Coty's Q1 2025 Earnings: Fragrance Strength, Mass Beauty Challenges

Coty Inc. (COTY) reported its Q1 2025 earnings on November 6, 2024, highlighting strong fragrance performance and challenges in the mass beauty segment. The company's net revenues grew 2% to $1.67 billion, with like-for-like (LFL) sales up 4.5%. Prestige net revenues increased 5% driven by fragrance growth, while consumer beauty net revenues declined 3% due to mass cosmetics weakness and retailer inventory management.

Coty's fragrance division was the star performer, with prestige fragrance sales up 6% on a reported basis and 9% LFL. The company's leading fragrance brands achieved double-digit LFL growth, driven by solid brand performance and premiumization. This strong fragrance performance contributed significantly to Coty's overall revenue growth.

However, Coty faced challenges in its mass beauty segment, particularly in the U.S. market. The closure of hundreds of pharmacy stores by chains like Walgreens, CVS, and Rite-Aid, coupled with tight inventory management by retailers, led to Coty's U.S. consumer beauty sell-in tracking well below sell-out. This channel shift, combined with a slowdown in the U.S. mass color cosmetics market, resulted in a 3% decline in consumer beauty net revenues.

Despite these challenges, Coty's CEO, Sue Nabi, remains optimistic about the company's prospects. She attributed the mass beauty decline to retailer strategies rather than Coty's brands and noted that the company is not overexposed to any individual market, brand, retailer, or channel. Coty expects like-for-like sales growth in the first half of 3 to 4%, with a focus on resumed alignment between sell-in and sell-out, strong launch initiatives, and select distribution expansion.


Coty's Q1 2025 earnings reflect a tale of two segments: a strong fragrance division and a challenged mass beauty segment. The company's fragrance performance, driven by premiumization and brand investments, has been a significant growth driver. However, the mass beauty segment faces headwinds from retailer inventory management and channel shifts, particularly in the U.S. market. As Coty navigates these challenges, investors should monitor the company's progress in addressing mass beauty weaknesses and maintaining its fragrance momentum.


| Segment | LFL Sales Growth |
| --- | --- |
| Prestige | 7% |
| Consumer Beauty | -3% |
| Total | 4.5% |