Coty Reports Q3 Results And Shares Multi-Pronged Plan of Attack to Fuel Momentum in FY26 and Beyond

Q3 Results and Near-Term Outlook Reflect Complex Operating Environment

Strong Focus on Protecting Profitability and Cash Flow

All-In to Win Transformation Program to Boost Agility, Scale and Efficiency

Robust Pipeline of Launches, Distribution Expansion and Adjacent Opportunities for FY26

Updates Fiscal 2025 Outlook

NEW YORK--(BUSINESS WIRE)--May 06, 2025-- 

Regulatory News:

Coty Inc. $(COTY)$ (Paris: COTY) ("Coty" or "the Company") today announced its results for the first nine months and third quarter of fiscal year 2025, ended March 31, 2025. While an uncertain market backdrop and FX headwinds led to declining Q3 sales, Coty has built robust plans to fuel operational and financial improvement in FY26 and beyond.

"Across economic cycles, beauty has remained resilient for decades. Even in this challenging landscape, we have significantly strengthened our strategic, operational, and financial fundamentals, driving margin expansion, stronger cash flow generation, and substantial deleveraging over the past four years," said Sue Nabi, Coty's CEO. "While we are not satisfied with our net revenue performance, Coty's strong fundamentals, coupled with our multi-pronged attack-plan for accelerating innovation, distribution and efficiencies, gives us confidence for the years ahead.

2025 remains a transition year for Coty. In Prestige, we are absorbing the triple-headwind of a slowing fragrance market, lapping a blockbuster innovation year, and depleting elevated retailer inventory, all of which was particularly acute in the U.S. We are laser focused on entering FY26 with alignment between sell-in and sell-out, to create a healthy baseline for growth. In Consumer Beauty, we have begun recalibrating our business in response to diverging market trends between cosmetics on the one hand and fragrances on the other hand, taking into account our relative strengths. Our goal is to strengthen our cosmetics business while making it more profitable, while in parallel over-driving our mass fragrances business where we have leadership and a strong margin profile.

Importantly, we are in control of our destiny and are already making the changes needed to address many of these challenges, with new leadership in the U.S. as the market has slowed in recent months, an updated organizational structure to drive faster changes and improved execution, and a robust cost savings program to protect our P&L and increase our firepower to accelerate our business."

RESULTS AT A GLANCE

 
                                                     Nine Months Ended March 31, 
                 Three Months Ended March 31, 2025               2025 
                 ---------------------------------  ------------------------------ 
(in millions, 
except per 
share data)                       Change YoY                       Change YoY 
                            ----------------------             ------------------- 
                             Reported                           Reported 
COTY, INC.                     Basis     $(LFL)$(a)                Basis      (LFL) 
--------------   ---------  ----------  ----------  ---------  ----------  ------- 
Net revenues     $1,299.1      (6%)      (3%)       $4,640.5      (2%)     --  % 
Operating 
 income - 
 reported          (280.4)  <(100%)                    225.6     (56)% 
Net income 
 attributable 
 to common 
 shareholders - 
 reported **       (409.0)  <(100%)                   (309.0)  <(100%) 
Operating 
 income - 
 adjusted*          147.9       3%                     785.2       4% 
Net income 
 attributable 
 to common 
 shareholders - 
 adjusted* **         6.8     (84%)                    233.7     (33)% 
EBITDA - 
 adjusted           204.2       2%                     955.0       3% 
EPS 
 attributable 
 to common 
 shareholders 
 (diluted) - 
 reported        $  (0.47)    N/A                   $  (0.36)  <(100%) 
EPS 
 attributable 
 to common 
 shareholders 
 (diluted) - 
 adjusted*       $   0.01     (80%)                 $   0.27     (31%) 
---------------   -------   -----       ----------   -------   -----       ------- 
(a) LFL results for the three and nine months ended March 31, 2025 include 0% help 
and 1% help, respectively from Argentina resulting from significant price 
increases due to hyperinflation. 
* These measures, as well as "free cash flow," "adjusted earnings before interest, 
taxes, depreciation and amortization (adjusted EBITDA)," "financial net debt," and 
"economic net debt" are Non-GAAP Financial Measures. Refer to "Non-GAAP Financial 
Measures" for discussion of these measures. Reconciliations from reported to 
adjusted results can be found at the end of this release. 
** Net income for Coty Inc. is net of the Convertible Series B Preferred Stock 
dividends. 
 

Nine Months Ended March 31, 2025, Summary Results

For the nine months ended March 31, 2025, compared to the nine months ended March 31, 2024:

   -- Net revenue of $4,640.5 million decreased 2% year-over-year and included 
      a 2% negative impact from FX. LFL net revenue were flat year-on-year. 
 
   -- Prestige net revenue of $3,059.6 million, or 66% of the Company's total 
      sales, were slightly positive year-over-year on a reported basis and grew 
      2% on a LFL basis. 
 
   -- Consumer Beauty net revenue of $1,580.9 million, or 34% of the Company's 
      total sales, declined 7% on a reported basis and declined 3% on a LFL 
      basis. 
 
   -- Reported gross margin of 65.5% increased 110 basis points year-over-year, 
      while adjusted gross margin of 65.6% increased by 120 basis points. 
 
   -- Reported operating income of $225.6 million declined 56% year-over-year, 
      with a reported operating margin of 4.9%. 
 
   -- Adjusted operating income of $785.2 million increased by 4% 
      year-over-year, while the adjusted operating margin of 16.9% reflected 
      100 basis points of margin expansion. 
 
   -- Reported net loss of $309.0 million decreased from net income of $176.4 
      million in the prior year. 
 
   -- Reported EPS of $(0.36) declined from $0.20 in the prior year, and 
      includes a negative impact from the equity swap mark-to-market of $0.21. 
 
   -- Adjusted EPS of $0.27 decreased from adjusted EPS of $0.39 in the prior 
      year, and includes a negative impact from the equity swap mark-to-market 
      of $0.21. 
 
   -- Adjusted EBITDA totaled $955.0 million, up 3% year-over-year, resulting 
      in an adjusted EBITDA margin of 20.6%, which reflected a strong 110 basis 
      points of margin expansion. 
 
   -- Cash from operating activities was $409.4 million and free cash flow was 
      $242.7 million. 

Three Months Ended March 31, 2025, Summary Results

For the three months ended March 31, 2025, compared to the three months ended March 31, 2024:

   -- Net revenue of $1,299.1 million declined 6% on a reported basis and 
      included a 3% headwind from FX. Coty's Q3 net revenue declined 3% on a 
      LFL basis. 
 
   -- Prestige net revenue of $829.4 million or 64% of Coty sales decreased 4% 
      on a reported basis and declined 2.5% LFL. 
 
   -- Consumer Beauty net revenue of $469.7 million, or 36% of Coty sales, 
      decreased by 9% on a reported basis, with LFL sales declining 5%. 
 
   -- Reported gross margin of 64.1% decreased 70 basis points year-over-year, 
      while adjusted gross margin of 64.3% decreased by 50 basis points. 
 
   -- Reported operating loss of $280.4 million declined from reported 
      operating income of $77.8 million in the prior year, resulting in a 
      reported loss margin of 21.6%. 
 
   -- Adjusted operating income of $147.9 million grew 3% year-over-year, 
      resulting in an adjusted operating margin of 11.4%, which expanded by 100 
      basis points year-over-year. 
 
   -- Reported net loss of $409.0 million decreased from net income of $0.5 
      million in the prior year. 
 
   -- Reported EPS of $(0.47) decreased from $0.00 in the prior year, and 
      included a negative impact from the equity swap mark-to-market of $0.07. 
 
   -- Adjusted EPS of $0.01 decreased from adjusted EPS of $0.05 in the prior 
      year, and includes a negative impact from the equity swap mark-to-market 
      of $0.07. 
 
   -- Adjusted EBITDA of $204.2 million increased 2% year-over-year, driving an 
      adjusted EBITDA margin of 15.7%, expanding by 130 basis points 
      year-over-year. Coty's adjusted EBITDA growth in both periods was boosted 
      by short term savings. 
 
   -- Cash outflow from operating activities was $122.5 million and free cash 
      outflow totaled $168.4 million. 

The Q3 and fiscal year-to-date reported operating results included a $212.8 million asset impairment charge primarily in Consumer Beauty's color cosmetics business, reflecting the more challenged category trends in the U.S. and Europe.

Total debt at the end of the third quarter totaled $3,858.8 million, while financial net debt was $3,615.3 million. This drove the total debt to net loss ratio of 10.2x and the financial leverage ratio (net debt to adjusted EBITDA) to 3.2x, a reduction of 0.2x versus a year ago. Coty's retained 25.8% Wella stake was valued at $1,000.0 million at quarter-end, supporting economic net debt of $2,615.3 million.

Continuing on the operating results, Sue Nabi, Coty's CEO, said:

"We are much more strongly positioned to navigate the current complex dynamics including tariffs and broader macroeconomic uncertainty, supported by the strategic, operational and financial fundamentals which we've significantly strengthened over the last four years, even in the context of the highly constrained P&L. These improved fundamentals coupled with our multi-pronged plan of attack for accelerating innovation, distribution and efficiencies, give us measured confidence that business trends should gradually improve over the course of FY26.

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