Core Insights - The departure of former CEO Sue Nabi from Coty has sparked significant discussion, particularly regarding the company's failure to meet its 2021 growth commitments, resulting in a more than 50% decline in stock price by 2025 [1][5][8] - Nabi's tenure was marked by high compensation, with her total pay reaching 1.98 billion yuan in FY2021 and 1.04 billion yuan in FY2023, making her the highest-paid CEO in the beauty industry [1][17] Performance Highlights - During Nabi's leadership, Coty achieved a compound annual growth rate of 9% over five years and launched successful products like Burberry Goddess, while also driving rapid growth for Lancôme in China [3][12] - However, the company's financial performance in FY2025 showed a net revenue of 5.893 billion USD (approximately 41.12 billion yuan), a 4% decline year-over-year, and a net loss of 381.1 million USD (approximately 2.66 billion yuan) [8][15] Strategic Failures - An investor highlighted that many of Coty's strategic goals set in 2021, including achieving a 10% revenue share from the Chinese market and a 10% revenue target for skincare, were not met, with actual figures falling significantly short [7][8] - The company's reliance on high-end fragrance licensing, which accounted for nearly 60% of net revenue in FY2025, poses a risk, especially with the loss of Gucci's beauty license to L'Oréal [18][19] Leadership Transition - Markus Strobel took over as the interim CEO on January 1, 2023, following Nabi's departure, amid concerns over the company's performance and strategic direction [10][21] - The market reacted negatively to the leadership change, with Coty's stock price dropping 3.5% on the announcement day, reflecting investor skepticism about the company's future [21]

Core Insights - Coty has appointed Markus Strobel as executive chairman of the board and interim CEO, effective January 1, 2026, following the planned departures of Peter Harf and Sue Nabi [1][4] Group 1: Leadership Transition - Markus Strobel brings over 30 years of experience from Procter & Gamble, where he led the global skin and personal care division and oversaw various beauty categories [1][2] - Strobel's appointment comes at a critical time as Coty conducts a strategic review of its Consumer Beauty division [3] Group 2: Company Background and Recent Developments - Coty, founded in Paris in 1904, operates in the beauty sector, offering fragrance, cosmetics, and skin and body care products in over 120 countries [5] - Under Sue Nabi's leadership, Coty launched new fragrances and reduced its financial net leverage to approximately 3 times [5] - Recently, Coty agreed to sell its remaining 25.8% stake in professional haircare group Wella to KKR-managed investment funds [5]

Core Insights - Coty Inc. announced that Markus Strobel will become Executive Chairman of the Board and Interim Chief Executive Officer starting January 1, 2026 [1] - Strobel has a 33-year career at Procter & Gamble, where he led the Global Skin & Personal Care business and revitalized the SK-II brand [2] - Strobel aims to leverage Coty's strong foundations to accelerate growth and enhance its position in both prestige and mass beauty markets [4] Company Leadership Transition - Markus Strobel succeeds Peter Harf, who is retiring after over 30 years, and Sue Nabi, who is stepping down after five years as CEO [4] - Harf's leadership contributed to Coty's status as a global beauty leader, while Nabi launched several successful fragrances and reduced financial net leverage to approximately 3x [4] Strategic Direction - Strobel will lead Coty during a strategic review of the Consumer Beauty business, identifying opportunities for profitable growth and expansion [3] - The company is focused on reinforcing its leadership in the beauty sector and delivering sustainable value to shareholders and consumers [4] Company Overview - Coty, founded in Paris in 1904, is one of the largest beauty companies globally, with a diverse portfolio across fragrance, color cosmetics, and skin and body care [5] - The company operates in over 120 countries, empowering consumers to express their beauty visions while committing to environmental protection [5]

Core Insights - Coty Inc. reported a 6 percent decline in net revenue to $1.58 billion for the first three months of fiscal 2026, aligning with Wall Street estimates, while like-for-like revenues fell by 8 percent [1][2] - The company is set to lose its Gucci license for fragrance and beauty, which accounts for approximately 8 percent of its sales and 11 percent of its profits, as part of Kering's deal to sell its beauty business to L'Oréal [3][4] Financial Performance - Prestige revenue decreased by 4 percent, just exceeding $1 billion, while consumer beauty revenue fell by 9 percent to $507.7 million [2] - Adjusted earnings per share were reported at 12 cents, below analysts' expectations of 15 cents [2] Strategic Initiatives - Coty is focusing on optimizing the Gucci brand during the remaining term of its license and is exploring new partnerships with other brands [4] - The company plans to launch new fragrances under brands such as Swarovski, Etro, and Marni within the next two years, alongside innovations in prestige cosmetics like Marc Jacobs Beauty set for 2026 [5] Business Review - A strategic review is underway for Coty's $1.2 billion mass color cosmetics business and its $400 million operations in Brazil, assessing options including partnerships, divestitures, and spin-offs [5] - The consumer beauty division is the only segment currently under strategic review, with Coty denying any plans to sell its prestige division [6] Market Position - Coty's market capitalization is currently valued at $3.33 billion [7]

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]