Coty Stock Slips As Revenue Misses, Outlook Cut Despite Operating Profit Gains

Coty Inc COTY shares are trading lower in premarket on Wednesday after the third-quarter FY25 earnings.

The company reported a third-quarter sales decline of 6.3% year-on-year to $1.30 billion, missing the analyst consensus estimate of $1.31 billion.

LFL revenue decreased 3%. Prestige net revenues declined 4% and that of Consumer Beauty dropped 9%.

Revenue in the Americas fell 10% Y/Y, and EMEA decreased 3%. Gross margin contracted 70 basis points Y/Y to 64.1%, and the gross profit decreased 7.3% to $832.4 million.

Adjusted operating margin was 11.4%, and the adjusted operating income increased 3% to $147.9 million. Adjusted EBITDA of $204.2 million climbed 2% Y/Y, resulting in an adjusted EBITDA margin of 15.7%.

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Adjusted EPS was $0.01, missing the consensus estimate of $0.06.

Operating cash flow for the quarter totaled $(122.5) million, with a free cash flow of $(168.4) million. The company held $243.5 million in cash and equivalents as of March-end.

Total debt of $3.86 billion on March 31, 2025 increased from $3.46 billion on Dec. 31, 2024.

"While we are not satisfied with our net revenue performance, Coty’s strong fundamentals, coupled with our multi-pronged attack-plan for accelerating innovation, distribution and efficiencies, gives us confidence for the years ahead,” said CEO Sue Nabi.

“We are much more strongly positioned to navigate the current complex dynamics including tariffs and broader macroeconomic uncertainty, supported by the strategic, operational and financial fundamentals which we’ve significantly strengthened over the last four years, even in the context of the highly constrained P&L,” Nabi added.

Outlook: Coty lowered FY25 adjusted EPS guidance from $0.50 – $0.52 to $0.49 – $0.50 with an estimate of $0.42. LFL sales are expected to decline 2%.

For the fourth quarter, the company expects a high single-digit LFL decline in sales.

Price Action: COTY shares traded lower by 2.90% at $5.02 in premarket at last check Wednesday.

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