Coty Q1 2025 Earnings Report
Key Takeaways
Coty Inc. reported a 2% increase in net revenues, or 4.5% on a LFL basis, driven by strong growth in prestige fragrances and EMEA. The company saw continued gross margin expansion and operating income growth, while investing in its brands. The company reiterates FY25 EBITDA Underpinned by Accelerating Actions to Adapt Coty for Future Success
Net revenues grew 2% reported and 4.5% LFL, despite a 1% FX headwind and a 1% headwind from the divestiture of the Lacoste license.
Prestige net revenues increased 5% reported and 7% LFL, driven by fragrances.
Consumer Beauty net revenues declined 3% reported, with LFL net revenues flat.
Reported gross margin increased 200 basis points year-over-year to 65.5%.
Coty
Coty
Coty Revenue by Segment
Coty Revenue by Geographic Location
Forward Guidance
Coty expects LFL sales growth in the first half of 3-4%. Coty anticipates LFL growth in the second half to be relatively consistent with the first half. Coty expects FY25 adjusted EBITDA to grow near the lower end of its prior guidance of +9-11% YoY. Coty expects FY25 adjusted EPS at the low end of its prior guidance range of $0.54-0.57, reflecting mid teens percentage growth. Coty continues to expect FY25 free cash flow to grow by a double-digit percentage YoY to the low to mid $400M range.
Positive Outlook
- Prestige fragrances remain an outperforming category.
- Coty anticipates LFL growth in the second half to be relatively consistent with the first half, reflecting easier prior year comparisons.
- Solid prestige fragrance performance.
- Coty expects FY25 adjusted EPS at the low end of its prior guidance range of $0.54-0.57, reflecting mid teens percentage growth.
- Coty is future proofing its organization and processes to better capture new opportunities, respond to changes in the market with more agility, and solidify Coty’s position as a beauty leader over the long term.
Challenges Ahead
- Slower end demand and significant channel shifts in U.S. mass beauty and in Asia are continuing to weigh on order levels into Q2.
- Sell-in tracking well below sell-out.
- Continued pressure in the Chinese mainland.
- Continued pressure in Asia Travel Retail.
- Continued pressure in U.S. mass cosmetics.
Revenue & Expenses
Visualization of income flow from segment revenue to net income