NEW YORK – Coty Inc. . (NYSE:), a leading global beauty company, has announced preliminary results for the first quarter, revealing approximately 4-5% growth in comparable sales (LFL), which, while strong, is moderately below the company’s figures. previous estimate of 6% growth in LFL. Despite this, Coty reaffirmed its full-year profit target, indicating confidence in its financial outlook.
The company’s performance comes against the backdrop of a global beauty market experiencing solid but slightly reduced growth. In particular, the prestige fragrance category, one of Coty’s domains, continues to outperform the broader market, driven by higher volumes and favorable pricing trends. In contrast, the mass beauty segment shows slower growth, driven solely by unit demand.
Coty’s sales gains were tempered by cautious order and inventory management by retailers, particularly in the US, Australia, China and Travel Retail Asia. However, these regions represent a small fraction of Coty’s business, and growth in other key markets has been strong, ranging from mid- to double-digit percentage increases.
The company expects moderate sales growth in the second quarter, with expectations of acceleration in the second half of the year. This outlook is supported by easier year-over-year comparisons, sales-to-sales alignment, promising new product launches and expanded distribution.
Despite lower-than-expected order patterns in the latter part of the first quarter, Coty has managed to maintain strong gross margin expansion. However, this was offset by investments in high ROI sales initiatives, the timing of certain fixed costs and the impact of the Lacoste license sale, leading to forecast year-over-year adjusted EBITDA between stable and moderately lower for the first quarter.
In response to the uncertain demand environment and cautious behavior from retailers, Coty is accelerating its cost reduction efforts, aiming to exceed its initial fiscal 2025 savings target of approximately $75 million. These measures, along with continued sales growth and gross margin expansion, support Coty’s expectation of achieving a 9-11% increase in adjusted EBITDA by fiscal 2025, in line with previous guidance.
The beauty giant will release its full first-quarter results on November 6, 2024, followed by a live Q&A session with financial analysts and investors on November 7, 2024. Coty’s preliminary estimates are based on information currently available and are subject to change once finalized. of the financial review of the quarter. The company recommends caution when relying on these preliminary figures.
This report is based on a press release from Coty Inc. and contains forward-looking statements that are subject to risks and uncertainties.
In other recent news, Coty Inc. reported mixed fourth-quarter results, with a modest 0.9% revenue increase, slightly below forecast growth of 1.8%. However, comparable sales grew 5% and adjusted EBITDA reached $164.5 million, slightly exceeding its guidance. Adjusted earnings per share came in at a loss of $0.03, missing estimates. Amid these developments, Coty has forecast 6% to 8% growth in comparable sales for the first half of fiscal 2025. The company also formed its first Scientific Advisory Board to guide its research and development in skin care. Analyst firms including Jefferies, TD Cowen, Canaccord Genuity and DA Davidson have expressed positive outlooks for Coty, with Jefferies upgrading shares from Hold to Buy, citing its strong position in the premium fragrance market. These are the recent developments in the company’s operations and market performance.
InvestingPro Insights
To complement Coty’s preliminary first-quarter results and full-year outlook, data from InvestingPro provides additional context for investors. Despite the company’s moderate sales growth and reaffirmed profit targets, Coty’s financials present a mixed picture.
Data from InvestingPro shows that Coty’s revenue for the trailing twelve months to Q4 2024 amounted to $6.118 billion, with a notable revenue growth of 10.15% over the same period. This aligns with the company’s reported sales growth and its position in the expanding beauty market.
A tip from InvestingPro highlights Coty’s impressive gross profit margins, which are reflected in data showing a gross profit margin of 64.39% for the trailing twelve months to Q4 2024. This strong margin supports the claim of the company to maintain strong gross margin expansion despite lower orders. patterns.
However, investors should note that Coty is trading on a high earnings multiple, with a P/E ratio of 105.29. This valuation metric suggests that the market has high growth expectations for the company, which may be difficult to meet given the current cautious retail environment described in the article.
Another tip from InvestingPro indicates that Coty’s share price movements are quite volatile. This volatility could be attributed to the uncertain demand environment and the company’s efforts to accelerate cost reductions, as mentioned in the article.
For those interested in a deeper analysis, InvestingPro offers 7 additional tips for Coty, which provide a more complete view of the company’s financial health and market position.
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