COTY INC. Q1 FY2025 earnings call

• Coty continues to deliver sustained like-for-like sales growth and outperforms leading global beauty players. - The fragrance market remains robust with consumers using fragrances more often. - Coty is step changing efforts to adapt for future success, expecting fiscal 2025 savings of over $120 million. - Focus on five pillars to future proof the organization: establishing centers of excellence for key processes, adapting commercial organization to omnichannel world, speed to market, maximizing benefits of emerging tech and AI, and regional footprint redesign. - Fueling fragrance leadership across all price points, including strong performance of Burberry, Gucci, Marc Jacobs, Hugo Boss, etc. - Fueling cosmetics brands through social media advocacy and agile innovation. - Strong performance in growth engine markets and ESG milestones achieved.

In the first quarter, Coty's net revenue grew 4.5% like-for-like. In prestige, there was 7% like-for-like growth, with prestige fragrances growing strongly at 9% like-for-like. Consumer beauty growth was flat due to slightly negative volumes affected by the slower market and inventory reductions in the U.S. mass channel. Regionally, EMEA had high single digit growth, Americas had mid-single digit growth, and APAC had a low single digit decline. Growth engine markets, accounting for approximately 21% of Q1 sales, grew strongly at 15% like-for-like. The travel retail channel, accounting for roughly 9% of Q1 sales, grew 4% like-for-like. Mature markets grew 1% like-for-like.

• Q2 like-for-like sales expected to be slightly positive, with inventory reduction impact abating entering second half. - Fiscal 2025 like-for-like sales growth expected to be 3% to 4%. - Adjusted EBITDA growth near lower end of prior guidance of 9% to 11% year-on-year. - Adjusted EPS expected at low end of prior guidance range of $0.54 to $0.57. - Target fiscal 2025 free cash flow in low to mid 400 million.

• Tight order and inventory management by retailers in several markets impacting sales. - Pressure in China and Asia travel retail channel. - Substantial working capital reduction at a key retailer in Australia impacting prestige business shipments.