Coty lowers outlook despite positive Q1 results

In the first quarter, Coty's net revenues grew 2 percent and 4.5 percent on a LFL basis supported by strong growth in fragrances across all price points, including prestige, ultra premium and mass fragrances.

Coty expects FY25 adjusted EBITDA to grow near the lower end of its prior guidance of 9 to 11 percent, stronger adjusted EBITDA margin expansion of around 100 bps, and adjusted EPS at the low end of its prior guidance range of 54 to 57 cents, reflecting mid teens percentage growth.

Commenting on the operating results, Sue Nabi, Coty's CEO, said in a release: "As we enter FY25, the macroeconomic environment remains as complex as ever and the outsized growth of the last few years is now entering the normalisation phase. Nevertheless, one thing is very clear: consumers continue to prioritise beauty in their spending routines, even as they pull back on many other consumer segments.”

Prestige fragrances drive Coty's Q1 growth

The company said Prestige net revenues increased 5 percent on a reported basis, with net revenues growing at a 7 percent pace on a LFL basis, including a 6 percent growth in prestige fragrances, which grew 9 percent LFL.

Consumer Beauty net revenues declined 3 percent on a reported basis, with LFL net revenues flat year-over-year. The company added that net revenues grew strongly in mass fragrance and mass skincare, partially offsetting declines in body care and mass cosmetics reported net revenues

Coty's Q1 results across geographies

By geography, EMEA net revenues increased 8 percent on both a reported basis and LFL basis, Americas net revenues declined 2 percent on a reported basis, but grew 4 percent on a LFL basis, Asia Pacific net revenues declined 5 percent on both a reported and LFL basis, primarily driven by the ongoing difficulty in the Chinese mainland market and the Asia Travel Retail channel.

Reported and adjusted gross margin of 65.5 percent increased 200 basis points, operating income of 237.8 million dollars, was up 20 percent, adjusted operating income of 303.6 million dollars was roughly flat resulting in an adjusted operating margin of 18.2 percent.

The company’s reported net income of 79.6 million dollars increased from a net loss of 1.7 million dollars in the prior year, , while adjusted net income of 128.1 million dollars increased from 74.1 million dollars. Adjusted EBITDA for the quarter of 360.1 million dollars was flat, with an adjusted EBITDA margin of 21.5 percent.