11.07.24
Coty released its results for the first quarter of fiscal year 2025, which ended September 30, 2024. The company saw continued sales and gross margin expansion in Q1 while continuing to invest in its brands.
Coty's net revenues grew 2% on a reported basis. Coty's Q1 net revenues grew 4.5% on an LFL basis, despite the very elevated comparison of the prior year when Coty's LFL revenues grew 18%.
The reported Q1 sales growth was attributed to strong growth in fragrances across all price points, including prestige, ultra-premium, and mass fragrances.
Coty CEO, Sue Nabi said,
"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 normalization phase. Nevertheless, one thing is very clear: consumers continue to prioritize beauty in their spending routines, even as they pull back on many other consumer segments. And within the broader beauty backdrop, fragrances remain a top performing category.”
Prestige’s net revenue growth in Q1 was driven by solid growth in the underlying fragrance category and Coty's brand performance. Net revenues reached $1,114.1 million, which was 67% of Coty’s sales.
The prestige fragrance category continues to outperform the overall beauty market across North America and Europe, supported by expansion in both volumes and price/mix.
In Coty's Prestige cosmetics business, Burberry makeup and Kylie Cosmetics grew reported net revenues, while Gucci makeup declined from weakness in the Chinese mainland and Asia Travel Retail.
In 1Q25, Consumer Beauty reported net revenues grew strongly in mass fragrance and mass skincare, partially offsetting declines in body care and mass cosmetics reported net revenues.
For cosmetics, the weakness was concentrated in the U.S. mass color cosmetics market, which was further exacerbated by significant channel shifts, resulting in Coty's U.S. Consumer Beauty sell-in tracking well below sell-out.
Coty's mass fragrance brands grew by double-digit percentages, supported by strong growth in Adidas, Nautica, Beckham, and Mexx. Also, Coty's Brazilian brands, Risque, a color cosmetics brand, and Paixao, a body care brand, each grew reported net revenues.
Reported net revenues grew in Latin America, Canada, and the regional Travel Retail channel. On an LFL basis, America’s net revenues increased by 4% in Q1, supported by high-single-digit percentage growth in the Prestige segment, and included a 2% contribution from Argentina.
EMEA net revenues of $787.8 million increased 8% on a reported basis. High-single-digit percentage net revenue growth in Prestige and mid-single-digit percentage net revenue growth in Consumer Beauty drive this growth.
The regional performance was supported by reported net revenue growth in nearly all markets and the regional Travel Retail channel.
Asia Pacific net revenues reached $190.2 million, a 5% decrease on a reported basis driven by declines in Prestige coupled with a 1% headwind from the divestiture of the Lacoste license partially.
Reported net revenues declined in the region in both divisions, driven by the challenging market dynamics in the Chinese mainland and the regional Travel Retail channel. Declines were partially offset by reported net revenue growth in other Asia Pacific markets.
Nabi concluded,
“Finally, as we continue to deliver strong profitability and free cash flow in FY25 and beyond, we will deploy this cash toward shareholder returns, further deleveraging, and amplifying Coty’s growth trajectory."
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Coty's net revenues grew 2% on a reported basis. Coty's Q1 net revenues grew 4.5% on an LFL basis, despite the very elevated comparison of the prior year when Coty's LFL revenues grew 18%.
The reported Q1 sales growth was attributed to strong growth in fragrances across all price points, including prestige, ultra-premium, and mass fragrances.
Coty CEO, Sue Nabi said,
"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 normalization phase. Nevertheless, one thing is very clear: consumers continue to prioritize beauty in their spending routines, even as they pull back on many other consumer segments. And within the broader beauty backdrop, fragrances remain a top performing category.”
Prestige
Q1 net revenues increased 5% on a reported basis, including a 2% negative impact from the divestiture of the Lacoste license.Prestige’s net revenue growth in Q1 was driven by solid growth in the underlying fragrance category and Coty's brand performance. Net revenues reached $1,114.1 million, which was 67% of Coty’s sales.
The prestige fragrance category continues to outperform the overall beauty market across North America and Europe, supported by expansion in both volumes and price/mix.
In Coty's Prestige cosmetics business, Burberry makeup and Kylie Cosmetics grew reported net revenues, while Gucci makeup declined from weakness in the Chinese mainland and Asia Travel Retail.
Consumer Beauty
Q1 net revenues declined 3% on a reported basis, with net revenues reaching $557.4 million.In 1Q25, Consumer Beauty reported net revenues grew strongly in mass fragrance and mass skincare, partially offsetting declines in body care and mass cosmetics reported net revenues.
For cosmetics, the weakness was concentrated in the U.S. mass color cosmetics market, which was further exacerbated by significant channel shifts, resulting in Coty's U.S. Consumer Beauty sell-in tracking well below sell-out.
Coty's mass fragrance brands grew by double-digit percentages, supported by strong growth in Adidas, Nautica, Beckham, and Mexx. Also, Coty's Brazilian brands, Risque, a color cosmetics brand, and Paixao, a body care brand, each grew reported net revenues.
Sales by Region
American net revenues of $693.5 million decreased by 2% on a reported basis. This was driven by Consumer Beauty segment revenues, which were impacted by the softness in the U.S. color cosmetics market. Body care in Brazil, partially offset this by a mid-single-digit percentage growth in the Prestige segment.Reported net revenues grew in Latin America, Canada, and the regional Travel Retail channel. On an LFL basis, America’s net revenues increased by 4% in Q1, supported by high-single-digit percentage growth in the Prestige segment, and included a 2% contribution from Argentina.
EMEA net revenues of $787.8 million increased 8% on a reported basis. High-single-digit percentage net revenue growth in Prestige and mid-single-digit percentage net revenue growth in Consumer Beauty drive this growth.
The regional performance was supported by reported net revenue growth in nearly all markets and the regional Travel Retail channel.
Asia Pacific net revenues reached $190.2 million, a 5% decrease on a reported basis driven by declines in Prestige coupled with a 1% headwind from the divestiture of the Lacoste license partially.
Reported net revenues declined in the region in both divisions, driven by the challenging market dynamics in the Chinese mainland and the regional Travel Retail channel. Declines were partially offset by reported net revenue growth in other Asia Pacific markets.
Nabi concluded,
“Finally, as we continue to deliver strong profitability and free cash flow in FY25 and beyond, we will deploy this cash toward shareholder returns, further deleveraging, and amplifying Coty’s growth trajectory."
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