/Q4 Highlights Coty's CEO highlighted five years of transformation, achieving strong fragrance CAGR and outlining a multi-pronged plan for FY26 improvement CEO's Remarks & Strategic Overview Coty's CEO highlighted five years of transformation, achieving strong fragrance CAGR and outlining a multi-pronged plan for FY26 improvement - Coty achieved a 10% net revenue CAGR in Prestige fragrance sales and 2% in Consumer Beauty sales from FY21 through FY25[2] - Implemented a nimbler regional model with new U.S. leadership to address Prestige sell-out gaps[4] - Delivered $140 million of productivity savings in FY25 through the 'All-In to Win' strategy[4] - Achieved $1 billion in e-commerce revenue by embedding digital and e-commerce teams within markets and brands[4] - Accelerating AI adoption across demand planning, procurement, media allocation, marketing content, and back-office processes[4] - Strengthening competitive advantages by transferring mass fragrance and entry prestige fragrance production to the U.S. manufacturing plant[4] - FY25 adjusted EBITDA reached $1,082 million with an 18.4% margin (up 60 basis points), adjusted EPS (excluding equity swap) was $0.50, and free cash flow was approximately $280 million[5] - Fragrance LFL sales growth in FY25: +9% in Ultra-Premium, +2% in Prestige, and +8% in Consumer Beauty fragrances[6] - New blockbuster launch, Boss Bottled Beyond, is exceeding prior benchmarks, and a major push into affordable fragrance mists is underway[7] Key Financial Highlights (FY25 & Q4) FY25 net revenue declined 4% reported, with adjusted gross and EBITDA margins expanding, while Q4 saw a more significant revenue and margin decline FY25 Key Financial Highlights | Metric | FY25 Value | YoY Change (Reported) | YoY Change (LFL) | |:---|:---|:---|:---| | Net revenues | $5,892.9 million | (4%) | (2%) | | Prestige net revenue | $3,820.2 million | (1%) | Slightly positive | | Consumer Beauty net revenue | $2,072.7 million | (8%) | (5%) | | Reported gross margin | 64.8% | +40 bps | N/A | | Adjusted gross margin | 64.9% | +50 bps | N/A | | Reported operating income | $241.1 million | (56%) | N/A | | Adjusted operating income | $852.9 million | (1%) | N/A | | Reported net loss | $(381.1) million | <(100%) | N/A | | Reported EPS | $(0.44) | <(100%) | N/A | | Adjusted EPS | $0.22 | (41%) | N/A | | Adjusted EBITDA | $1,081.7 million | (1%) | N/A | | Adjusted EBITDA margin | 18.4% | +60 bps | N/A | | Cash flow from operating activities | $492.6 million | N/A | N/A | | Free cash flow | $277.6 million | N/A | N/A | Q4 FY25 Key Financial Highlights | Metric | Q4 FY25 Value | YoY Change (Reported) | YoY Change (LFL) | |:---|:---|:---|:---|\n| Net revenue | $1,252.4 million | (8%) | (9%) | | Prestige net revenue | $760.6 million | (5%) | (7%) | | Consumer Beauty net revenue | $491.8 million | (12%) | (12%) | | Reported & adjusted gross margin | 62.3% | (190 bps) | N/A | | Reported operating income | $15.5 million | (55%) | N/A | | Adjusted operating income | $67.7 million | (37%) | N/A | | Reported net loss | $(72.1) million | 28% | N/A | | Reported EPS | $(0.08) | 33% | N/A | | Adjusted EPS | $(0.05) | (67%) | N/A | | Adjusted EBITDA | $126.7 million | (23%) | N/A | | Adjusted EBITDA margin | 10.1% | (200 bps) | N/A | | Cash flow from operating activities | $83.2 million | N/A | N/A | | Free cash flow | $34.9 million | N/A | N/A | - FY25 reported operating results included a $212.8 million non-cash asset impairment charge, primarily related to the Consumer Beauty's color cosmetics business[13] - Total debt was $4,008.4 million, financial net debt was $3,751.3 million, and financial leverage ratio (net debt to adjusted EBITDA) was 3.5x at quarter-end[14] Detailed Financial Results This section provides a comprehensive overview of Coty's FY25 and Q4 financial performance across consolidated statements, segments, regions, cash flow, and debt Consolidated Statements of Operations (Reported vs. Adjusted) FY25 net revenue declined 4% reported, with gross margin improving, while Q4 saw an 8% revenue decrease and gross margin contraction FY25 Net Revenues (Reported vs. LFL) | Segment | Reported Net Revenue | Reported YoY Change | LFL YoY Change | |:---|:---|:---|:---|\n| Total | $5,892.9 million | (4%) | (2%) | | Prestige | $3,820.2 million | (1%) | Slightly positive | | Consumer Beauty | $2,072.7 million | (8%) | (5%) | Q4 FY25 Net Revenues (Reported vs. LFL) | Segment | Reported Net Revenue | Reported YoY Change | LFL YoY Change | |:---|:---|:---|:---|\n| Total | $1,252.4 million | (8%) | (9%) | | Prestige | N/A | (5%) | (7%) | | Consumer Beauty | N/A | (12%) | (12%) | Gross Margin Performance | Metric | FY25 | Q4 FY25 | |:---|:---|:---|\n| Reported Gross Margin | 64.8% (up 40 bps YoY) | 62.3% (down 190 bps YoY) | | Adjusted Gross Margin | 64.9% (up 50 bps YoY) | 62.3% (down 190 bps YoY) | Operating Income (Reported vs. Adjusted) | Metric | FY25 Reported | FY25 Adjusted | Q4 FY25 Reported | Q4 FY25 Adjusted | |:---|:---|:---|:---|:---|\n| Operating Income | $241.1M | $852.9M | $15.5M | $67.7M | | Operating Income YoY Change | (56%) | (1%) | (55%) | (37%) | | Operating Margin | 4.1% | 14.5% (up 40 bps) | 1.2% | 5.4% (down 250 bps) | Net Income & EPS (Reported vs. Adjusted) | Metric | FY25 Reported | FY25 Adjusted | Q4 FY25 Reported | Q4 FY25 Adjusted | |:---|:---|:---|:---|:---|\n| Net Income (Loss) | $(381.1)M | $188.8M | $(72.1)M | $(44.9)M | | Net Income (Loss) Margin | (6.5%) | 3.2% | (5.8%) | (3.6%) | | EPS (Diluted) | $(0.44) | $0.22 | $(0.08) | $(0.05) | Adjusted EBITDA | Metric | FY25 | Q4 FY25 | |:---|:---|:---|\n| Adjusted EBITDA | $1,081.7M | $126.7M | | Adjusted EBITDA YoY Change | (1%) | (23%) | | Adjusted EBITDA Margin | 18.4% (up 60 bps) | 10.1% (down 200 bps) | Segment Performance Prestige revenue was slightly positive LFL with margin expansion, while Consumer Beauty declined significantly with margin contraction FY25 Segment Net Revenue & Operating Income | Segment | Net Revenue (FY25) | Reported YoY Change | LFL YoY Change | Reported Operating Income (FY25) | Adjusted Operating Income (FY25) | |:---|:---|:---|:---|:---|:---|\n| Prestige | $3,820.2M (65% of total) | (1%) | Slightly positive | $580.6M | $773.2M | | Prestige YoY Change | N/A | N/A | N/A | 0% | up 5% | | Consumer Beauty | $2,072.7M (35% of total) | (8%) | (5%) | $(127.4)M | $79.7M | | Consumer Beauty YoY Change | N/A | N/A | N/A | <(100%) | down 38% | Q4 FY25 Segment Net Revenue & Operating Income | Segment | Net Revenue (Q4 FY25) | Reported YoY Change | LFL YoY Change | Reported Operating Income (Q4 FY25) | Adjusted Operating Income (Q4 FY25) | |:---|:---|:---|:---|:---|:---|\n| Prestige | $760.6M (61% of total) | (5%) | (7%) | $38.1M | $74.7M | | Prestige YoY Change | N/A | N/A | N/A | down 23% | down 15% | | Consumer Beauty | $491.8M (39% of total) | (12%) | (12%) | $(16.0)M | $(7.0)M | | Consumer Beauty YoY Change | N/A | N/A | N/A | <(100%) | <(100%) | FY25 Segment Adjusted Operating & EBITDA Margins | Segment | Adjusted Operating Margin (FY25) | Adjusted EBITDA Margin (FY25) | |:---|:---|:---|\n| Prestige | 20.2% (up 120 bps YoY) | 23.2% (up 140 bps YoY) | | Consumer Beauty | 3.8% (down 190 bps YoY) | 9.5% (down 160 bps YoY) | Q4 FY25 Segment Adjusted Operating & EBITDA Margins | Segment | Adjusted Operating Margin (Q4 FY25) | Adjusted EBITDA Margin (Q4 FY25) | |:---|:---|:---|\n| Prestige | 9.8% (down 110 bps YoY) | 13.5% (down 60 bps YoY) | | Consumer Beauty | (1.4%) (down 500 bps YoY) | 4.8% (down 430 bps YoY) | Regional Performance Americas and Asia Pacific revenues declined in FY25, while EMEA saw modest growth, reflecting varied regional market dynamics FY25 Regional Net Revenue Performance | Region | Net Revenue (FY25) | Reported YoY Change | LFL YoY Change | |:---|:---|:---|:---|\n| Americas | $2,373.0M (40% of total) | (8%) | (3%) (incl. 2% from Argentina) | | EMEA | $2,811.8M (48% of total) | 1% | 1% | | Asia Pacific | $708.1M (12% of total) | (8%) | (7%) | Q4 FY25 Regional Net Revenue Performance | Region | Net Revenue (Q4 FY25) | Reported YoY Change | LFL YoY Change | |:---|:---|:---|:---|\n| Americas | $511.2M | (12%) | (10%) (incl. 1% from Argentina) | | EMEA | $574.2M | (4%) | (9%) | | Asia Pacific | $167.0M | (8%) | (9%) | - Americas sales were impacted by lower Prestige net revenue due to elevated comparisons and proactive inventory rightsizing, and lower Consumer Beauty net revenue in the U.S. due to ongoing weakness in mass color cosmetics[44] - EMEA decline in Q4 was driven by lower Prestige net revenue due to inventory rightsizing and lower Consumer Beauty net revenue[45] - Coty's sell-out performance in almost all Asia markets excluding China grew nearly 4x ahead of the market in Q4, with strong double-digit percentage sell-out in fragrance and skincare[46] Cash Flow & Debt FY25 operating and free cash flow decreased, while total debt increased, raising the financial leverage ratio to 3.5x Cash Flow Performance | Metric | FY25 | Q4 FY25 | |:---|:---|:---|\n| Cash flow from operating activities | $492.6M (down from $614.6M YoY) | $83.2M (down from $176.5M YoY) | | Free cash flow | $277.6M (down from $369.4M YoY) | $34.9M (down from $116.7M YoY) | Debt Metrics (as of June 30, 2025) | Metric | Value | |:---|:---|\n| Total debt | $4,008.4 million | | Financial net debt | $3,751.3 million | | Financial leverage ratio (net debt to adjusted EBITDA) | 3.5x (up from 3.2x QoQ) | | Value of Wella stake | $1,002.0 million | | Economic net debt | $2,749.3 million | Strategic Updates & Outlook Coty outlines its strategic priorities, product pipeline for FY26 and beyond, and financial guidance, anticipating a return to LFL growth in 2H FY26 Strategic Priorities Coty prioritizes leveraging global fragrance leadership, expanding into profitable beauty categories, and improving mass color cosmetics profitability - Prioritize and leverage leadership in global fragrances, which are over 60% of revenues and a larger portion of profits[16] - Continue to grow Coty's footprint in a limited number of structurally profitable and growing beauty categories and geographic markets[16] - Focus on scenting and fragrances across the price spectrum from $5 to $500, including licensed brands[18] - Steadily build the skincare business while remaining vigilant with investment levels[21] - Improve profitability of the mass color cosmetics platform[21] Product Pipeline for FY26 and Beyond The FY26 product pipeline includes major Prestige launches like Boss Bottled Beyond and multi-brand fragrance mists, alongside Consumer Beauty innovations - Prestige: Currently launching new blockbuster Boss Bottled Beyond globally, with early trends tracking ahead of Burberry Goddess (FY24 blockbuster)[25] - Prestige: Broader extension of the Hugo Boss brand into the U.S. market[25] - Prestige: Multi-brand push into the rapidly growing fragrance mist category, including Calvin Klein and philosophy[25] - Prestige: Blockbuster launch under another flagship Coty brand planned in 2H FY26[25] - Prestige: Launched Marc Jacobs on Amazon Premium Beauty Store in Q1 FY26; Marc Jacobs Beauty makeup expected to debut in CY26[25] - Prestige: Swarovski fragrance targeted to launch in CY27[25] - Consumer Beauty: Launching new innovations under key mass fragrance brands (adidas, Nautica, Vera Wang, bruno banani)[25] - Consumer Beauty: Rolling out new in-house developed fragrance lines, including the Origen collection exclusively at Walmart[25] - Consumer Beauty: Expanded into scenting adjacencies with hair & body mists under adidas Vibes and Nautica[25] - Consumer Beauty: Capitalizing on Lip subcategory momentum with CoverGirl's Yummy Blur lipstick and Rimmel's Oh My Gloss! Butter Me Up[25] - Consumer Beauty: Launching new cosmetics embellisher offerings like Rimmel's Multi-Tasker Jelly Crush and CoverGirl's TruBlend Skin Enhancer Balms[25] FY26 Outlook & Guidance Coty forecasts gradual sales improvement in FY26, with LFL growth returning in 2H, alongside 1H margin pressure and a focus on deleveraging - Expects a gradual improvement in LFL sales trends through FY26, returning to growth in 2H FY26[27] FY26 LFL Sales Guidance | Period | LFL Sales Decline | |:---|:---|\n| 1Q26 | 6% to 8% | | 2Q26 | 3% to 5% | | 2H FY26 | Return to growth | - Anticipates low single-digit percentage FX benefit in 1H FY26 reported revenue[28] - Expects 1H FY26 gross margin pressure from lower sales and net impact from tariffs, with tariff mitigation contributing more meaningfully in 2H FY26[29] FY26 Adjusted EBITDA Guidance | Period | Adjusted EBITDA Change | |:---|:---|\n| 1Q26 | Mid-to-high teens percentage decline | | 2Q26 | Low-to-mid teens percentage decline | | 2H FY26 | Return to growth | - 1H FY26 adjusted EPS expected to decline high single-digit to mid-teen percentage to $0.33-$0.36, with adjusted EPS growth in 2H FY26[30] - Estimates seasonally stronger free cash flow of over $350 million in 1H FY26[31] - Targets leverage at end of CY25 approximately in line with or below 4Q25 level of ~3.5x, with a focus on deleveraging over CY26 and beyond to achieve an investment grade profile[31] Corporate Information & Disclosures This section provides essential corporate details, including company developments, investor relations contacts, company overview, forward-looking statements, and non-GAAP financial measure explanations Noteworthy Company Developments Coty hosted a Cultural Tastemakers Series event at Maison Orveda, featuring Marc Jacobs and Bridget Foley, celebrating artistry and innovation - Coty hosted Marc Jacobs and Bridget Foley at Maison Orveda for a Cultural Tastemakers Series event[47] Conference Call & Investor Relations Coty Inc. will release Q4/FY25 results via pre-recorded remarks and a live Q&A session in August 2025 - Pre-recorded remarks for Q4/FY25 results available August 20, 2025, with a live Q&A session on August 21, 2025[48] - Investor Relations contact: Olga Levinzon, olga_levinzon@cotyinc.com, +1 212 389-7733[49] - Media contact: Antonia Werther, antonia_werther@cotyinc.com, +31 621 394495[49] About Coty Inc. Coty, a global beauty company founded in 1904, offers iconic brands across fragrance, cosmetics, and skincare in over 120 countries - Coty, founded in Paris in 1904, is one of the world's largest beauty companies[49] - Portfolio includes iconic brands across fragrance, color cosmetics, and skin and body care[49] - Sells prestige and mass market products in over 120 countries and territories[49] - Committed to empowering self-expression and protecting the planet[49] Forward-Looking Statements This section details forward-looking statements on Coty's strategy and financials, subject to risks and uncertainties that may alter actual results - Forward-looking statements reflect current views on strategic planning, financial targets, future operations, and cost efficiency[50] - Statements are subject to risks and uncertainties, including the ability to implement strategic priorities, respond to market trends, manage operational and financial risks, and adapt to global economic and political changes[50][51][52] - The company does not undertake any obligation to update or revise forward-looking statements, except as required by law[55] Non-GAAP Financial Measures Explanation Coty utilizes non-GAAP measures like Adjusted EBITDA and Free Cash Flow, excluding specific items, to supplement GAAP results and enhance performance understanding - Non-GAAP measures (Adjusted operating income, Adjusted EBITDA, Adjusted net income, Free cash flow) are used to supplement GAAP financial measures[57] - These measures exclude items like restructuring costs, amortization, acquisition/divestiture-related costs, stock-based compensation, and asset impairment charges[60][63] - Management uses Adjusted Performance Measures for evaluating performance, annual budgets, benchmarking, and financial covenant compliance[58][61] - Free cash flow is defined as net cash provided by operating activities less capital expenditures[64] - Adjusted EBITDA is defined as adjusted operating income, excluding adjusted depreciation and non-cash stock-based compensation[64] - Financial Net Debt is total debt less cash and cash equivalents; Economic Net Debt further subtracts the value of the Wella Stake[64] - Constant currency information is provided to assess underlying business performance excluding foreign currency exchange translations[65][66] Supplemental Schedules & Reconciliations This section provides detailed GAAP to non-GAAP reconciliations and supplemental schedules for revenues, operating income, and EBITDA by segment and region Q4 FY25 & FY25 Net Revenues by Segment | Segment | Q4 FY25 Net Revenues | Q4 FY25 Reported Change | Q4 FY25 LFL Change | FY25 Net Revenues | FY25 Reported Change | FY25 LFL Change | |:---|:---|:---|:---|:---|:---|:---|\n| Prestige | $760.6M | (5%) | (7%) | $3,820.2M | (1%) | 0% | | Consumer Beauty | $491.8M | (12%) | (12%) | $2,072.7M | (8%) | (5%) | | Total | $1,252.4M | (8%) | (9%) | $5,892.9M | (4%) | (2%) | Q4 FY25 & FY25 Adjusted EBITDA by Segment | Segment | Q4 FY25 Adjusted EBITDA | Q4 FY25 Adjusted EBITDA Margin | FY25 Adjusted EBITDA | FY25 Adjusted EBITDA Margin | |:---|:---|:---|:---|:---|\n| Prestige | $102.9M | 13.5% | $884.6M | 23.2% | | Consumer Beauty | $23.8M | 4.8% | $197.1M | 9.5% | | Total | $126.7M | 10.1% | $1,081.7M | 18.4% | Q4 FY25 & FY25 Net Revenues by Region | Region | Q4 FY25 Net Revenues | Q4 FY25 Reported Change | Q4 FY25 LFL Change | FY25 Net Revenues | FY25 Reported Change | FY25 LFL Change | |:---|:---|:---|:---|:---|:---|:---|\n| Americas | $511.2M | (12%) | (10%) | $2,373.0M | (8%) | (3%) | | EMEA | $574.2M | (4%) | (9%) | $2,811.8M | 1% | 1% | | Asia Pacific | $167.0M | (8%) | (9%) | $708.1M | (8%) | (7%) | | Total | $1,252.4M | (8%) | (9%) | $5,892.9M | (4%) | (2%) | FY25 & Q4 FY25 Consolidated Statements of Operations (GAAP) | Metric | Q4 FY25 | Q4 FY24 | FY25 | FY24 | |:---|:---|:---|:---|:---|\n| Net revenues | $1,252.4M | $1,363.4M | $5,892.9M | $6,118.0M | | Gross profit | $779.7M | $875.4M | $3,820.9M | $3,939.2M | | Gross margin | 62.3% | 64.2% | 64.8% | 64.4% | | Operating income | $15.5M | $34.7M | $241.1M | $546.7M | | Net (loss) income attributable to common stockholders | $(72.1)M | $(100.2)M | $(381.1)M | $76.2M | | Diluted EPS | $(0.08) | $(0.12) | $(0.44) | $0.09 | FY25 & Q4 FY25 Reconciliation of Reported to Adjusted Results | Metric | Q4 FY25 Reported | Q4 FY25 Adjusted | FY25 Reported | FY25 Adjusted | |:---|:---|:---|:---|:---|\n| Net revenues | $1,252.4M | $1,252.4M | $5,892.9M | $5,892.9M | | Gross profit | $779.7M | $779.7M | $3,820.9M | $3,825.2M | | Gross margin | 62.3% | 62.3% | 64.8% | 64.9% | | Operating income | $15.5M | $67.7M | $241.1M | $852.9M | | Net loss attributable to common stockholders | $(72.1)M | $(44.9)M | $(381.1)M | $188.8M | | Adjusted EBITDA | N/A | $126.7M | N/A | $1,081.7M | | EPS (diluted) | $(0.08) | $(0.05) | $(0.44) | $0.22 | FY25 & Q4 FY25 Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow | Metric | Q4 FY25 | Q4 FY24 | FY25 | FY24 | |:---|:---|:---|:---|:---|\n| Net cash provided by operating activities | $83.2M | $176.5M | $492.6M | $614.6M | | Capital expenditures | $(48.3)M | $(59.8)M | $(215.0)M | $(245.2)M | | Free cash flow | $34.9M | $116.7M | $277.6M | $369.4M | Reconciliation of Total Debt to Financial Net Debt and Economic Net Debt (June 30, 2025) | Metric | Value | |:---|:---|\n| Total debt | $4,008.4M | | Less: Cash and cash equivalents | $257.1M | | Financial Net debt | $3,751.3M | | Less: Value of Wella stake | $1,002.0M | | Economic Net debt | $2,749.3M | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets slightly decreased, total liabilities increased due to higher debt, and total equity declined Condensed Consolidated Balance Sheets (June 30, 2025 vs. 2024) | Asset/Liability | June 30, 2025 (in millions) | June 30, 2024 (in millions) | |:---|:---|:---|\n| ASSETS: | | | | Total current assets | $1,953.3 | $1,963.5 | | Property and equipment, net | $709.2 | $718.9 | | Goodwill | $4,062.2 | $3,905.7 | | Other intangible assets, net | $3,214.8 | $3,565.6 | | Equity investments | $1,002.0 | $1,090.6 | | TOTAL ASSETS | $11,907.7 | $12,082.5 | | LIABILITIES & EQUITY: | | | | Total current liabilities | $2,538.3 | $2,601.8 | | Long-term debt, net | $3,955.5 | $3,841.8 | | TOTAL LIABILITIES | $7,952.1 | $7,834.8 | | Total Coty Inc. stockholders' equity | $3,542.7 | $3,827.1 | | Total equity | $3,719.0 | $4,011.7 | | TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY | $11,907.7 | $12,082.5 | Condensed Consolidated Statements of Cash Flows FY25 operating cash flow decreased, investing cash outflow lessened, and financing cash outflow increased due to debt and repurchases Condensed Consolidated Statements of Cash Flows (FY25 vs. FY24) | Cash Flow Category | FY25 (in millions) | FY24 (in millions) | |:---|:---|:---|\n| Net (loss) income | $(350.2) | $109.4 | | Net cash provided by operating activities | $492.6 | $614.6 | | Net cash used in investing activities | $(128.4) | $(226.2) | | Net cash used in financing activities | $(426.8) | $(336.7) | | Effect of exchange rates on cash, cash equivalents and restricted cash | $12.4 | $(14.9) | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(50.2) | $36.8 | | Cash, cash equivalents and restricted cash—End of period | $270.4 | $320.6 |