COTY Stock Plunges More Than 25% in 3 Months: What Should You Do?

Core Insights - Coty Inc. is facing challenges due to rising costs and weaker-than-expected demand in key markets such as China, Travel Retail Asia, and the United States [1] - The company reported a decline in both top and bottom-line results for the second quarter of fiscal 2025, missing the Zacks Consensus Estimate despite strong holiday sales [1][4] - Coty's share price has dropped by 25.7% over the past three months, underperforming the industry and broader market indices [2] Financial Performance - In the second quarter of fiscal 2025, Coty's Asia Pacific segment reported net revenues of $191.5 million, reflecting an 11% decline due to tough market dynamics in China and the regional Travel Retail channel [5] - The company anticipates LFL sales trends in the second half of fiscal 2025 to remain consistent with the second quarter, projecting a decline of 1% to 2% [7] - A significant foreign exchange headwind of approximately 3% is expected to impact reported sales for fiscal 2025, leading to a low single-digit percentage decline [7] Cost Pressures - Coty has been experiencing increased advertising and consumer promotions (A&CP) spending, with A&CP costs remaining in the high 20s percentage range [6] - The ongoing rise in A&CP expenses, if not effectively managed, could further pressure Coty's margins and profitability in the upcoming quarters [6] Market Outlook - The beauty market is transitioning into a more normalized phase, with ongoing challenges in Asia and Travel Retail affecting Coty's performance [4] - Management forecasts a similar challenging market environment for fiscal 2026, indicating that recovery may take longer than anticipated [8]