Executive Summary
Coty delivered a robust Q3 2024 performance with meaningful margin expansion and reaffirmed a constructive trajectory into fiscal 2024 and 2025. The company reported like-for-life revenues up 10% in Q3 and 13% year-to-date, underscoring the strength of its diversified portfolio across Prestige fragrances, color cosmetics, skincare, and body care. Adjusted gross margin expanded 190 bps year over year to 64.8% in Q3 (64.4% year-to-date), with adjusted operating income and EBITDA also registering double-digit gains, driving EBITDA margin up about 30 bps. Management raised the midpoint of fiscal 2024 guidance for the third time this year, signaling confidence in continued growth, disciplined pricing, and ongoing margin accretion despite investments in growth initiatives. Key strategic pillars—Consumer Beauty expansion, Prestige fragrance leadership, skincare portfolio buildup, digital and R&D scale, Travel Retail expansion, and sustainability leadership—remain the cornerstone of the growth framework. However, near-term headwinds include FX pressure, a modest Q4 restocking impact in Prestige, higher working capital and inventory investments, and a leverage profile aimed at investment-grade levels over the next 12–18 months. The earnings call highlighted notable innovations (Burberry Goddess, Daisy Wild, Cosmic Kylie Jenner, Infiniment Coty Paris) and a strong push into e-commerce (roughly 20% year-to-date penetration) as catalysts for future growth. The company continues to pursue deleveraging toward ~2.5x by end-2024 and ~2x by end-2025, with planned divestitures (e.g., Wella stake) to support this path.
Key Performance Indicators
QoQ: -20.13% | YoY:10.73%
QoQ: -67.13% | YoY:-60.92%
QoQ: -97.90% | YoY:-96.49%
QoQ: -97.85% | YoY:-96.42%
Key Insights
Financial highlights for Q3 2024: Revenue 1,385.6 million USD; gross profit 897.8 million; gross margin 64.795% (adjusted gross margin 64.8%); operating income 77.8 million; EBITDA 180.0 million; EBITDA margin 13.0% (EBITDAR 12.99%); net income 3.8 million; net income margin 0.27%; earnings per share (EPS) 0.0043; diluted EPS 0.0043; weighted average shares outstanding 883.1 million; diluted shares 892.0 million. YoY changes: revenue +7.5%; gross profit +10.7%; operating income down ~60.9% (refl...
Financial Highlights
Financial highlights for Q3 2024: Revenue 1,385.6 million USD; gross profit 897.8 million; gross margin 64.795% (adjusted gross margin 64.8%); operating income 77.8 million; EBITDA 180.0 million; EBITDA margin 13.0% (EBITDAR 12.99%); net income 3.8 million; net income margin 0.27%; earnings per share (EPS) 0.0043; diluted EPS 0.0043; weighted average shares outstanding 883.1 million; diluted shares 892.0 million. YoY changes: revenue +7.5%; gross profit +10.7%; operating income down ~60.9% (reflecting cost structure and lower one-time items in prior year); net income down ~96.5%; EPS down ~96.4%. QoQ changes: revenue -19.8%; gross profit -20.1%; operating income -67.1%; net income -97.9%; EPS -97.9%. Profitability metrics show gross margin expansion, with operating margin around 5.6% (Q3), and net margin near 0.27%. Free cash flow (FCF) for the quarter was negative at -234.3 million; year-to-date FCF around -? (negative given tax and working capital timing). Cash balance ended at 260.2 million; total debt near 4.198 billion; net debt about 3.9379 billion; leverage approximately 3.4x. For the full year 2024, management expects like-for-life revenues to grow at the upper end of +9% to +11% and Adjusted EBITDA in the range of 1,080–1,090 million with margin at the upper end of guidance (10–30 bps expansion). Q4 guidance includes a modest FX headwind (1–2%) and a Lacoste license divestiture headwind (~2%), with Q4 adjusted EPS excluding the equity swap of 0.05–0.06. The company targets debt reduction to ~2.5x exiting 2024 and ~2x exiting 2025, aided by deleveraging and Wella stake divestment. Management also reiterated ongoing all-in-to-win savings (YTD >$90m; FY24 target $110–120m; FY25 target $75m) and continued investment in premiumization, digital advocacy, and innovation across six strategic pillars.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.39B |
7.50% |
-19.80% |
| Gross Profit |
897.80M |
10.73% |
-20.13% |
| Operating Income |
77.80M |
-60.92% |
-67.13% |
| Net Income |
3.80M |
-96.49% |
-97.90% |
| EPS |
0.00 |
-96.42% |
-97.85% |
Key Financial Ratios
operatingProfitMargin
5.61%
operatingCashFlowPerShare
$-0.19
freeCashFlowPerShare
$-0.27
dividendPayoutRatio
86.8%
priceEarningsRatio
690.79
Management Commentary
Key management insights from the May 2024 earnings call, grouped by theme: Growth and market dynamics: 'Coty’s very strong Q3 results, with double-digit growth... like-for-life revenues grew 10% in Q3 and 13% year-to-date' (CEO Sue Nabi). Margin and profitability: 'adjusted gross margin increasing by 190 basis points in Q3 and up 20 basis points fiscal year-to-date to 64.4%'; 'Q3 adjusted operating income grew a strong 17%', 'adjusted EBITDA grew 10% YoY to $200 million, with EBITDA margin up 30 bps to 14.4%'; leverage and capital allocation: 'net debt of approximately $3.7 billion with leverage ~3.4x at quarter end; target leverage toward ~2.5x exiting 2024 and ~2x exiting 2025' (Laurent Mercier); strategic progress and product innovation: 'Infiniment Coty Paris' launched, 'Burberry Goddess is a top fragrance launch; Daisy Wild and Cosmic Kylie Jenner are top fragrance launches in US YTD'; 'Infiniment Coty Paris is anchored in Molecular Aura technology with 30-hour signature and 100% carbon-captured ethanol'; ESG leadership: 'eight carbon neutral sites, solar expansion, refillable formats, carbon-captured ethanol, ISS ESG Prime Status'; Travel Retail and e-commerce: 'Travel Retail channel sales grew over 20% like-for-life in Q3 and YTD; e-commerce penetration expanded ~190 bps to nearly 20% YTD; Prestige and Consumer Beauty e-commerce market share now rank #2 among beauty peers in e-commerce'. Guidance and outlook: 'Q4 like-for-life revenue growth expected in the low-to-mid single digits; FX headwind 1–2%; Lacoste divestiture ~2% headwind; Q4 adjusted EPS excluding equity swap 0.05–0.06; full-year 2024 adjusted EPS ex-swap at the high end of 0.44–0.47; leverage targets unchanged; continue deleveraging via cash generation and EBITDA expansion.'
Coty’s very strong Q3 results, with double-digit growth, reinforce our nearly four-year track record of delivering results in-line to ahead of expectations. Our like-for-life revenues grew 10% in Q3 and grew 13% year-to-date, trending above our guidance of plus 9% to 11% like-for-life for fiscal 2024.
— Sue Nabi, CEO
Infiniment Coty Paris is the first globally distributed full fragrance collection manufactured using 100% carbon-captured ethanol, with refillable, stackable and reusable bottles, and a boutique opened in Paris with promising early results.
— Sue Nabi, CEO
Forward Guidance
Management maintains an optimistic view for 2024 and 2025, anchored by a diversified portfolio and disciplined investment strategy. For Q4 2024, Coty expects like-for-life revenue growth in the low-to-mid single digits, reflecting a mid-single-digit headwind from Prestige restocking year-over-year, plus FX headwinds of 1–2% and approximately 2% from Lacoste license divestiture. They anticipate an expansion in adjusted gross margin driven by reduced COGS inflation and improved mix, albeit at a more moderate pace than Q3. For full-year 2024, revenue is guided at the high end of the 9–11% like-for-life range, with adjusted EBITDA of $1,080–$1,090 million and adjusted EPS ex-swap of $0.44–$0.47, implying strong year-over-year growth at the upper end. The company targets leverage of ~2.5x by end-2024 and ~2x by end-2025, supported by ongoing cost savings (All-in-to-Win) totaling about $110–$120 million in 2024 and $75 million in 2025, as well as the planned divestiture of the Wella stake by 2025. Investors should monitor: (1) Prestige fragrance sell-out performance versus market growth, (2) sustained margin expansion and inflation/easing dynamics, (3) progression of deleveraging and capital allocation (including Wella divestiture timing), (4) success of new launches (Infiniment Coty Paris, Daisy Wild, Cosmic Kylie Jenner, Burberry Goddess) and the performance of e-commerce and Travel Retail channels, and (5) FX movements and any potential restocking dynamics in key markets.