COTY's Q3 Earnings Miss Due to Market Challenges and FX Headwinds

Core Insights - Coty Inc. reported third-quarter fiscal 2025 results with both net sales and earnings missing Zacks Consensus Estimates, reflecting year-over-year declines [1][4][21] - The company's performance was affected by foreign exchange headwinds and broader market challenges, but it remains strategically positioned for fiscal 2026 with plans for innovation and operational efficiency [2][19] Financial Performance - Adjusted earnings were 1 cent per share, missing the estimate of 5 cents, and down from 5 cents in the prior year [4] - Net revenues were $1,299.1 million, a 6% decline year-over-year, with a 3% adverse impact from foreign exchange [4][21] - On a like-for-like basis, net revenues decreased by 3%, with a 3% decline in Prestige and a 5% decline in Consumer Beauty [5] Segment Analysis - Prestige Segment: Net revenues were $829.4 million, a 4% drop, with a 1% foreign exchange headwind. Adjusted operating income increased to $158.8 million, with a margin of 19.1% [8][9] - Consumer Beauty Segment: Net revenues were $469.7 million, a 9% decline, primarily due to weaker color cosmetics and body care performance. The segment reported an adjusted operating loss of $10.9 million [11][12] Regional Performance - Americas: Net revenues of $529.7 million, a 10% decline, impacted by lower Prestige revenues and market softness [15] - EMEA: Generated $610 million in net revenues, a 3% decline, with lower revenues in both segments [16] - Asia Pacific: Reported $159.4 million in net revenues, a 5% decline, primarily due to lower Prestige revenues in mainland China [17] Future Outlook - Coty is focusing on resetting its baseline in fiscal 2025, with plans to align retailer inventories and prioritize high-margin categories [19][20] - The company anticipates a high single-digit like-for-like sales decline in the fiscal fourth quarter, projecting a 2% decline for fiscal 2025 [21] - Coty expects gross margin expansion to approximately 65% and EBITDA margin growth of about 70 basis points for fiscal 2025 [22]