COTY INC.

Previous wording

Certain statements in this Form 10-Q are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, strategic planning, targets and outlook for future reporting periods (including the extent and timing of revenue, expense and profit trends and changes in operating cash flows and cash flows from operating activities and investing activities), the Company’s future operations and strategy (including the expected implementation and related impact of its strategic priorities), ongoing and future cost efficiency, optimization and restructuring initiatives and programs, expectations of the impact of inflationary pressures and the timing, magnitude and impact of pricing actions to offset inflationary costs, strategic transactions (including their expected timing and impact), expectations and/or plans with respect to joint ventures (including Wella and the timing and size of any related divestiture, distribution or return of capital), the Company’s capital allocation strategy and payment of dividends (including suspension of dividend payments and the duration thereof and any plans to resume cash dividends on common stock or to continue to pay dividends in cash on preferred stock) and expectations for stock repurchases, investments, licenses and portfolio changes, product launches, relaunches or rebranding (including the expected timing or impact thereof), plans for growth in growth engine markets, channels and other white spaces, synergies, savings, performance, cost, timing and integration of acquisitions, future cash flows, liquidity and borrowing capacity (including any refinancing or deleveraging activities), timing and size of cash outflows and debt deleveraging, the timing and extent of any future impairments, and synergies, savings, impact, cost, timing and implementation of the Company’s ongoing strategic transformation agenda (including operational and organizational structure changes, operational execution and simplification initiatives, fixed cost reductions, continued process improvements and supply chain changes), the impact, cost, timing and implementation of e-commerce and digital initiatives, the expected impact, cost, timing and implementation of sustainability initiatives (including progress, plans, goals and our ability to achieve sustainability targets), the wind down of the Company’s operations in Russia (including timing and expected impact), the expected impact of geopolitical risks including the ongoing war in Ukraine and/or the armed conflict in the Middle East (including the Red Sea conflict) on our business operations, sales outlook and strategy, expectations regarding economic recovery in Asia, consumer purchasing trends and the related impact on our plans for growth in China, the expected impact of global supply chain challenges and/or inflationary pressures (including as a result of the…

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Current wording

Certain statements in this Form 10-Q are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, strategic planning, targets and outlook for future reporting periods (including the extent and timing of revenue, expense and profit trends and changes in operating cash flows and cash flows from operating activities and investing activities), the Company’s future operations and strategy (including the expected implementation and related impact of its strategic priorities), ongoing and future cost efficiency, optimization and restructuring initiatives and programs, expectations of the impact of inflationary pressures and the timing, magnitude and impact of pricing actions to offset inflationary costs, strategic transactions (including their expected timing and impact), expectations and/or plans with respect to joint ventures (including Wella and the timing and size of any related divestiture, distribution or return of capital), the Company’s capital allocation strategy and payment of dividends (including suspension of dividend payments and the duration thereof and any plans to resume cash dividends on common stock or to continue to pay dividends in cash on preferred stock) and expectations for stock repurchases, investments, licenses and portfolio changes, product launches, relaunches or rebranding (including the expected timing or impact thereof), plans for growth in growth engine markets, channels and other white spaces, synergies, savings, performance, cost, timing and integration of acquisitions, future cash flows, liquidity and borrowing capacity (including any refinancing or deleveraging activities), timing and size of cash outflows and debt deleveraging, the timing and magnitude of any “true up” payments in connection with our forward repurchase contracts, the timing and extent of any future impairments, and synergies, savings, impact, cost, timing and implementation of the Company’s ongoing strategic transformation agenda (including operational and organizational structure changes, operational execution and simplification initiatives, fixed cost reductions, continued process improvements and supply chain changes), the impact, cost, timing and implementation of e-commerce and digital initiatives, the expected impact, cost, timing and implementation of sustainability initiatives (including progress, plans, goals and our ability to achieve sustainability targets), the expected impact of geopolitical risks including the ongoing war in Ukraine and/or the armed conflict in the Middle East on our business operations, sales outlook and strategy, expectations regarding the impact of tariffs (including magnitude, scope and timing) and plans to manage such impact, expectations regarding economic recovery in Asia, consumer purchasing trends and the related impact on our plans for growth in China, the expected imp…

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Previous wording

•any unanticipated problems, liabilities or integration or other challenges associated with a past or future acquired business, joint ventures or strategic partnerships, which could result in increased risk or new, unanticipated or unknown liabilities, including with respect to environmental, competition and other regulatory, compliance or legal matters, and specifically in connection with the strategic partnerships with Kylie Jenner and Kim Kardashian, risks related to the entry into a new distribution channel, the potential for channel conflict, risks of retaining customers and key employees, difficulties of integration (or the risks associated with limiting integration) and management of the partnerships, our relationships with Kylie Jenner and Kim Kardashian, our ability to protect trademarks and brand names, litigation, investigations by governmental authorities, and changes in law, regulations and policies that affect King Kylie LLC (“King Kylie”) and/or KKW Holdings, LLC’s (“KKW Holdings”) business or products, including risk that direct selling laws and regulations may be modified, interpreted or enforced in a manner that results in a negative impact to King Kylie and/or KKW Holdings’ business model, revenue, sales force or business;

Current wording

•any unanticipated problems, liabilities or integration or other challenges associated with a past or future acquired business, joint ventures or strategic partnerships, which could result in increased risk or new, unanticipated or unknown liabilities, including with respect to environmental, competition and other regulatory, compliance or legal matters, and specifically in connection with our strategic partnerships, risks related to the entry into a new distribution channel, the potential for channel conflict, risks of retaining customers and key employees, difficulties of integration (or the risks associated with limiting integration) and management of the partnerships, our relationships with our strategic partners, our ability to protect trademarks and brand names, litigation, investigations by governmental authorities, and changes in law, regulations and policies that affect the business or products of our strategic partnerships, including risk that direct selling laws and regulations may be modified, interpreted or enforced in a manner that results in a negative impact to the business model, revenue, sales force or business of any of our strategic partnerships;

Previous wording

•global political and/or economic uncertainties, disruptions or major regulatory or policy changes, and/or the enforcement thereof that affect our business, financial performance, operations or products, including the impact of the war in Ukraine and any escalation or expansion thereof, armed conflict in the Middle East, the outcome of U.S. elections, changes in the U.S. tax code and/or tax regulations in other jurisdictions where we operate (including recent and pending implementation of the global minimum corporate tax (part of the “Pillar Two Model Rules”) that may impact our tax liability in the European Union (“EU”)), and recent changes and future changes in tariffs, retaliatory or trade protection measures, trade policies and other international trade regulations in the U.S., the EU, and Asia and in other regions where we operate, potential regulatory limits on payment terms in the EU, future changes in sanctions regulations, regulatory uncertainty impacting the wind-down of our business in Russia, recent and future changes in regulations impacting the beauty industry, including regulatory measures addressing products, formulations, raw materials and packaging, and recent and future regulatory measures restricting or otherwise impacting the use of web sites, mobile applications or social media platforms that we use in connection with our digital marketing and e-commerce activities;

Current wording

•global political and/or economic uncertainties, disruptions or major regulatory or policy changes, and/or the enforcement thereof that affect our business, financial performance, operations or products, including the impact of the war in Ukraine and any escalation or expansion thereof, armed conflict in the Middle East, the current administration in the U.S. and related changes to regulatory and trade policies, changes in the U.S. tax code and/or tax regulations in other jurisdictions where we operate (including recent and pending implementation of the global minimum corporate tax (part of the “Pillar Two Model Rules”) that may impact our tax liability in the European Union (“EU”)), and recent changes and future changes in tariffs, retaliatory or trade protection measures, trade policies and other international trade regulations in the U.S., the EU, and Asia and in other regions where we operate (and our ability to manage the impact of such changes), potential regulatory limits on payment terms in the EU, future changes in sanctions regulations, recent and future changes in regulations impacting the beauty industry, including regulatory measures addressing products, formulations, raw materials and packaging, and recent and future regulatory measures restricting or otherwise impacting the use of web sites, mobile applications or social media platforms that we use in connection with our digital marketing and e-commerce activities;

Previous wording

•disruptions in operations, sales and in other areas, including due to disruptions in our supply chain, restructurings and other business alignment activities, manufacturing or information technology systems, labor disputes, extreme weather and natural disasters, impact from public health events, the outbreak of war or hostilities (including the war in Ukraine and armed conflict in the Middle East, including the Red Sea conflict, and any escalation or expansion thereof), the impact of global supply chain challenges or other disruptions in the international flow of goods, and the impact of such disruptions on our ability to generate profits, stabilize or grow revenues or cash flows, comply with our contractual obligations and accurately forecast demand and supply needs and/or future results;

Current wording

•disruptions in operations, sales and in other areas, including due to disruptions in our supply chain, restructurings and other business alignment activities, manufacturing or information technology systems, labor disputes, extreme weather and natural disasters, impact from public health events, the outbreak of war or hostilities (including the war in Ukraine and armed conflict in the Middle East, and any escalation or expansion thereof), the impact of global supply chain challenges or other disruptions in the international flow of goods (including disruptions arising from changing tariff scenarios), and the impact of such disruptions on our ability to generate profits, stabilize or grow revenues or cash flows, comply with our contractual obligations and accurately forecast demand and supply needs and/or future results;

Previous wording

•our relationship with KKR, whose affiliate KKR Bidco, is an investor in the Wella Business, and any related conflicts of interest or litigation;

Current wording

•our relationship with KKR, whose affiliate KKR Bidco, is an investor in the Wella Company, and any related conflicts of interest or litigation;

Previous wording

We are one of the world’s largest beauty companies, with an iconic portfolio of brands across fragrance, color cosmetics, skincare, and body care. Our brands empower people to express themselves freely, creating their own visions of beauty and we are committed to making a positive impact on the planet. Our strategic priorities include stabilizing and growing our Consumer Beauty brands through leading innovation and improved execution, accelerating our Prestige fragrance business and ongoing expansion into Prestige cosmetics, building a comprehensive skincare portfolio over the mid-to-long term leveraging existing brands, enhancing our organizational growth capabilities including digital and research and development, expanding our presence in growth channels such as the Travel Retail channel, in China and other growth engine markets (Latin America, including Brazil, the Middle East, North and South East Asia, Africa, and India), and establishing Coty as an industry leader in sustainability.

Current wording

We are one of the world’s largest beauty companies, with an iconic portfolio of brands across fragrance, color cosmetics, skincare, and body care. Our brands empower people to express themselves freely, creating their own visions of beauty and we are committed to making a positive impact on the planet. Our strategic priorities include stabilizing and growing our Consumer Beauty brands, accelerating our Prestige fragrance business and ongoing expansion into Prestige cosmetics, building a comprehensive skincare portfolio, enhancing our organizational growth capabilities including digital and research and development, expanding our presence in growth channels such as the Travel Retail channel, in China and other growth engine markets (Latin America, including Brazil, the Middle East, North and South East Asia, Africa, and India), and establishing Coty as an industry leader in sustainability.

Previous wording

We have been making progress on our strategic priorities. In Consumer Beauty, we have implemented the relaunch of our top brands. We are now focusing on accelerating our digital advocacy strategy to amplify our brand and product innovations and leveraging consumer analytics and insights to improve the return on investment of our marketing activities. In Prestige, we are accelerating our fragrance business with exceptional new launches and expanding our premium and ultra-premium categories, while also enhancing the assortment of our Prestige cosmetic products. We are continuing to thoughtfully expand our skincare portfolio (which contributed a low single digit percentage of our first quarter fiscal 2025 net revenue), with our focus on winning over the most discerning skin care consumers in our areas of excellence – UV protection and photoaging prevention and repair, biotech-enhanced longevity science, and micro-dose formulations. We have successfully expanded our e-commerce capabilities, through best-in-class online launches, our digital advocacy strategy and active participation in key online shopping events, and increasing digital media competitiveness.

Current wording

We have been making progress on our strategic priorities. In Consumer Beauty, we have implemented the relaunch of our top brands. We are now focusing on accelerating our digital advocacy strategy to amplify our brand and product innovations and leveraging consumer analytics and insights to improve the return on investment of our marketing activities. In Prestige, we are accelerating our fragrance business with exceptional new launches and expanding our premium and ultra-premium category portfolio, while also enhancing the assortment of our Prestige cosmetic products. We are continuing to thoughtfully expand our skincare portfolio (which contributed a low single digit percentage of our first half fiscal 2025 net revenue). We continue to expand our e-commerce capabilities, through online launches, our digital advocacy strategy and active participation in key online shopping events. We expect to further refine our strategy as we monitor the evolving global macroeconomic conditions.

Previous wording

Our products are sold in approximately 121 countries and territories. As a geographically diverse company we are susceptible to global economic trends, geopolitical conflicts, domestic and foreign governmental policies, and changes in foreign exchange rates. In particular, economic conditions in China have had, and are expected to continue to have, an impact on our strategic initiatives, including our growth agenda in the region for Prestige products and our skincare growth priorities. Within the China market we continue to monitor and take actions to address the impact to our Consumer Beauty brands which have experienced sales declines as retailers and distributors continue to deplete their existing inventory. We remain attentive to economic and geopolitical conditions that may materially impact our business.

Current wording

Our products are sold in approximately 121 countries and territories. As a geographically diverse company we are susceptible to global economic trends, geopolitical conflicts, domestic and foreign governmental policies, and changes in foreign exchange rates. In particular, challenging economic conditions in China have had, and are expected to continue to have, an impact on our strategic initiatives, including our growth agenda in the region for Prestige products and our skincare growth priorities. We remain attentive to economic and geopolitical conditions that may materially impact our business. We also continue to monitor and take actions to address the impact to our Consumer Beauty brands in China.

Previous wording

We expect that our net revenue for fiscal year 2025 will grow in the low to mid-single digits versus the prior year, excluding the impact of foreign exchange and the early termination of the Lacoste fragrance license. We anticipate that our annual gross margin will remain in the mid-sixties, providing us with opportunities to fund new product initiatives and support our brands through advertising and consumer promotional investments. In anticipation of a more uncertain demand backdrop, including cautious retailer behavior and a complex macroeconomic environment, we are re-accelerating our cost reduction efforts across to deliver savings well above approximately $75.0. We continue to target advertising and consumer promotional spending in the high-twenties percentage of net revenues. However, our level of advertising and consumer promotional spending will depend on various factors, including seasonality, the timing of product launches, and budgetary considerations.

Current wording

We expect that our reported net revenue for fiscal 2025 will decline in the low-single-digit percentage versus the prior year, which includes an estimated low-single-digit percentage negative impact of foreign exchange. We anticipate that our annual gross margin will remain in the mid-sixties, providing us with opportunities to fund new product initiatives and support our brands through advertising and consumer promotional investments. In anticipation of a more uncertain demand backdrop, including cautious retailer behavior and a complex macroeconomic environment, we are re-accelerating our cost reduction efforts across to deliver savings above approximately $120.0. We continue to target advertising and consumer promotional spending in the high-twenties percentage of net revenues. However, our level of advertising and consumer promotional spending will depend on various factors, including seasonality, the timing of product launches, and budgetary considerations.

Previous wording

Basis of Presentation of Acquisitions, Divestitures, Terminations and Market Exit from Russia

Current wording

Basis of Presentation of Acquisitions, Divestitures, Terminations or Market Exit

Previous wording

Digital and e-commerce channel sales growth also contributed to the increase in net revenues.

Current wording

Digital and e-commerce channel sales declines also contributed to the decrease in net revenues.

Previous wording

•Prestige fragrance sales growth of $83.2, due to successful performance of Burberry, Chloe, and Hugo Boss from existing fragrance lines. In addition, continued brand innovation such as Gucci Flora Gorgeous Orchid, Burberry Goddess Intense, Chloe Signature Intense, and Boss Bottled Absolu contributed to the category sales growth . The category sales growth can also be attributed to positive market trends in most major markets.

Current wording

•Prestige fragrance sales growth of $18.9, due to successful performance of Burberryand Gucci from existing fragrance lines. In addition, continued brand innovation such as Gucci Flora Gorgeous Orchid, Burberry Goddess Intense, Chloe Signature Intense, and Boss Bottled Absolu contributed to the category sales growth. The category sales growth was partially offset by declines from Calvin Klein due to a reduction in value distribution channel sales and tight inventory management from certain retailers, as well as a decline due to the expiration of the Roberto Cavalli license in the prior year. The overall category sales growth can also be attributed to positive market trends in most major markets.

Previous wording

In the three months ended September 30, 2024, net revenues from the Consumer Beauty segment decreased 3%, or $19.3, to $557.4 from $576.7 in the three months ended September 30, 2023, reflecting a negative foreign currency exchange translation impact of 3%, a decrease in unit volume of 1% (primarily due to color cosmetics brands in the United States), partially offset by a positive price and mix impact of 1% (primarily due to positive pricing impact as a result of price increases in the prior period). The decrease in net revenues primarily reflects:

Current wording

In the three months ended December 31, 2024, net revenues from the Consumer Beauty segment decreased 8%, or $51.2, to $553.8 from $605.0 in the three months ended December 31, 2023, reflecting a negative foreign currency exchange translation impact of 4% (primarily driven by foreign currency exposure to Brazilian Real), a decrease in unit volume of 3% (primarily due to body care brands in Brazil), and a negative price and mix impact of 1% (primarily due to higher promotions in the current period). The decrease in net revenues primarily reflects:

Previous wording

•Color cosmetics sales decline of $29.7, primarily due to negative market trends in the color cosmetics market in the United States which impacted net revenues from Covergirland through increased returns and markdowns compared to the prior period. Sally Hansen also declined despite gaining market share in the current period; and

Current wording

•Color cosmetics sales decline of $27.7, primarily due to negative market trends in the color cosmetics market in the United States which impacted net revenues from several brands. Category sales declines were also impacted by increased discounts and promotions compared to the prior period. Sally Hansen also declined despite gaining market share in the current period due to negative market trends in the bottle and brush nail subcategory in the United States; and

Previous wording

In the three months ended September 30, 2024, cost of sales decreased 4%, or $22.6, to $576.9 from $599.5 in the three months ended September 30, 2023. Cost of sales as a percentage of net revenues decreased to 34.5% in the three months ended September 30, 2024 from 36.5% in the three months ended September 30, 2023, resulting in a gross margin increase of approximately 200 basis points, primarily reflecting:

Current wording

In the three months ended December 31, 2024, cost of sales decreased 8%, or $47.8, to $555.7 from $603.5 in the three months ended December 31, 2023. Cost of sales as a percentage of net revenues decreased to 33.3% in the three months ended December 31, 2024 from 34.9% in the three months ended December 31, 2023, resulting in a gross margin increase of approximately 160 basis points, primarily reflecting:

Previous wording

(i)approximately 110 basis points related to a decrease in manufacturing and material costs as a percentage of net revenues, driven by increased manufacturing efficiencies, improvements in productivity, as well as procurement and material cost optimization; and

Current wording

(i)approximately 140 basis points related to a decrease in manufacturing and material costs as a percentage of net revenues, driven by increased manufacturing efficiencies, improvements in productivity, as well as procurement and material cost optimization; and

Previous wording

The above reflects a positive impact from pricing net of inflation of approximately 130 basis points.

Current wording

The above reflects a positive impact from pricing net of inflation of approximately 60 basis points.

Previous wording

In the three months ended September 30, 2024, selling, general and administrative expenses increased 5%, or $40.6, to $808.0 from $767.4 in the three months ended September 30, 2023. Selling, general and administrative expenses as a percentage of net revenues increased to 48.3% in the three months ended September 30, 2024 from 46.8% in the three months ended September 30, 2023, or approximately 150 basis points. This increase primarily reflects:

Current wording

In the three months ended December 31, 2024, selling, general and administrative expenses decreased 4%, or $36.1, to $797.3 from $833.4 in the three months ended December 31, 2023. Selling, general and administrative expenses as a percentage of net revenues decreased to 47.7% in the three months ended December 31, 2024 from 48.2% in the three months ended December 31, 2023, or approximately 50 basis points. This decrease primarily reflects:

Previous wording

These decreases were partially offset by:

Current wording

These decreases were partially offset by the following increases:

Previous wording

In the three months ended September 30, 2024, operating income was $237.8 compared to income of $197.5 in the three months ended September 30, 2023. Operating income as a percentage of net revenues, increased to 14.2% in the three months ended September 30, 2024 as compared to 12.0% in the three months ended September 30, 2023. The increase in operating margin is primarily driven by a decrease in cost of goods sold as a percentage of net revenues (approximately 200 basis points), a decrease in restructuring costs as a percentage of net revenues (approximately 170 basis points), a decrease in stock-based compensation expense (approximately 80 basis points) primarily related to a reduction in expense recognized in connection with a prior year's grant made to the CEO, partially offset by an increase in fixed costs as a percentage of net revenues (approximately 100 basis points) primarily related to people costs, an increase in advertising and consumer promotional costs as a percentage of net revenues (approximately 40 basis points), an increase in losses from our exposure to foreign currency (approximately 40 basis points), and an increase in expense related to other miscellaneous operating expenses (approximately 40 basis points). Our consolidated operating income margin was negatively impacted by a greater proportion of net revenues generated by the lower margin brands from our Brazilian business, and lower sales of the higher margin color cosmetics in the United States compared to the prior year.

Current wording

In the three months ended December 31, 2024, operating income was $268.2 compared to income of $236.7 in the three months ended December 31, 2023. Operating income as a percentage of net revenues, increased to 16.1% in the three months ended December 31, 2024 as compared to 13.7% in the three months ended December 31, 2023. The increase in operating margin is primarily driven by a decrease in cost of goods sold as a percentage of net revenues (approximately 160 basis points), an increase in gains in our exposure to foreign currency (approximately 100 basis points), a decrease in restructuring expense (approximately 20 basis points), and a decrease in stock-based compensation expense (approximately 20 basis points) primarily related to a reduction in expense recognized in connection with a prior year's grant made to the CEO, partially offset by an increase in advertising and consumer promotional costs as a percentage of net revenues (approximately 50 basis points) and an increase in fixed costs as a percentage of net revenues (approximately 30 basis points) primarily related to non-full time employee and non-people costs. Our consolidated operating income margin was positively impacted by a greater proportion of net revenues generated by the higher margin brands from our Prestige fragrance business, and lower proportion of net revenues generated from the lower margin brands in Brazil compared to the prior year.

Previous wording

In the three months ended September 30, 2024, operating income for Prestige was $241.5 compared to income of $221.6 in the three months ended September 30, 2023. Operating margin increased to 21.7% of net revenues in the three months ended September 30, 2024 as compared to 20.8% in the three months ended September 30, 2023, driven by a decrease in cost of goods sold as a percentage of net revenues (approximately 260 basis points), a decrease in amortization expense as a percentage of net revenues (approximately 20 basis points), partially offset by an increase in fixed costs as a percentage of net revenues (approximately 100 basis points) primarily related to people costs, an increase in losses from our exposure to foreign currency (approximately 80 basis points), and an increase in advertising and consumer promotional costs as a percentage of net revenues (approximately 20 basis points).

Current wording

In the three months ended December 31, 2024, operating income for Prestige was $222.3 compared to income of $200.6 in the three months ended December 31, 2023. Operating margin increased to 19.9% of net revenues in the three months ended December 31, 2024 as compared to 17.9% in the three months ended December 31, 2023, driven by a decrease in cost of goods sold as a percentage of net revenues (approximately 160 basis points), an decrease in losses from our exposure to foreign currency (approximately 100 basis points), partially offset by an increase in advertising and consumer promotional costs as a percentage of net revenues (approximately 40 basis points), and an increase in fixed costs as a percentage of net revenues (approximately 20 basis points) primarily related to non-full time employee and non-people costs. Our Prestige operating income margin was positively impacted by a higher proportion of net revenues generated by the higher margin fragrance brands.

Previous wording

In the three months ended September 30, 2024, operating income for Consumer Beauty was $14.0 compared to income of $32.0 in the three months ended September 30, 2023. Operating margin decreased to 2.5% of net revenues in the three months ended September 30, 2024 as compared to 5.5% in the three months ended September 30, 2023, driven by an increase in advertising and consumer promotional costs as a percentage of net revenues (approximately 120 basis points), an increase in fixed costs as a percentage of net revenues (approximately 110 basis points), an increase in losses from our exposure to foreign currency (approximately 80 basis points). Our Consumer Beauty operating income margin was negatively impacted by a greater proportion of Consumer Beauty net revenues generated by the lower margin brands from our Brazilian business, and lower sales by the higher margin color cosmetics brands in the United States compared to the prior year.

Current wording

In the three months ended December 31, 2024, operating income for Consumer Beauty was $64.1 compared to income of $60.4 in the three months ended December 31, 2023. Operating margin increased to 11.6% of net revenues in the three months ended December 31, 2024 as compared to 10.0% in the three months ended December 31, 2023, driven by a decrease in cost of goods sold as a percentage of net revenues (approximately 110 basis points), an decrease in losses from our exposure to foreign currency (approximately 90 basis points), partially offset by an increase in fixed costs as a percentage of net revenues (approximately 30 basis points) primarily related to non-full time employee and non-people costs. Our Consumer Beauty operating income margin was positively impacted by a lower proportion of Consumer Beauty net revenues generated by the lower margin brands from our Brazilian business.

Previous wording

In the three months ended September 30, 2024, the operating loss for Corporate was $17.7 compared to a loss of $56.1 in the three months ended September 30, 2023, as described under “Adjusted Operating Income for Coty Inc.” below. The decrease in the operating loss for Corporate was primarily driven by a $27.7 decrease in restructuring costs and a $12.7 decrease in stock-based compensation expense.

Current wording

In the three months ended December 31, 2024, the operating loss for Corporate was $18.2 compared to a loss of $24.3 in the three months ended December 31, 2023, as described under “Adjusted Operating Income for Coty Inc.” below. The decrease in the operating loss for Corporate was primarily driven by a $4.9 decrease in stock-based compensation expense and a $1.3 decrease in restructuring and other business realignment costs.

Previous wording

In the three months ended September 30, 2024, amortization expense decreased to $48.1 from $48.6 in the three months ended September 30, 2023. In the three months ended September 30, 2024, amortization expense of $38.2 and $9.9 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended September 30, 2023, amortization expense of $38.7 and $9.9 was reported in the Prestige and Consumer Beauty segments, respectively.

Current wording

In the three months ended December 31, 2024, amortization expense decreased to $47.3 from $48.3 in the three months ended December 31, 2023. In the three months ended December 31, 2024, amortization expense of $37.7 and $9.6 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended December 31, 2023, amortization expense of $38.4 and $9.9 was reported in the Prestige and Consumer Beauty segments, respectively.

Previous wording

•We incurred a credit in business structure realignment costs of $(1.1), which is reported in selling, general and administrative expenses.

Current wording

•We incurred a credit in business structure realignment costs of $(1.7), which is reported in selling, general and administrative expenses.

Previous wording

In the three months ended September 30, 2024, stock-based compensation was $17.0 as compared with $29.7 in the three months ended September 30, 2023. The decrease in stock-based compensation is primarily related to a reduction in expense recognized in connection with awards granted to the CEO.

Current wording

In the three months ended December 31, 2024, stock-based compensation was $15.5 as compared with $20.2 in the three months ended December 31, 2023. The decrease in stock-based compensation is primarily related to a reduction in expense recognized in connection with awards granted to the CEO.

Previous wording

In the three months ended September 30, 2024, adjusted depreciation expense of $27.9 and $28.6 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended September 30, 2023, adjusted depreciation expense of $27.3 and $30.8 was reported in the Prestige and Consumer Beauty segments, respectively.

Current wording

In the three months ended December 31, 2024, adjusted depreciation expense of $28.2 and $28.8 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended December 31, 2023, adjusted depreciation expense of $27.2 and $29.9 was reported in the Prestige and Consumer Beauty segments, respectively.

Previous wording

In the three months ended September 30, 2024, net interest expense was $61.8 as compared with $69.8 in the three months ended September 30, 2023. The decrease in interest expense is primarily due to lower debt balances in the current period as well as lower interest rates.

Current wording

In the three months ended December 31, 2024, net interest expense was $54.4 as compared with $60.1 in the three months ended December 31, 2023. The decrease in interest expense is primarily due to lower debt balances in the current period as well as lower interest rates.

Previous wording

In the three months ended September 30, 2024, other expense was $43.3 as compared with other expense of $76.6 in the three months ended September 30, 2023.

Current wording

In the three months ended December 31, 2024, other expense was $157.2 as compared with other income of $80.8 in the three months ended December 31, 2023.

Previous wording

Net income attributable to Coty Inc. was $82.9 in the three months ended September 30, 2024 as compared to net income of $1.6 in the three months ended September 30, 2023. The increase in the income was primarily driven by higher operating income of $40.3 in the current period and lower net losses from forward repurchase contracts of $33.6 in the current period.

Current wording

Net income attributable to Coty Inc. was $23.7 in the three months ended December 31, 2024 as compared to net income of $180.9 in the three months ended December 31, 2023. The decrease in the income was primarily driven higher net losses on forward repurchase contracts of $198.1 compared to the gains in the prior year period and a higher losses from equity investments of $45.0 as a result of an unfavorable fair market value adjustment in the current period compared to a favorable adjustment in the prior year period, partially offset by a lower provision for income taxes of $45.4 in the current period, and higher operating income of $31.5 in the current period.

Previous wording

(a)Adjusted Diluted EPS is adjusted by the effect of dilutive securities. For the three months ended September 30, 2024 and 2023, no dilutive shares of the Forward Repurchase Contracts were included in the computation of adjusted diluted EPS as their inclusion would be anti-dilutive. Accordingly, we did not reverse the impact of the fair market value losses/(gains) for contracts with the option to settle in shares or cash of $24.6 and $44.3, respectively. For the three months ended September 30, 2024, as the Convertible Series B Preferred Stock was dilutive, an adjustment to reverse the impact of the preferred stock dividends of $3.3 was required. For the three months ended September 30, 2023, convertible Series B Preferred Stock (23.7 million weighted average dilutive shares) were anti-dilutive. Accordingly, we excluded these shares from the diluted shares and did not adjust the earnings for the related dividend of $3.3.

Current wording

(a)Adjusted Diluted EPS is adjusted by the effect of dilutive securities. For the three months ended December 31, 2024 and 2023, no dilutive shares of the Forward Repurchase Contracts were included in the computation of adjusted diluted EPS as their inclusion would be anti-dilutive. Accordingly, we did not reverse the impact of the fair market value losses/(gains) for contracts with the option to settle in shares or cash of $96.5 and $(44.4), respectively. For the three months ended December 31, 2024, Convertible Series B Preferred Stock (23.7 million weighted average dilutive shares) was anti-dilutive. Accordingly, we excluded these shares from the diluted shares and did not adjust the earnings for the related dividend of $3.3. For the three months ended December 31, 2023, as the Convertible Series B Preferred Stock was dilutive, an adjustment to reverse the impact of the preferred stock dividends of $3.3 was required.

Previous wording

In the three months ended September 30, 2024, net revenues from the Prestige segment increased 5%, or $49.4 to $1,114.1 compared to $1,064.7 in the three months ended September 30, 2023. Excluding net revenue from the first quarter of the prior period from Lacoste, net revenues from the Prestige segment increased 7% or $72.2 to $1,114.1 from $1,041.9 in the three months ended September 30, 2023, reflecting a positive price and mix impact of 5% (primarily due to the positive pricing impact as a result of price increases in the prior period, in line with the overall premiumization strategy), and an increase in unit volume of 2% (primarily due to innovation in prestige fragrance). The increase in net revenues primarily reflects:

Current wording

In the six months ended December 31, 2024, net revenues from the Prestige segment increased 2%, or $42.9, to $2,230.2 from $2,187.3 in the six months ended December 31, 2023. Excluding net revenue from the first and second quarters of the prior year period from Lacoste, net revenues from the Prestige segment increased 3% or $71.5 to $2,230.2 from $2,158.7 in the six months ended December 31, 2023, reflecting a positive price and mix impact of 4% (primarily due to positive pricing impact as a result of prior year period price increases and in line with the overall premiumization strategy), and negative foreign currency exchange translation impact of 1%. The increase in net revenues primarily reflects:

Previous wording

•Mass bodycare decline of $15.8, primarily due to declines in sales volumes from Monangein Brazil. The decline can also be attributed to continued lower sales volumes foradidas as a result of category slowdown in China which resulted in higher trade inventory levels.

Current wording

•Mass body care sales declines of $41.1, primarily due to declines in sales volumes from Monange in Brazil due to competitive pricing action in the deodorant market. The decline can also be attributed to lower sales volumes foradidas during the first quarter as a result of category slowdown in China which resulted in higher trade inventory levels.

Previous wording

•Mass fragrance sales growth of $23.1, due to brand innovation and geographical expansion of existing products into growth-engine markets; and

Current wording

•Mass fragrance sales growth of $25.6, due to brand innovation such asadidas Vibes and geographical expansion of existing products into growth-engine markets; and

Previous wording

(ii)approximately 80 basis points related to decreased excess and obsolescence costs primarily associated with the Prestige product portfolio.

Current wording

(ii)approximately 60 basis points related to an decrease in excess and obsolescence costs primarily associated with the Prestige product portfolio.

Previous wording

(i)110 basis points due to an increase in administrative costs as a percentage of net revenues due to higher compensation expense from increased headcount;

Current wording

(i)70 basis points due to an increase in administrative costs as a percentage of net revenues primarily due to higher compensation expense from increased headcount;

Previous wording

These increases were partially offset by the following decrease:

Current wording

These increases were partially offset by the following decreases:

Previous wording

(i)80 basis points due to a decrease in stock-based compensation cost primarily related to a reduction in expense recognized in connection with awards granted to the CEO.

Current wording

(i)50 basis points due to a decrease in stock-based compensation cost primarily related to a reduction in expense recognized in connection with awards granted to the CEO; and

Previous wording

(iii)40 basis points due to unfavorable transactional impact from our exposure to foreign currency as a percentage of net revenues; and

Current wording

(ii)40 basis points due to favorable transactional impact from our exposure to foreign currency as a percentage of net revenues.

Previous wording

In the three months ended September 30, 2023, we recognized a gain of $1.7 related to sale of real estate.

Current wording

In the six months ended December 31, 2024 and 2023, we recognized $0.0 and a gain of $(1.6) related to sale of real estate, respectively.