In This Article:
Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Coty Inc (NYSE:COTY) reported strong growth in the Prestige fragrance category, particularly in the US and European markets, driven by increased penetration among new consumer segments.
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The company is actively working on cleaning up its baseline in the Prestige division to prepare for a robust pipeline of innovation for fiscal '26.
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Coty Inc (NYSE:COTY) is seeing high single-digit to double-digit growth in mass fragrances, which are more profitable than color cosmetics.
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The company has implemented strategic organizational changes to enhance agility and decision-making, particularly in the US market.
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Coty Inc (NYSE:COTY) is confident in its ability to manage tariff impacts through strategic sourcing, inventory management, and mid-single-digit price increases in the Prestige segment.
Negative Points
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Coty Inc (NYSE:COTY) is experiencing a mid-single-digit decline in the global color cosmetics category, impacting the Consumer Beauty division.
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The company anticipates sales declines in the first half of fiscal '26, driven by continued pressure in the Consumer Beauty segment.
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Retailers are maintaining tight inventory levels, affecting Coty Inc (NYSE:COTY)'s sell-in and sell-out trends, particularly in the US market.
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The company faces challenges in the US color cosmetics market due to intense competition from indie and dupe brands.
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Coty Inc (NYSE:COTY) is dealing with pressure in the Prestige cosmetics market, particularly in Asia and Travel Retail, impacting overall performance.
Q & A Highlights
Q: Can you provide more detail on the Q4 sales outlook and the reasons behind the expected sales deceleration? A: Sue Nabi, CEO, explained that the sales deceleration is not due to worsening market conditions but rather a strategic decision to clean up the baseline in the Prestige division. This is in preparation for a significant pipeline of innovation for fiscal '26. The Consumer Beauty division continues to face a mid-single-digit decline in cosmetics globally, with some impact from marketing allocation and gross-to-net headwinds, which are expected to reverse next year.
Q: How sustainable is the mid-single-digit growth in the Prestige fragrance category, and what are the geographic trends? A: Sue Nabi, CEO, stated that the mid-single-digit growth is sustainable, particularly in the US and most European markets. The growth is driven by increased penetration among new user demographics, such as Gen Z and male consumers. In China, the market is improving, and the low penetration levels suggest continued growth potential.