Coty 2025 Q3 Earnings Misses Targets with Net Income Down 4670%

Coty Inc. (COTY) reported its fiscal 2025 Q3 earnings on May 7th, 2025. The company missed earnings expectations, with revenue falling short of analyst projections. Coty lowered its profit forecast for the fiscal year, citing macroeconomic challenges and tariff uncertainties. The guidance adjustment reflects a cautious outlook, with anticipated continued pressures on sales and earnings. Despite these challenges, Coty remains committed to its strategic initiatives aimed at driving growth and efficiency in the coming fiscal year.

Revenue
Coty experienced a revenue decline of 6.2% in the third quarter of fiscal 2025, totaling $1.30 billion compared to $1.39 billion in the same quarter of the previous year. The Prestige segment generated $829.40 million, while Consumer Beauty contributed $469.70 million. The Corporate segment reported no revenue, resulting in a combined total of $1.30 billion for the quarter.

Earnings/Net Income
Coty reported a net loss of $0.47 per share in Q3 2025, a significant drop from breaking even in the previous year, with a 78433.3% negative change. The company's net loss amounted to $402.20 million, a 4670.5% decline from the $8.80 million net income reported in Q3 2024. Overall, the EPS results were unfavorable.

Price Action
The stock price of Coty declined by 2.77% during the latest trading day, reflecting investor concerns over the earnings miss and revised guidance. Over the past week, the stock tumbled 9.50%, and it has decreased by 9.33% month-to-date as market sentiment remains cautious.

Post-Earnings Price Action Review
The strategy of purchasing Coty shares following a quarter-over-quarter revenue increase and holding them for 30 days has underperformed significantly over the past five years. This approach yielded a return of -3.69%, falling short of the benchmark return of 84.08%. The strategy's excess return amounted to -87.78%, with a compound annual growth rate (CAGR) of -0.75%. Additionally, it faced a maximum drawdown of -33.47%, and a Sharpe ratio of -0.03, underscoring the considerable risk and negative returns associated with it. Despite these performance challenges, Coty remains focused on strengthening its operating model and boosting efficiency through its ongoing transformation program.

CEO Commentary
“Across economic cycles, beauty has remained resilient for decades. Even in this challenging landscape, we have significantly strengthened our strategic, operational, and financial fundamentals, driving margin expansion, stronger cash flow generation, and substantial deleveraging over the past four years,” said Sue Nabi, CEO of Coty. While acknowledging dissatisfaction with net revenue performance, she emphasized the company's strong fundamentals and a multi-pronged attack plan aimed at accelerating innovation and improving efficiencies. Nabi also noted that 2025 is a transition year, highlighting the challenges in the Prestige segment and the recalibration efforts in Consumer Beauty to enhance profitability.

Guidance
Coty anticipates that 2025 will continue to serve as a transitional year, with a strong focus on aligning sell-in and sell-out strategies to establish a healthy growth baseline entering FY26. The company aims to strengthen its cosmetics business while capitalizing on its leadership in the mass fragrances sector. Coty is implementing necessary organizational changes and cost-saving measures to protect profitability and enhance operational agility, reinforcing confidence in future performance despite current market challenges.

Additional News
In recent weeks, Coty announced the launch of the next phase of its transformative "All-in to Win" program. This initiative aims to establish a simplified and scaled operating model while boosting agility and operational efficiency. Coty anticipates generating approximately $130 million in fixed-cost savings and around $240 million in ongoing productivity savings over the next two years. The cumulative savings are expected to reach $1.2 billion since the program's initiation in FY21. Additionally, Coty has been making organizational changes, including adjustments in leadership roles, to improve execution in key markets like the U.S. The company continues to focus on expanding its presence in e-commerce and strengthening its brand portfolio, positioning itself for sustainable growth despite current market challenges.