COTY INC.
For the period ended Mar 31, 2025. Filed May 7, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 7, 2025
COTY$4.05+3.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-12-31; filed 2025-02-10.
0001024305-25-000007
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0001024305-25-000018
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 295 previous paragraphs and 338 current paragraphs.
173 unchanged; 86 reworded; 66 added; 30 removed; 6 previous and 13 current paragraphs rearranged.
Tables are not compared: 21 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (66)
Current report
Strategic Progress
Current report
During the third quarter of fiscal 2025, we formulated a new plan, which was announced on April 24, 2025, to strengthen our operating model and simplify our fixed cost structure (the “Fixed Cost Reduction Plan”). Cash costs associated with the program include restructuring and business structure realignment costs and are expected to be approximately $80.0, roughly evenly split between fiscal 2026 and fiscal 2027.
Current report
Global Economic Landscape and Business Impact
Current report
Recent changes in U.S. and international trade policies—particularly tariff increases—and the ongoing uncertainty surrounding such policies may present challenges to our business operations and financial condition. These challenges may include supply chain disruptions and commodity price volatility, resulting in increases in our cost of goods sold. Under the current tariff framework, the biggest areas of potential challenges for us are prestige fragrances shipped to the U.S. from our Barcelona plant, and the sourcing of various components and marketing materials from China. We estimate additional costs related to tariff increases to be in the range of approximately $90.0 to $130.0. The vast majority of these costs are expected to be incurred in fiscal 2026, based on a preliminary analysis of announcements made by the U.S. administration beginning on April 2, 2025, and announcements by U.S. trade partners. In response, we may consider more diversified sourcing strategies, strategic pricing adjustments and cost-reduction initiatives to help offset these pressures and protect our profitability. In addition, reductions in consumer confidence and discretionary spending could impact demand for our products and negatively affect our sales. We are closely monitoring developments, evaluating potential impacts, and proactively taking steps to mitigate adverse effects on our business.
Current report
Market Trends and Sales Performance
Current report
•Color Cosmetics: Our net revenues from mass color cosmetics declined by low-double digits percentage during the same period due to a weakening in market demand, particularly in the United States and in several European markets. Our net revenues from prestige color cosmetics declined by a double-digits percentage, impacted by economic conditions in Asia affecting a key brand in the region.
Current report
Financial Outlook
Current report
In the three months ended March 31, 2025, net revenues decreased 6%, or $86.5, to $1,299.1 from $1,385.6 in the three months ended March 31, 2024, reflecting a negative price and mix impact of 3% (primarily due to a higher proportion of the total sales coming from lower priced Brazil brands) and negative foreign currency exchange translation impact of 3% (primarily driven by the weakening of the Brazilian Real versus the U.S. dollar). The overall decrease in net revenues reflects declines within color cosmetics across both divisions— primarily due to negative market trends in the United States, China, and several European markets— and declines within Prestige fragrance—primarily due to the expiration of the Roberto Cavalli license in the prior year. Net revenues declined across all regions.
Current report
•Prestige fragrance sales declines of $12.9, primarily due to the expiration of the Roberto Cavalli license in the prior year and negative performance of Calvin Klein and Marc Jacobs. Calvin Kleinnet revenue was negatively impacted by a reduction in certain channel sales and Marc Jacobs net revenue was negatively impacted by lower sales within the United States after lapping the Marc Jacobs Daisy Wild launch in the same period last year. The category sales decline was partially offset by successful performance of Gucci and Chloe from existing brand lines and due to successful innovations such as Kylie Cosmic 2.0 and Burberry Hero EDP Intense. The overall category sales growth from existing brand lines reflect positive but decelerating market trends in North America and Europe.
Current report
In the three months ended March 31, 2025, net revenues from the Consumer Beauty segment decreased 9%, or $48.7, to $469.7 from $518.4 in the three months ended March 31, 2024, reflecting a negative price and mix impact of 5% (primarily due to negative mix impact from a higher proportion of the net revenues coming from lower priced Brazilian brands and higher discounts and returns in the current period) and a negative foreign currency exchange translation impact of 4% (primarily driven by the weakening of the Brazilian Real versus the U.S. dollar). Volumes for the segment were roughly flat, supported by volume growth in the Brazil skincare and body care categories. Excluding the contribution from the Brazilian brands, the Consumer Beauty segment experienced a decline in sales volume primarily in the color cosmetics category. The decrease in net revenues primarily reflects:
Current report
(i)approximately 70 basis points, primarily due to an increase in manufacturing and material costs as a percentage of net revenues. This increase in cost ratio was driven by lower net revenues in the current period—reflecting higher returns, discounts, and promotions. Although we achieved improvements in manufacturing efficiency, productivity, and procurement cost optimization, these benefits only partially offset the impact of the reduced net revenue base; and
Current report
(i)550 basis points due to the loss on the termination of the KKW Collaboration Agreement in the current period;
Current report
(iv)20 basis points due to an increase in bad debt expense as a percentage of net revenues.
Current report
(i)220 basis points due to a decrease in administrative costs as a result of decreased discretionary compensation for employees;
Current report
(ii)50 basis points due to a decrease in stock-based compensation expense primarily related to a reduction in expense recognized in connection with awards granted to the CEO; and
Current report
(iii)20 basis points due to a decrease in logistics costs as a percentage of net revenues.
Current report
OPERATING (LOSS)/INCOME
Current report
In the three months ended March 31, 2025, operating income for Prestige was $78.7 compared to income of $108.7 in the three months ended March 31, 2024. Operating margin decreased to 9.5% of net revenues in the three months ended March 31, 2025 as compared to 12.5% in the three months ended March 31, 2024, driven by an increase in asset impairment charges (approximately 520 basis points), unfavorable transactional impact from our exposure to foreign currency (approximately 80 basis points), an increase in advertising and consumer promotional costs as a percentage of net revenues (approximately 40 basis points), partially offset by a decrease in fixed costs as a percentage of net revenues primarily related to decreased discretionary compensation for employees (approximately 310 basis points), and a decrease in cost of goods sold as a percentage of net revenues (approximately 20 basis points.
Current report
During the third quarter of fiscal 2025, we formulated a new plan, which was announced on April 24, 2025, to strengthen our operating model and simplify our fixed cost structure (the “Fixed Cost Reduction Plan”). Cash costs associated with the program include restructuring and business structure realignment costs and are expected to be approximately $80.0, roughly evenly split between fiscal 2026 and fiscal 2027.
Current report
In the three months ended March 31, 2025, we incurred restructuring and other business structure realignment costs of $87.2 as follows:
Current report
•We incurred restructuring costs of $76.6, of which $74.4 related to the Fixed Cost Reduction Plan included in the Condensed Consolidated Statements of Operations; and
Current report
In the three months ended March 31, 2024, we incurred a credit in restructuring and other business structure realignment costs of $(1.7) as follows:
Current report
•We incurred restructuring costs of $0.9 primarily related to the Restructuring Actions, included in the Condensed Consolidated Statements of Operations; and
Current report
In the three months ended March 31, 2025, we incurred a net loss of $71.0 related to the loss on the termination of the KKW Collaboration Agreement and recognized a gain of $(0.7) related to our decision to wind down our business in Russia.
Current report
In the three months ended March 31, 2024, we recognized a gain of $(1.2) related to our decision to wind down our business in Russia.
Current report
Asset Impairment Charges
Current report
In the three months ended March 31, 2025, we incurred $212.8 of asset impairment charges of which $84.0, $61.0, and $24.9 related to the Max Factor, CoverGirl and Bourjois trademarks, respectively, totaling $169.9 within the Consumer Beauty segment and $42.9 related to thephilosophy trademark within the Prestige Segment.
Current report
In the three months ended March 31, 2024, we did not incur any asset impairment charges.
Current report
OTHER EXPENSE
Current report
Other expense of $14.0 in the three months ended March 31, 2024 was principally comprised of net losses on forward repurchase contracts of $17.2.
Current report
The effective tax rate of (158.8)% in the three months ended March 31, 2024 results from reporting income before taxes and a benefit for income taxes. The effective rate was lower than the statutory tax rate of 21% primarily due to a benefit of $8.5 on the resolution of foreign uncertain tax positions compared to $3.4 of income in the period.
Current report
Net loss attributable to Coty Inc. was $405.7 in the three months ended March 31, 2025 as compared to net income of $3.8 in the three months ended March 31, 2024. The increase in the loss was primarily driven by asset impairment charges of $212.8, higher restructuring costs of $75.7, a loss on the termination of the KKW Collaboration Agreement of $71.0 in the current period, higher net losses on forward repurchase contracts of $61.3, higher losses from equity investments of $53.0 as a result of an unfavorable fair market value adjustment in the current period, partially offset by a higher benefit for income taxes of $53.0 and lower interest expense of $12.5 in the current period.
Current report
NINE MONTHS ENDED MARCH 31, 2025 AS COMPARED TO NINE MONTHS ENDED MARCH 31, 2024
Current report
•Prestige skincare sales declines of $13.6, primarily due to negative performance from philosophy.
Current report
(i)180 basis points primarily due to the loss on the termination of the KKW Collaboration Agreement in the current period; and
Current report
(ii)20 basis points due to a decrease in administrative costs as a result of decreased discretionary compensation for employees.
Current report
In the nine months ended March 31, 2025, amortization expense decreased to $141.3 from $145.4 in the nine months ended March 31, 2024. In the nine months ended March 31, 2025, amortization expense of $113.1 and $28.2 was reported in the
Current report
Prestige and Consumer Beauty segments, respectively. In the nine months ended March 31, 2024, amortization expense of $115.6 and $29.8 was reported in the Prestige and Consumer Beauty segments, respectively.
Current report
During the third quarter of fiscal 2025, we formulated a new plan, which was announced on April 24, 2025, to strengthen our operating model and simplify our fixed cost structure (the “Fixed Cost Reduction Plan”). Cash costs associated with the program include restructuring and business structure realignment costs and are expected to be approximately $80.0, roughly evenly split between fiscal 2026 and fiscal 2027.
Current report
In the nine months ended March 31, 2025, we incurred restructuring and other business structure realignment costs of $90.6 as follows:
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Removed paragraphs (30)
Previous report
•Mass skincare sales decline of $0.6.
Previous report
(i)50 basis points due to an increase in advertising and consumer promotional costs as a percentage of net revenues primarily due to increases in in-store merchandising execution and education, partially offset by declines in working and non-working media investment as a percentage of net revenues; and
Previous report
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 report
In the three months ended December 31, 2024, we incurred restructuring and other business structure realignment costs of $2.7 as follows:
Previous report
•We incurred restructuring costs of $1.4 primarily related to the Restructuring Actions, included in the Condensed Consolidated Statements of Operations; and
Previous report
In the three months ended December 31, 2023, we incurred restructuring and other business structure realignment costs of $4.0 as follows:
Previous report
•We incurred restructuring costs of $5.7 primarily related to the Restructuring Actions, included in the Condensed Consolidated Statements of Operations; and
Previous report
OTHER EXPENSE/INCOME
Previous report
Other income of $80.8 in the three months ended December 31, 2023 was principally comprised of net gains on forward repurchase contracts of $72.1, and equity investment related gains of $11.5.
Previous report
The effective tax rate of 27.7% in the three months ended December 31, 2023, was higher than the Federal statutory rate of 21% primarily due to the limitation on the deductibility of executive stock compensation.
Previous report
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 report
SIX MONTHS ENDED DECEMBER 31, 2024 AS COMPARED TO SIX MONTHS ENDED DECEMBER 31, 2023
Previous report
In the six months ended December 31, 2024, net revenues decreased 1%, or $27.6, to $3,341.4 from $3,369.0 in the six months ended December 31, 2023. Excluding net revenue from the six months ended December 31, 2023 from Lacoste, net revenues remained relatively flat, increasing $1.0 to $3,341.4 from $3,340.4 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), a decrease in unit volume of 2% (primarily due to body care brands under Monangein Brazil as a result of competitive pricing action in the deodorant market), and a negative foreign currency exchange translation impact of 2% (primarily driven by foreign currency exposure to Brazilian Real). The overall increase in net revenues reflects growth in our prestige and mass fragrance categories due to the positive market trends in most major markets and geographical expansion of certain brands. This growth was mostly offset by declines in color cosmetics primarily due to negative market trends in the United States, declines within mass bodycare in Brazil primarily due to competitive pricing action in the Brazilian deodorant market, and declines within Prestige cosmetics primarily due to sales volumes decline in the Travel Retail Asia channel as a result of regulations impacting surrogate shopping purchases.
Previous report
•Prestige skincare sales declines of $9.3, due to declines across the prestige skincare portfolio.
Previous report
In the six months ended December 31, 2024, net revenues from the Consumer Beauty segment decreased 6%, or $70.5, to $1,111.2 from $1,181.7 in the six months ended December 31, 2023, reflecting a negative foreign currency exchange translation impact of 4% (primarily driven by foreign currency exposure to Brazilian Real), and a decrease in unit volume of 2% (primarily due to body care brands in Brazil). The decrease in net revenues primarily reflects:
Previous report
•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 report
(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 report
(ii)40 basis points due to an increase in advertising and consumer promotional costs as a percentage of net revenues primarily due to increases in in-store merchandising execution and education, partially offset by declines in working media investment as a percentage of net revenues;
Previous report
(iii)20 basis points due to an increase in miscellaneous operating expenses.
Previous report
OPERATING INCOME
Previous report
Adjusted Operating Income by Segment
Previous report
In the six months ended December 31, 2024, amortization expense decreased to $95.4 from $96.9 in the six months ended December 31, 2023. In the six months ended December 31, 2024, amortization expense of $75.9 and $19.5 was reported in the Prestige and Consumer Beauty segments, respectively. In the six months ended December 31, 2023, amortization expense of $77.1 and $19.8 was reported in the Prestige and Consumer Beauty segments, respectively.
Previous report
In the six months ended December 31, 2024, we incurred restructuring and other business structure realignment costs of $3.4 as follows:
Previous report
•We incurred restructuring costs of $2.1 primarily related to the Restructuring Actions, included in the Condensed Consolidated Statements of Operations; and
Previous report
In the six months ended December 31, 2023, we incurred restructuring and other business structure realignment costs of $31.3 as follows:
Previous report
•We incurred restructuring costs of $34.1 primarily related to the Restructuring Actions, included in the Condensed Consolidated Statements of Operations; and
Previous report
OTHER EXPENSE/INCOME
Previous report
The effective income tax rate for the six months ended December 31, 2024 and 2023 was 35.9% and 36.4%, respectively. The change in the effective rate is primarily due to the impact of a higher effective tax rate in the prior period related to the revaluation of the Company's deferred tax liabilities due to a tax rate increase enacted in Switzerland resulting in an expense of $24.3.
Previous report
The effective tax rate of 35.9% for the six months ended December 31, 2024, was higher than the statutory tax rate of 21% due to the limitation on the deductibility of executive stock compensation and the limitation on the deductibility of interest expense as well as the impact of fair value losses related to the investment in Wella taxed at a rate below the statutory rate of 21%.
Previous report
Net cash used in investing activities was $108.2 and $119.4 for the six months ended December 31, 2024 and 2023, respectively. The decrease in cash used in investing activities of $11.2 was primarily due to the positive impact from the current year collection of contingent consideration relating to the sale of a discontinued business.
Reworded paragraphs (86)
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 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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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 (including our Fixed Cost Reduction Plan), 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 p…
Excerpt shortened here; the source contains the full paragraph.
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, 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.
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 protecting 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 growth engine markets (Latin America, including Brazil, the Middle East, North and South East Asia, China, 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 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.
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 franchise-building extensions, 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 nine months fiscal 2025 net revenue). We continue to expand our e-commerce capabilities across our portfolio, through online launches, our digital advocacy strategy and active participation in key online shopping events. We are adjusting our strategy in step with the beauty market evolution. Our aim is to continue expanding our footprint and diversifying into a limited number of structurally profitable and growing beauty categories and geographic markets at scale. We are leveraging and overdriving our leadership position and best-in-class capabilities in global fragrances to fuel strong expansion—with fragrances already constituting more than 60% of our fiscal 2024 net revenues and an even larger portion of our profits.
Previous wording
Changing market trends continue to impact sales of our products across and within product categories and regions. In the first half of fiscal 2025, our fragrance category experienced mid-single digit percentage net revenue growth compared to the previous fiscal year, driven by high-single digit percentage growth in the overall fragrance market. Net revenues from Prestige fragrances increased by a mid-single digit percentage in the first half of fiscal 2025, reflecting a deceleration in growth compared to the prior year. Our net revenues from color cosmetics declined during the same period due to a weakening in market demand, particularly in the United States. Additionally, competitive pricing actions in Brazil negatively impacted demand for certain of our deodorant brands leading to a decline in our body care net revenues during the first half of the fiscal year, despite positive trends in the overall mass body care market. Regionally, net revenues in the Asia Pacific region declined by high-single digit percentage in the first half of fiscal 2025, impacted by China and a decline in sales in the Asia Travel Retail channel. Asia Travel Retail sales were negatively affected by regulatory restrictions in Asia aimed at formalizing cross-border shopping, which reduced daigou (surrogate shopping) purchases. Net revenues in the Americas declined by a mid-single digit percentage during the same period, driven by softness within the color cosmetics market in the United States, while revenues from EMEA increased by a mid-single digit percentage due to growth across most European markets. We continue to monitor the impact that potential tariffs could have on our business such as negatively affecting our sales and operating performance in certain markets. We expect that some of the market trends may continue into fiscal 2026.
Current wording
Changing market trends continue to impact sales of our products across and within product categories and geographic regions.
Previous 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.
Current wording
We expect that our reported net revenue for fiscal 2025 will decline in the mid-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 of approximately $120.0 in fiscal 2025. 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
•Tax: This adjustment represents the impact of the tax effect of the pretax items excluded from Adjusted net income. The tax impact of the non-GAAP adjustments is based on the tax rates related to the jurisdiction in which the adjusted items are received or incurred. Additionally, adjustments are made for the tax impact of any intra-entity transfer of assets and liabilities.
Current wording
•Tax: This adjustment represents the impact of the tax effect of the pretax items excluded from Adjusted net income. The tax impact of the non-GAAP adjustments is based on the tax rates related to the jurisdiction in which the adjusted items are received or incurred. Additionally, adjustments are made for the tax impact of any intra-entity transfer of assets and liabilities. Also, in connection with our market exit in Russia, we have adjusted for the release of tax charges previously taken related to certain direct incremental impacts of the decision.
Previous wording
In the three months ended December 31, 2024, net revenues from the Prestige segment decreased 1%, or $6.5 to $1,116.1 compared to $1,122.6 in the three months ended December 31, 2023. Excluding net revenue from the second quarter of the prior year period from Lacoste, net revenues from the Prestige segment remained relatively flat, decreasing by $0.7 to $1,116.1 from $1,116.8 in the three months ended December 31, 2023, reflecting a decrease in unit volume of 3% (primarily due to lower sales through the Travel retail channel for Prestige cosmetics) and negative foreign currency exchange translation impact of 1%, partially offset by 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). The decrease in net revenues primarily reflects:
Current wording
In the three months ended March 31, 2025, net revenues from the Prestige segment decreased 4%, or $37.8 to $829.4 compared to $867.2 in the three months ended March 31, 2024, reflecting a decrease in unit volume of 3% (primarily due to [negative market trends in the cosmetics category] and lower sales through the Travel retail channel for Prestige cosmetics) and negative foreign currency exchange translation impact of 1%, The decrease in net revenues primarily reflects:
Previous wording
•Prestige cosmetic sales declines of $15.3, primarily due to declines in sales volume in the Asia Travel Retail channel from Gucci makeup as a result of regulations impacting the surrogate shopping purchases. The overall category sales decline can also be attributed to negative market trends in China and fewer innovations compared to the prior year; and
Current wording
•Prestige cosmetic sales declines of $20.6, primarily due to declines from Kylie makeup as a result of fewer innovations and declines in sales volume in the Asia Travel Retail channel from Gucci makeup as a result of regulations impacting the surrogate shopping purchases. The overall category sales decline can also be attributed to negative market trends in China; and
Previous 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
Current wording
•Color cosmetics sales decline of $54.2, primarily due to negative market trends in the color cosmetics market in the United States which impacted net revenues from Sally Hansen and Covergirl. The category sales decline can also be attributed to negative market trends in several European markets. Category net revenue declines were also impacted by increased discounts and returns compared to the prior period; and
Previous wording
These decreases were partially offset by the following increases:
Current wording
These decreases were partially offset by:
Previous wording
•Mass fragrance sales growth of $2.4.
Current wording
•Mass fragrance sales growth of $8.5; and
Previous wording
•Mass skincare sales growth of $2.5.
Current wording
•Mass skincare sales growth of $4.3.
Previous 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:
Current wording
In the three months ended March 31, 2025, cost of sales decreased 4%, or $21.1, to $466.7 from $487.8 in the three months ended March 31, 2024. Cost of sales as a percentage of net revenues increased to 35.9% in the three months ended March 31, 2025 from 35.2% in the three months ended March 31, 2024, resulting in a gross margin decrease of approximately 70 basis points, primarily reflecting:
Previous wording
(i)approximately 20 basis points related to an increase in designer license fees due to licensed Prestige brands comprising a larger portion of overall net revenues in the current period and expanded Consumer Beauty collections under licensed brands driving increased license fees.
Current wording
(ii)approximately 20 basis points related to an increase in designer license fees due to licensed Prestige brands comprising a larger portion of overall net revenues in the current period and expanded Consumer Beauty collections under licensed brands driving increased license fees.
Previous wording
(ii)approximately 30 basis points related to decreased excess and obsolescence costs.
Current wording
(i)approximately 20 basis points related to decreased excess and obsolescence costs.
Previous wording
The above reflects a positive impact from pricing net of inflation of approximately 60 basis points.
Current wording
The above reflects a positive impact from pricing net of inflation of approximately 50 basis points.
Previous 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:
Current wording
In the three months ended March 31, 2025, selling, general and administrative expenses increased 1%, or $6.9, to $777.5 from $770.6 in the three months ended March 31, 2024. Selling, general and administrative expenses as a percentage of net revenues increased to 59.8% in the three months ended March 31, 2025 from 55.6% in the three months ended March 31, 2024, or approximately 420 basis points. This increase primarily reflects:
Previous wording
(ii)40 basis points due to favorable transactional impact from our exposure to foreign currency as a percentage of net revenues.
Current wording
(ii)90 basis points due to unfavorable transactional impact from our exposure to foreign currency as a percentage of net revenues;
Previous wording
(i)120 basis points due to favorable transactional impact from our exposure to foreign currency as a percentage of net revenues; and
Current wording
(iii)30 basis points due to an increase in advertising and consumer promotional costs as a percentage of net revenues; and
Previous 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.
Current wording
In the three months ended March 31, 2025, operating loss was $280.4 compared to income of $77.8 in the three months ended March 31, 2024. Operating loss margin, decreased to (21.6)% in the three months ended March 31, 2025 as compared to operating income margin of 5.6% in the three months ended March 31, 2024. The decrease in operating margin is primarily driven by an increase in asset impairment charges (approximately 1,640 basis points), higher restructuring costs in the current period (approximately 580 basis points), a loss on the termination of the KKW Collaboration Agreement (approximately 550 basis points), unfavorable transactional impact from our exposure to foreign currency (approximately 90 basis points), increase in cost of goods sold as a percentage of net revenues (approximately 70 basis points), an increase in advertising and consumer promotional costs as a percentage of net revenues (approximately 30 basis points), an increase in bad debt expense as a percentage of net revenues (approximately 20 basis points), partially offset by a decrease in fixed costs as a percentage of net revenues (approximately 240 basis points) primarily related to decreased discretionary compensation for employees, and a decrease in stock-based compensation expense (approximately 50 basis points) primarily related to a reduction in expense recognized in connection with a prior year's grant made to the CEO. In addition, a greater proportion of total sales came from higher margin Prestige brands in the current period which positively benefited our operating margin.
Previous 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.
Current wording
In the three months ended March 31, 2025, operating loss for Consumer Beauty was $189.5 compared to loss of $13.3 in the three months ended March 31, 2024. Operating loss margin decreased to (40.3)% of net revenues in the three months ended March 31, 2025 as compared to (2.6)% in the three months ended March 31, 2024, driven by an increase in asset impairment charges (approximately 3620 basis points), an increase in cost of goods sold as a percentage of net revenues (approximately 230 basis points), an increase in miscellaneous expense primarily related to unfavorable transactional impact from our exposure to foreign currency and other miscellaneous accruals (approximately 200 basis points), partially offset by a decrease in fixed costs as a percentage of net revenues primarily related to decreased discretionary compensation for employees (approximately 270 basis points). Our Consumer Beauty operating income margin was negatively impacted by a higher proportion of Consumer Beauty net revenues generated by the lower margin brands from our Brazilian business.
Previous 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.
Current wording
In the three months ended March 31, 2025, the operating loss for Corporate was $169.6 compared to a loss of $17.6 in the three months ended March 31, 2024, as described under “Adjusted Operating Income for Coty Inc.” below. The increase in the operating loss for Corporate was primarily driven by a $88.9 increase in restructuring and other business realignment costs, the loss on the termination of the KKW Collaboration Agreement of $71.0, partially offset by a $8.3 decrease in stock-based compensation expense.
Previous wording
In the three months ended December 31, 2024, adjusted operating income increased $24.4 to $333.7 from $309.3 in the three months ended December 31, 2023. Adjusted operating margin increased to 20.0% of net revenues in the three months ended December 31, 2024 from 17.9% in the three months ended December 31, 2023. In the three months ended December 31, 2024, adjusted EBITDA increased $24.3 to $390.7 from $366.4 in the three months ended December 31, 2023. Adjusted EBITDA margin increased to 23.4% of net revenues in the three months ended December 31, 2024 from 21.2% in the three months ended December 31, 2023.
Current wording
In the three months ended March 31, 2025, adjusted operating income increased $4.0 to $147.9 from $143.9 in the three months ended March 31, 2024. Adjusted operating margin increased to 11.4% of net revenues in the three months ended March 31, 2025 from 10.4% in the three months ended March 31, 2024. In the three months ended March 31, 2025, adjusted EBITDA increased $4.3 to $204.2 from $199.9 in the three months ended March 31, 2024. Adjusted EBITDA margin increased to 15.7% of net revenues in the three months ended March 31, 2025 from 14.4% in the three months ended March 31, 2024.
Previous 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.
Current wording
In the three months ended March 31, 2025, amortization expense decreased to $45.9 from $48.5 in the three months ended March 31, 2024. In the three months ended March 31, 2025, amortization expense of $37.2 and $8.7 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended March 31, 2024, amortization expense of $38.6 and $9.9 was reported in the Prestige and Consumer Beauty segments, respectively.
Previous wording
•We incurred business structure realignment costs of $1.3, which is reported in cost of sales.
Current wording
•We incurred business structure realignment costs of $10.6, which is reported in selling, general and administrative expenses and cost of sales, primarily related to the Fixed Cost Reduction Plan.
Previous wording
•We incurred a credit in business structure realignment costs of $(1.7), which is reported in selling, general and administrative expenses.
Current wording
•We incurred a credit in business structure realignment costs of $(2.6), which is reported in selling, general and administrative expenses.
Previous 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.
Current wording
In the three months ended March 31, 2025, stock-based compensation was $12.1 as compared with $20.5 in the three months ended March 31, 2024. 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 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.
Current wording
In the three months ended March 31, 2025, adjusted depreciation expense of $27.1 and $29.2 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended March 31, 2024, adjusted depreciation expense of $25.7 and $30.3 was reported in the Prestige and Consumer Beauty segments, respectively.
Previous 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.
Current wording
In the three months ended March 31, 2025, net interest expense was $47.9 as compared with $60.4 in the three months ended March 31, 2024. 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 December 31, 2024, other expense was $157.2 as compared with other income of $80.8 in the three months ended December 31, 2023.
Current wording
In the three months ended March 31, 2025, other expense was $132.3 as compared with other expense of $14.0 in the three months ended March 31, 2024.
Previous wording
Other expense of $157.2 in the three months ended December 31, 2024 was principally comprised of net losses on forward repurchase contracts of $126.0 and equity investment related impacts of $33.1.
Current wording
Other expense of $132.3 in the three months ended March 31, 2025 was principally comprised of net losses on forward repurchase contracts of $78.5 and equity investment related impacts of $53.0.
Previous wording
The increase in Other expense of $238.0 is primarily due to higher net losses on forward repurchase contracts of $198.1 compared to the gains in the prior year period and higher losses from equity investments of $45.0 as a result of an unfavorable fair market value adjustment related to our equity investment in Wella in the current period compared to a favorable adjustment in the prior year period.
Current wording
The increase in Other expense of $118.3 is primarily due to higher net losses on forward repurchase contracts of $61.3 compared to the prior year period and higher losses from equity investments of $53.0 as a result of an unfavorable fair market value adjustment related to our equity investment in Wella in the current period.
Previous wording
The effective income tax rate for the three months ended December 31, 2024 and 2023 was 45.9% and 27.7%, respectively. The increase in the effective tax rate was primarily attributable to the loss on forward repurchase contracts having a higher proportional impact in the current period, as well as the impact of fair value losses related to the investment in Wella taxed at a rate below the statutory rate of 21% in the current period.
Current wording
The effective income tax rate for the three months ended March 31, 2025 and 2024 was 12.7% and (158.8)%, respectively. The increase in the effective tax rate was primarily attributable to a capital loss realized on the sale of the Company’s investment in KKW Holdings during the period for which no tax benefit can be recognized, the loss on forward repurchase contracts having a higher proportional impact in the current period, as well as the impact of fair value losses related to the investment in Wella taxed at a rate below the statutory rate of 21%.
Previous wording
The effective tax rate of 45.9% for the three months ended December 31, 2024, was higher than the Federal statutory rate of 21% primarily due to the limitation on the deductibility of executive stock compensation and the limitation on the deductibility of interest expense as well as the impact of fair value losses related to the investment in Wella taxed at a rate below the statutory rate of 21%.
Current wording
The effective tax rate of 12.7% for the three months ended March 31, 2025, results from reporting losses before income taxes and a benefit for income taxes. The effective rate was lower than the Federal statutory rate of 21% primarily due to a capital loss realized on the sale of the Company’s investment in KKW Holdings during the period for which no tax benefit can be recognized, the loss on forward repurchase contracts having a higher proportional impact in the current period, as well as the impact of fair value losses related to the investment in Wella taxed at a rate below the statutory rate of 21%
Previous wording
(b)The tax effects of each of the items included in adjusted income are calculated in a manner that results in a corresponding income tax expense/provision for adjusted income. In preparing the calculation, each adjustment to reported income is first analyzed to determine if the adjustment has an income tax consequence. The provision for taxes is then calculated based on the jurisdiction in which the adjusted items are incurred, multiplied by the respective statutory rates and offset by the increase or reversal of any valuation allowances commensurate with the non-GAAP measure of profitability.
Current wording
(b)The tax effects of each of the items included in adjusted income are calculated in a manner that results in a corresponding income tax expense/provision for adjusted income. In preparing the calculation, each adjustment to reported income is first analyzed to determine if the adjustment has an income tax consequence. The provision for taxes is then calculated based on the jurisdiction in which the adjusted items are incurred, multiplied by the respective statutory rates and offset by the increase or reversal of any valuation allowances commensurate with the non-GAAP measure of profitability. The total tax impact on adjustments in the current period includes a tax benefit of $10.0 on the resolution of uncertain tax positions associated with the Company’s exit from Russia in fiscal 2022.
Previous wording
(d)For the three months ended December 31, 2024, this primarily represents recovery of previously written-off non-income tax credits and the amortization of basis differences in certain equity method investments. For the three months ended December 31, 2023, this primarily represents loss from our equity investment in KKW.
Current wording
(d)For the three months ended March 31, 2025, this primarily represents recovery of previously written-off non-income tax credits, the amortization of basis differences in certain equity method investments, and net loss on the sale of an equity investment. For the three months ended March 31, 2024, this primarily represents loss from our equity investment in KKW.
Previous wording
The adjusted effective tax rate was 28.1% for the three months ended December 31, 2024 compared to 24.6% for the three months ended December 31, 2023. The difference is primarily due to the loss on forward repurchase contracts having a higher proportional impact in the current period.
Current wording
The adjusted effective tax rate was 28.8% for the three months ended March 31, 2025 compared to 19.3% for the three months ended March 31, 2024. The difference is primarily due to the loss on forward repurchase contracts having a higher proportional impact in the current period.
Previous 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.
Current wording
(a)Adjusted Diluted EPS is adjusted by the effect of dilutive securities. For the three months ended March 31, 2025 and 2024, 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 for contracts with the option to settle in shares or cash of $60.1 and $7.1, respectively. For the three months ended March 31, 2025 and 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.
Previous wording
(d)For the three months ended December 31, 2024, this primarily represents recovery of previously written-off non-income tax credits and the amortization of basis differences in certain equity method investments. For the three months ended December 31, 2023, this primarily represents adjustments for equity loss from KKW.
Current wording
(d)For the three months ended March 31, 2025, this primarily represents recovery of previously written-off non-income tax credits, the amortization of basis differences in certain equity method investments, and net loss on the sale of an equity investment. For the three months ended March 31, 2024, this primarily represents adjustments for equity loss from KKW.
Previous wording
In the three months ended December 31, 2024, net revenues decreased 3%, or $57.7, to $1,669.9 from $1,727.6 in the three months ended December 31, 2023. Excluding net revenue from the second quarter of the prior period from Lacoste, net revenues decreased 3% or $51.9 to $1,669.9 from $1,721.8 in the three months ended December 31, 2023, reflecting a decrease in unit volume of 3% (primarily due to body care brands under Monange in Brazil as a result of competitive pricing action in the deodorant market) and negative foreign currency exchange translation impact of 2% (primarily driven by foreign currency exposure to Brazilian Real), partially offset by a positive price and mix impact of 2% (primarily due to positive pricing impact as a result of prior year period price increases and in line with the overall premiumization strategy). The overall decrease in net revenues reflects declines within color cosmetics primarily due to negative market trends in the United States, declines within mass bodycare in Brazil primarily due to competitive pricing action in the Brazilian deodorant market, and declines within Prestige cosmetics due to sales volumes decline in the Travel Retail Asia channel as a result of regulations impacting surrogate shopping purchases. The decrease in net revenues was partially offset by growth in the Prestige fragrance category primarily due to positive market trends in most major markets.
Current wording
In the nine months ended March 31, 2025, net revenues decreased 2%, or $114.1, to $4,640.5 from $4,754.6 in the nine months ended March 31, 2024. Excluding net revenue from the first and second quarters of the prior period from Lacoste, net revenues decreased 2%, decreasing $85.5 to $4,640.5 from $4,726.0 in the nine months ended March 31, 2024, reflecting a negative foreign currency exchange translation impact of 2% (primarily driven by the weakening of the Brazilian Real versus the U.S. dollar) and a decrease in unit volume of 2% (primarily due to body care brands from Monangein Brazil as a result of competitive pricing action in the deodorant market), partially offset by a positive price and mix impact of 2% (primarily due to positive pricing impact as a result of prior year period and current year period price increases and in line with the overall premiumization strategy). The overall decrease in net revenues reflects declines within color cosmetics across both divisions— primarily due to negative market trends in the United States, China, across several European markets— and as a result of a decline in the Travel Retail Asia channel as a result of regulations impacting surrogate shopping purchases. The decline can also be attributed to mass bodycare in Brazil— primarily due to competitive pricing action in the Brazilian deodorant market— and from Prestige skincare primarily due to negative performance from our brands. These declines were partially offset by growth in our prestige and mass fragrance categories due to the positive but decelerating market trends in most major markets and geographical expansion of certain brands. Net revenues declined in the Americas and Asia Pacific but grew within Europe, the Middle East and Africa.
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Rearranged current paragraphs (13)
Current report — wording carried from elsewhere
•Fragrances: In the first nine months of fiscal 2025, our fragrance category experienced mid-single digit percentage net revenue growth compared to the previous fiscal year, driven by high-single digit percentage but decelerating growth in the overall fragrance market. Net revenues from prestige fragrances increased by a low-single digit percentage in the first nine months of fiscal 2025, reflecting a deceleration in growth compared to the prior year, as the contribution from our fragrance innovation this fiscal year was more moderate than the contribution from major innovations in the previous fiscal year.
Current report — wording carried from elsewhere
•Skin and Body Care: Our skincare portfolio contributed a low-single digit percentage of our first nine months fiscal 2025 net revenue. Competitive pricing actions in Brazil negatively impacted demand for certain of our deodorant brands leading to a high-double digit percentage decline in our body care net revenues during the first nine months of fiscal 2025, despite positive trends in the overall mass body care market.
Current report — wording carried from elsewhere
•Geographic Regions: Net revenues in the Americas declined by a mid-single digit percentage during the first nine months fiscal 2025, driven by softness within the color cosmetics market in the United States. Revenues from EMEA increased by a low-single digit percentage due to decelerating growth across most European markets. Net revenues in the Asia Pacific region declined by high-single digit percentage in the first nine months of fiscal 2025, impacted by China and a decline in sales in the Asia Travel Retail channel. Asia Travel Retail channel sales were negatively affected by regulatory restrictions in Asia aimed at formalizing cross-border shopping, which reduced daigou (surrogate shopping) purchases.
Current report — wording carried from elsewhere
We expect that some of the market trends may continue into fiscal 2026.
Current report — wording carried from elsewhere
•Mass body care decline of $7.3.
Current report — wording carried from elsewhere
Adjusted Operating Income (Loss) by Segment
Current report — wording carried from elsewhere
Digital and e-commerce channel sales declines also contributed to the decrease in net revenues.
Current report — wording carried from elsewhere
These increases were partially offset by:
Current report — wording carried from elsewhere
These decreases were partially offset by:
Current report — wording carried from elsewhere
•Mass skincare sales growth of $6.8.
Current report — wording carried from elsewhere
These increases were partially offset by the following decreases:
Current report — wording carried from elsewhere
Early License Termination and Market Exit Costs
Current report — wording carried from elsewhere
The amendments were effective from October 2024 to February 2025 and did not apply to the forward repurchase contracts executed in December 2022. The share price further declined during the amendment period, triggering cash settlements under our December 2022 and November 2023 forward repurchase contracts of $191.1 million, in February 2025.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
•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 report — wording carried elsewhere
(ii)20 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.
Previous report — wording carried elsewhere
Digital and e-commerce channel sales remained relatively flat compared to the prior year.
Previous report — wording carried elsewhere
(i)approximately 120 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 report — wording carried elsewhere
In the six months ended December 31, 2024, we incurred no costs related to the early termination of a license and our decision to wind down our business in Russia.
Previous report — wording carried elsewhere
NET INCOME ATTRIBUTABLE TO COTY INC.