Coty Inc. (NYSE:COTY) is a global beauty company known for its wide range of cosmetics, skincare, and fragrance products. Despite its strong market presence, Coty faces stiff competition from industry giants like L'Oreal and Estée Lauder. The company recently reported its financial results for the second quarter of fiscal year 2025, revealing some challenges.
On February 10, 2025, Coty reported earnings per share (EPS) of $0.11, which was significantly below the Zacks Consensus Estimate of $0.22. This represents a 50% negative earnings surprise, highlighting the company's struggle to meet market expectations. Compared to the same quarter last year, when EPS was $0.25, this marks a notable decline. Over the past four quarters, Coty has consistently failed to exceed consensus EPS estimates.
Coty's revenue for the quarter was approximately $1.67 billion, falling short of the estimated $1.72 billion. This 2.65% miss from the Zacks Consensus Estimate also reflects a decrease from the $1.73 billion reported in the same period the previous year. The company has only surpassed consensus revenue estimates once in the last four quarters, indicating ongoing challenges in revenue generation.
The company has revised its annual profit forecast downward, now expecting an adjusted per-share profit between 50 and 52 cents, down from the previous forecast of 54 to 57 cents. This revision comes amid a decline in demand for cosmetics in the U.S. and stricter inventory management by retailers. Similar trends have been observed by competitors like Elf Beauty and L'Oreal, as highlighted by recent reports.
Despite these challenges, Coty achieved significant gross and operating margin expansion in the first half of fiscal year 2025. However, net revenue decreased by 1% year-over-year, influenced by foreign exchange rates and the divestiture of the Lacoste license. The company's like-for-like net revenue grew by 2%, driven by performance in prestige and mass fragrances, as well as mass skincare, although cosmetics and body care saw declines.
