Coty Inc. Reports 6% Revenue Decline and $280.4 Million Operating Loss for Q1 2025

Coty Inc. reported a significant decline in its financial performance for the three months ended March 31, 2025, with net revenues of $1,299.1 million, down 6% from $1,385.6 million in the same period last year. The decrease was attributed to a negative price and mix impact of 3% and a similar impact from foreign currency exchange rates. The company's operating loss for the quarter was $280.4 million, compared to an operating income of $77.8 million in the prior year, primarily driven by asset impairment charges of $212.8 million and increased restructuring costs.

In the nine months ending March 31, 2025, Coty’s net revenues also fell by 2% to $4,640.5 million from $4,754.6 million year-over-year. The decline was influenced by a decrease in unit volume and adverse foreign currency impacts, particularly in the Consumer Beauty segment, which saw a 7% drop in revenues. The Prestige segment, however, remained relatively stable, with revenues increasing slightly by 1%. The overall decline in revenues was exacerbated by challenging market conditions in key regions, including the United States and China.

Strategically, Coty has initiated a Fixed Cost Reduction Plan aimed at simplifying its operating model and reducing fixed costs, with expected cash costs of approximately $80 million to be incurred over the next two fiscal years. The company also faced a loss of $71 million related to the termination of the KKW Collaboration Agreement, which further impacted its financial results. Additionally, Coty recorded substantial asset impairment charges related to several trademarks, reflecting the ongoing challenges in the color cosmetics market.

Operationally, Coty reported a decrease in its employee headcount and a decline in customer engagement metrics, particularly in the color cosmetics category. The company continues to focus on geographic expansion and product innovation, particularly in the fragrance and skincare segments, which have shown some resilience despite broader market challenges. Coty’s management remains cautious about the economic landscape, particularly in China, and is actively monitoring market trends to adapt its strategies accordingly.

Looking ahead, Coty anticipates a mid-single-digit percentage decline in reported net revenue for fiscal 2025, factoring in a low-single-digit negative impact from foreign exchange. The company aims to maintain its gross margin in the mid-sixties percentage range while implementing cost reduction initiatives to offset inflationary pressures. Coty’s leadership is committed to enhancing its operational efficiency and stabilizing its brand portfolio as it navigates a complex market environment.