Executive Summary
Coty’s first quarter of fiscal 2025 (quarter ended September 30, 2024) delivered a modest top-line uptick and meaningful margin expansion within a still dynamic beauty market. Reported net revenue of $1.6715 billion rose 4.5% like-for-like (LFL), supported by strength in prestige and mass fragrance as well as mass skincare, while gross margin expanded 200 basis points to 65.5% driven by premiumization, pricing actions and supply-chain productivity. Adjusted EBITDA was approximately flat YoY at $360 million, reflecting softer order patterns in late Q1 and continued investments in strategic initiatives, including Laf Lacoste’s license divestiture impact and channel dynamics. Net income of $82.9 million and basic/diluted EPS of $0.0917/$0.0909 reflect the quarter’s earnings trajectory in the context of a high-teen to mid-teen growth framework for fiscal 2025. Coty reinforced its strategic program “all in to win,” delivering about $20 million of savings in Q1 with expected acceleration in Q2 and beyond, targeting >$120 million of savings for fiscal 2025 (and continued benefits in 2026+). Management underscored ongoing leadership in fragrance, a robust prestige fragrance backdrop, and a concerted push across categories, channels, and geographies to sustain outperformance versus peers. While near-term headwinds include U.S. retailer inventory management, China/Asia travel retail softness, and elevated prior-year comparables (notably Burberry Goddess), Coty projects like-for-like growth of 3%–4% for fiscal 2025 with EBITDA growth in the low-to-mid single digits in the first half and modest acceleration in Q3/Q4. The company’s balance sheet remains levered (net debt around $3.74 billion, ~3.4x EBITDA at quarter-end, excluding Wella) but anticipated deleveraging and continued free cash flow generation are central to the strategy, including potential enhanced buybacks post-Wella divestiture and a long-run leverage target near 2.5x exiting calendar 2024 and beyond. Overall, Coty’s QQ1 2025 results validate a transition toward higher profitability, stronger brand franchises, and a scalable, agile operating model designed to capture the beauty market’s growth across price points and regions.
Key Performance Indicators
QoQ: 553.30% | YoY:20.41%
QoQ: 185.55% | YoY:5 081.25%
QoQ: 176.42% | YoY:4 726.32%
Key Insights
Revenue: $1.6715B (+4.5% LFL YoY); Gross Margin: 65.5% (+200 bps YoY); Operating Income: $237.8M; EBITDA: $297.7M (reported) / Adjusted EBITDA: $360M (approx. flat YoY); Net Income: $82.9M; EPS (GAAP): $0.0917; EPS (Diluted): $0.0909; Free Cash Flow: -$7.9M; Net Debt: ~$3.74B; Leverage: ~3.4x; Cash at End of Period: $307.5M; A&C&P investments: ~25% of sales; Transformation savings: >$120M expected in FY25; Growth mix: Prestige Fragrances up ~7% LFL with Prestige Fragrances up ~9% LFL;...
Financial Highlights
Revenue: $1.6715B (+4.5% LFL YoY); Gross Margin: 65.5% (+200 bps YoY); Operating Income: $237.8M; EBITDA: $297.7M (reported) / Adjusted EBITDA: $360M (approx. flat YoY); Net Income: $82.9M; EPS (GAAP): $0.0917; EPS (Diluted): $0.0909; Free Cash Flow: -$7.9M; Net Debt: ~$3.74B; Leverage: ~3.4x; Cash at End of Period: $307.5M; A&C&P investments: ~25% of sales; Transformation savings: >$120M expected in FY25; Growth mix: Prestige Fragrances up ~7% LFL with Prestige Fragrances up ~9% LFL; Growth Engine Markets +15% LFL; E-commerce penetration ~20% of business; 4Q1 like-for-like growth commentary and channel dynamics cited by management.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.67B |
1.83% |
22.60% |
| Gross Profit |
1.09B |
5.06% |
32.26% |
| Operating Income |
237.80M |
20.41% |
553.30% |
| Net Income |
82.90M |
5 081.25% |
185.55% |
| EPS |
0.09 |
4 726.32% |
176.42% |
Key Financial Ratios
operatingProfitMargin
14.2%
operatingCashFlowPerShare
$0.08
freeCashFlowPerShare
$-0.01
dividendPayoutRatio
3.98%
Management Commentary
- Strategy and market backdrop: Coty maintains a disciplined stance as the beauty market normalizes post-2020s peak growth, with consumers still prioritizing beauty and fragrances as a growth driver. - Fragrance leadership: Prestige fragrances remain a growth engine, with ~7% LFL in Q1 and strong fragrance momentum in EMEA; Burberry Goddess and Gucci Flora Orchid launches illustrate franchise power and pricing/mix benefits. - Channel and region dynamics: US drugstore softness and Asia travel retail constraints weighed on sell-in, with headwinds also seen in Australia; growth is concentrated in EMEA, LATAM growth engines, and travel retail Americas/EMEA, offsetting some APAC pressures. - Margin and efficiency: Gross margin expansion driven by premiumization and cost controls; A&CP investments steady at high-20s% of sales; All-in-to-Win program delivering ~$20M savings in Q1 with a plan to surpass $120M in FY25. - Guidance and outlook: Expect 3–4% LFL growth for FY25, with EBITDA growth in the low-to-mid single digits in H1 and improving progression in H2; EPS (excluding equity swaps) targeted at $0.54–$0.57 for the year; leverage to sub-3x by year-end with ongoing deleveraging.
"As we enter fiscal 2025, the microeconomic environment remains as complex as ever and the outsized growth of the last few years is now entering the normalization phase. But one thing is very clear, consumers continue to prioritize beauty in their spending routines even as they pull back on many other consumer segments."
— Sue Nabi
"Our first quarter net revenue grew 4.5% like-for-like supported by solid growth in prestige fragrance, mass fragrance and mass skin care."
— Laurent Mercier
Forward Guidance
Coty guidance for fiscal 2025 centers on 3%–4% like-for-like revenue growth, with EBITDA growth near the low-to-mid single digits in H1 and continued margin expansion (~100 bps YoY over two years). The company maintains a plan for adjusted EPS (excluding equity swaps) in the $0.54–$0.57 range for FY25 and free cash flow in the low-to-mid $400M range. Management expects Lacoste divestiture and forex headwinds to be modest (<1% on reported revenue) in H1. They project stronger EBITDA growth in Q3–Q4 as inventory normalization progresses and savings from the All in to Win program accrue, supported by transformations across five pillars (centers of excellence, omnichannel restructuring, faster time to market via Agile Beauty, AI-enabled efficiency, and regional footprint optimization). The company targets leverage below 3.0x by year-end 2024 and closer to 2.5x exiting 2025, aided by ongoing deleveraging and potential Wella-related buybacks. Key factors investors should monitor include: (1) sell-in vs. sell-out dynamics by region and channel (especially U.S. mass and China/travel retail), (2) progression of savings initiatives and reinvestment in A&CP, (3) trajectory of gross margin expansion and the mix shift toward fragrances and mass fragrances, (4) execution of new launches (Adidas Vibes, Lena Gercke LeGer, Chansendeau, Burberry Goddess franchise, Gucci Flora Orchid), and (5) performance and timing of Wella divestiture proceeds and its impact on leverage and buyback capacity.