Coty Uses Secret Traceability Weapon to Crush Grey-Market Perfume Sales in Europe

Coty, a multinational cosmetics firm, used a secret traceability system to track the origin and distribution of a disputed Hugo Boss perfume bottle. The system allowed Coty to prove that the bottle was produced for and sent to South Africa, a non-EEA market, and had not been marketed in the EEA with its approval. The court ruled in Coty's favor, affirming the importance of traceability in proving trademark exhaustion in concurrent trade disputes.

Coty Inc. (COTY) has released its Q4 FY2025 results, showcasing resilience in the prestige fragrance segment despite facing various headwinds. The company reported a 10% net revenue CAGR in prestige fragrance sales from FY21 to FY25, highlighting its strong position in the market [1].

Coty's prestige fragrances generated $3.8 billion in net revenue, accounting for 65% of the company's total sales. Despite a 1% reported decline in Q4 FY25, the segment showed a low single-digit growth in sell-out. The company's Chief Executive Officer, Sue Nabi, and Chief Financial Officer, Laurent Mercier, emphasized the company's progress over the past five years, particularly in the prestige division [1].

Coty's consumer beauty segment, which makes up 35% of total sales, saw an 8% decline in net revenue in FY25, largely due to decreases in color cosmetics and bodycare. However, growth in mass fragrance and skincare partially offset these declines. The segment reported an operating loss of $127.4 million in FY25, a significant shift from an $89.3 million operating income in the prior year [1].

The company's net revenue decreased 4% in FY25 to $5.9 billion, with a 1% negative impact from foreign exchange (FX). On an LFL basis, net revenue decreased 2%. Despite these declines, Coty's gross margin improved by 40 basis points to 64.8%, and adjusted gross margin expanded by 50 basis points to 64.9% [1].

Coty's future outlook remains positive, with the company expecting a gradual improvement in sales and profit trends across FY26. Key initiatives include the global rollout of Boss Bottled Beyond, a multibrand push into fragrance mists, and the upcoming return of Marc Jacobs Beauty in CY26. Despite ongoing macro and tariff headwinds, Coty expects a LFL decline in the first half of FY26 before returning to growth in the second half [1].

References:
[1] https://beautymatter.com/articles/coty-q4-fy-2025-results