Coty Reports Strong Growth in Q1 2025

Coty has announced its results for the first quarter of fiscal year 2025, which ended on September 30, 2024. The company reported continued sales and gross margin expansion during Q1 while continuing to invest in its brands. Coty’s net revenues grew 2% on a reported basis, and 4.5% on a like-for-like (LFL) basis, despite the challenging comparison to last year’s exceptional growth of 18%.

The growth was largely driven by strong performance in fragrances across all price points, including prestige, ultra-premium, and mass fragrances. Coty’s CEO, Sue Nabi, emphasized the continued importance of beauty products in consumer spending habits, even amid broader economic challenges. She stated, “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 Segment

Coty’s Prestige segment saw a 5% increase in Q1 net revenues, despite a 2% negative impact from the divestiture of the Lacoste license. Prestige fragrances continued to outperform the overall beauty market, with growth supported by expansion in both volumes and price/mix in North America and Europe.

Prestige cosmetics also showed mixed results, with Burberry makeup and Kylie Cosmetics driving growth, while Gucci makeup experienced a decline due to weak performance in mainland China and Asia Travel Retail. Overall, Prestige accounted for 67% of Coty’s total sales, generating $1,114.1 million in net revenues.

Consumer Beauty Segment

In contrast, Coty’s Consumer Beauty segment saw a 3% decline in Q1 net revenues, reaching $557.4 million. The decline was primarily driven by challenges in the U.S. mass color cosmetics market, compounded by channel shifts that resulted in Coty’s U.S. sell-in tracking lower than sell-out.

However, mass fragrance brands experienced double-digit growth, fueled by strong performances from Adidas, Nautica, Beckham, and Mexx. Coty’s Brazilian brands, Risque (color cosmetics) and Paixao (body care), also saw growth.

Regional Performance

Coty’s American net revenues were $693.5 million, marking a 2% decline on a reported basis, driven by softness in the U.S. color cosmetics market. However, Brazil’s body care market partially offset this decline with mid-single-digit growth. Coty saw positive growth in Latin America, Canada, and the regional Travel Retail channel.

In the EMEA region, Coty reported $787.8 million in net revenues, an 8% increase driven by high-single-digit growth in Prestige and mid-single-digit growth in Consumer Beauty. This performance was bolstered by growth across most markets and the regional Travel Retail channel.

Asia Pacific net revenues reached $190.2 million, reflecting a 5% decline on a reported basis, primarily due to challenges in Prestige and the Chinese mainland market, alongside a 1% negative impact from the Lacoste divestiture. Growth in other Asia Pacific markets somewhat offset the decline.

Future Outlook

Sue Nabi concluded, “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.”

Coty remains optimistic about its growth prospects in the coming quarters, despite the challenges posed by the global market environment.