Coty 2025 Q3 Earnings Misses Targets with Net Income Plummeting 4670.5%

Coty (COTY) reported its fiscal 2025 Q3 earnings on May 06th, 2025. Coty fell short of analysts' expectations with a revenue decline to $1.30 billion against the consensus estimate of $1.31 billion. The company adjusted its guidance downward due to macroeconomic factors, now anticipating FY25 adjusted EPS of $0.49 to $0.50, below its prior forecast of $0.50 to $0.52. This adjustment reflects ongoing challenges in the consumer market and tariff uncertainties.

Revenue
Coty's total revenue for 2025 Q3 was $1.30 billion, marking a 6.2% decrease from $1.39 billion in 2024 Q3. The Prestige segment contributed $829.40 million, while the Consumer Beauty segment added $469.70 million. The Corporate segment reported no revenue, maintaining the total at $1.30 billion.

Earnings/Net Income
Coty experienced a dramatic swing to a loss of $0.47 per share in 2025 Q3 from a breakeven point per share in 2024 Q3, representing a 78433.3% negative change. The net loss of $402.20 million in 2025 Q3 reflects a drastic 4670.5% deterioration from the net income of $8.80 million in 2024 Q3. This sharp decline in EPS indicates a particularly challenging quarter.

Price Action
The stock price of Coty edged up 1.57% during the latest trading day, gained 2.99% over the most recent full trading week, and decreased 0.77% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing Coty shares after a quarter-over-quarter revenue increase and holding them for 30 days has proven ineffective over the past five years. This approach has led to a return of -15.38%, significantly underperforming the benchmark return of 86.27%, resulting in an excess return of -101.65%. The compound annual growth rate (CAGR) was -3.29%, indicating considerable losses. Furthermore, the strategy exhibited a high maximum drawdown of -43.01% and a Sharpe ratio of -0.14, reflecting substantial risk and negative returns. These statistics underscore the challenges faced by Coty in delivering shareholder value through this investment strategy, highlighting the volatility and risks involved.

CEO Commentary
Sue Nabi, CEO of Coty Inc., remarked on the company's resilience amid a complex operating environment, highlighting significant improvements in strategic, operational, and financial fundamentals. Despite a decline in net revenue, she expressed confidence in Coty's strong fundamentals and a multi-faceted approach aimed at accelerating innovation and efficiency. Nabi acknowledged challenges in the Prestige segment due to market conditions and emphasized the importance of aligning sell-in and sell-out for sustainable growth, while also focusing on enhancing the profitability of the cosmetics business and leveraging leadership in mass fragrances.

Guidance
Coty anticipates FY26 as a critical year for operational alignment and growth, aiming to strengthen the cosmetics segment while driving profitability. The company is committed to creating a healthy baseline for growth by recalibrating its business strategies in response to market trends. Nabi noted that adjustments in leadership and organizational structure are underway, along with a robust cost savings initiative to enhance operational efficiency and protect profitability, positioning Coty favorably for the future amidst ongoing market challenges.

Additional News
In recent developments, Coty has launched the next phase of its transformative “All-in to Win” program, aiming to boost agility and scale while driving operational efficiency. This initiative targets approximately $130 million of fixed cost savings and $240 million of ongoing productivity savings over the next two years, with cumulative savings expected to reach $1.2 billion since the program's initiation. Additionally, Coty faces challenges due to macroeconomic uncertainties, prompting a cut in its fiscal 2025 profit forecast and a delay in its investor day. The company's tariff exposure remains minimal, but plans to potentially transfer production to the U.S. from Europe are under consideration if levies persist long-term.