COTY INC. (COTY) Q4 2025 Earnings Summary

Executive Summary

• Q4 FY25 revenue was $1.25B (-8% y/y; -9% LFL), coming in broadly in line with guidance and above S&P consensus of $1.21B*, while adjusted EPS of $(0.05) missed the $0.02* consensus; gross margin compressed 190 bps to 62.3% and adjusted EBITDA margin to 10.1% amid promotions and inventory normalization .
• FY25 full-year adjusted EBITDA reached $1.082B (18.4% margin, +60 bps), with FY25 adjusted EPS of $0.22 including a $(0.28) equity swap headwind (implies ~$0.50 ex-swap, in line with guidance) and free cash flow of $277.6M .
• FY26 outlook: mgmt guides sequential LFL improvement with Q1 LFL -6% to -8%, Q2 LFL -3% to -5%, and a return to LFL growth in 2H26; 1H26 adjusted EPS guided to $0.33–$0.36; tariff headwinds (notably US tariffs on EU fragrances) to pressure 1H margins with mitigation ramping in 2H .
• Catalysts: a return to blockbuster cadence (BOSS Bottled Beyond tracking ahead of Burberry Goddess at similar stage), a multi-brand push into profitable fragrance mists, and US manufacturing transfers to mitigate tariffs and improve resilience .

What Went Well and What Went Wrong

• What Went Well

  • FY25 margin resilience: adjusted EBITDA margin expanded 60 bps to 18.4% despite top-line pressure, supported by supply chain savings and productivity actions .
  • Prestige profitability held up: FY25 Prestige adjusted operating margin rose 120 bps to 20.2%; Q4 Prestige adjusted EBITDA margin was 13.5% despite softer top-line .
  • Strategic execution: e-commerce revenue hit $1B; AI embedded across planning, procurement, media, content, and back office; quote: “AI is already…a present day reality,” with bots live and S/4HANA in place .

• What Went Wrong

  • US underperformance and destocking drove Q4 declines; Consumer Beauty sales fell 12% y/y with an adjusted operating loss of $7.0M; US prestige and mass share losses were acknowledged and are a focus for new leadership .
  • Promotional intensity and lower volumes compressed Q4 gross margin by 190 bps to 62.3% and adjusted EBITDA margin by 200 bps to 10.1% .
  • Impairments: FY25 recorded $212.8M non-cash impairment, largely Consumer Beauty trademarks (Max Factor, CoverGirl, Bourjois) and Philosophy in Prestige, reflecting weaker mass color trends in US/EU .

Financial Results

• Consolidated performance (oldest → newest)

• Segment breakdown (Q4 FY25 vs Q4 FY24)

• KPIs and balance sheet

• Vs S&P Global consensus (performance vs estimates)

*Values retrieved from S&P Global.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO Sue Nabi: “Coty is operating from a position of reinvigorated strength after five years of transformation and proven execution…we delivered…a 3x reduction in our leverage…In FY25…we moved with speed and focus to return Coty to a path of consistent and profitable growth.”
• On category focus: “Our focus on scenting and fragrances across the price spectrum from $5 to $500…is unwavering.”
• On FY26 launches: “Boss Bottled Beyond…tracking ahead of Coty’s FY24 blockbuster Burberry Goddess…[and] a major attack plan in the…fragrance mists category…rolling out in the coming 12 months.”
• On US execution: “Our U.S. Prestige Fragrance sell-out grew double digits and 1.5x the market growth [in July].”
• On tariff mitigation: “We have built up US inventory…implementing a mid single digit price increase…[and] actively transferring fragrance manufacturing to the US.”

Q&A Highlights

• A separate live Q&A session was scheduled for Aug 21; the provided transcript contains prepared remarks only. Expect focus on US recovery, tariff mitigation phasing, and FY26 launch cadence based on prepared commentary .

Estimates Context

• Q4 FY25 revenue beat S&P consensus ($1,252.4M vs $1,208.1M*), while adjusted EPS missed ($(0.05) vs $0.016*). FY25 revenue slightly beat ($5,892.9M vs $5,852.2M*). Management’s FY26 1H guidance implies soft first half with sequential improvement into 2H26 .
• Implication: estimate revisions likely lower for 1H26 EPS and margins given tariff/mix headwinds, with potential upward bias for 2H26 on blockbusters, mists, and mitigation benefits .
  *Values retrieved from S&P Global.

Key Takeaways for Investors

• Near-term reset largely absorbed in Q4; FY26 should show sequential trend improvement with a return to growth in 2H as inventory normalization, launches, and channel/geo expansion kick in .
• Revenue quality improves as Coty doubles down on fragrances (structurally advantaged) and scales fragrance mists, a profitable adjacency with mass appeal and compelling ROI .
• US remains key swing factor; early signs encouraging (sell-out gap narrowed; July outperformance), with new leadership and regional model designed to improve execution .
• Tariffs are a 1H margin headwind; mitigation levers (pricing, US manufacturing transfer, supplier diversification) should support 2H margin recovery .
• Balance sheet manageable (3.5x net leverage) with FCF positive; deleveraging remains a focus as gross margin improvements and cost programs continue .
• FY25 delivery ex-equity swap met EPS guidance; credibility aided by margin discipline despite top-line pressure .
• Trading stance: monitor FY26 Q1 LFL and margin progression vs guidance, BOSS Bottled Beyond sell-through, and early reads from the mists rollout as potential catalysts .