In This Article:
Release Date: May 06, 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) has delivered significant productivity savings, achieving approximately EUR40 million in Q3, with a target of EUR120 million for fiscal year 25.
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The company has seen strong EBITDA growth, with a 2% increase in Q3 and a 130 basis points expansion in EBITDA margin.
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Coty Inc (NYSE:COTY) has successfully reduced its interest expense by EUR26 million year-on-year, reflecting lower debt balance and cost of debt.
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The company has maintained a strong focus on protecting profitability, driving free cash flow, and deleveraging, ending Q3 with a leverage of 3.2 times.
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Coty Inc (NYSE:COTY) has a robust plan for fiscal year 26, including major launches under top prestige brands and sizable distribution expansion plans.
Negative Points
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Coty Inc (NYSE:COTY) experienced a 3% decline in net revenues in Q3, with a 2.5% decline in prestige sales.
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The company faced a triple negative effect on its business due to a slowing prestige fragrance market, dominated by extensions rather than major innovations.
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Coty Inc (NYSE:COTY) reported a 4.8% decline in Consumer Beauty sales, with flat volumes and declines in color cosmetics.
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The US market posed significant challenges, with like-for-like sales declining in Q3, impacting fiscal year-to-date results.
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The company anticipates a high single-digit like-for-like decline in Q4, translating to a 2% decline for the fiscal year 25.
Q & A Highlights
Q: Can you elaborate on the challenges Coty faced in Q3 and how you plan to address them? A: Sue Nabi, CEO: Fiscal 25 has been a transitional year with a challenging consumer environment. We faced a triple negative effect due to a slowing prestige fragrance market, a launch calendar dominated by extensions rather than major innovations, and the need to deplete elevated retailer inventory. We are focused on correcting these issues by the end of this fiscal year and are confident that business trends will improve in fiscal 26.
Q: What are the key financial highlights from Q3? A: Laura Mercier, CFO: Our third-quarter net revenues declined 3% like-for-like, with prestige sales down 2.5%. Despite sales headwinds, we achieved a 130 basis point expansion in EBITDA margin. Our adjusted gross margin was 55.6%, reflecting strong expansion due to supply chain savings and productivity gains. We remain focused on protecting profitability and driving free cash flow.