Coty Inc (NYSE:COTY) stock fell 3.04% (As on May 7, 11:29:07 AM UTC-4, Source: Google Finance) after the company posted mixed result for the third quarter of FY 24. Coty’s performance this quarter was bolstered by strong demand in its Prestige segment, which saw an 8% reported revenue increase and a 13% lift on a like-for-like (LFL) basis. The Consumer Beauty segment also showed resilience with a 6% increase in both reported and LFL revenues. Despite the divestiture of the Lacoste license and foreign exchange headwinds, Coty’s diverse portfolio delivered robust growth across all regions, with notable gains in market share within the Prestige category. The company’s gross margin improved significantly, with a reported and adjusted gross margin of 64.8%, up 190 basis points from the previous year. Adjusted operating income grew by 17%, leading to a 90 basis point increase in adjusted operating margin to 10.4%. However, reported and adjusted net income saw declines due to mark-to-market losses, partially offset by higher operating income in the current period.
COTY in the third quarter of FY 24 has reported the adjusted earnings per share of $0.050, missing the analysts’ estimates for the adjusted earnings per share of $0.060. The company had reported the adjusted revenue growth of 8 percent to $1.39 billion in the third quarter of FY 24, beating the analysts’ estimates for revenue of $1.37 billion.
Meanwhile, COTY has announce that it has signed a long term license agreement with Lena Gercke to develop, produce, and distribute LeGer’s debut fragrance. This agreement marks the beginning of a long-term partnership between Coty and German Television Presenter and Model, Lena Gercke. The agreement is rooted in a mutual focus on empowerment, inspiration, and innovation. The collaboration comes as Coty continues to elevate and diversify its portfolio, continuously bringing new products, brands, and innovations to the forefront. Coty will develop, produce, and distribute the new LeGer fragrance, which is expected to launch in the DACH region this summer.
Looking ahead, Coty raised its FY24 outlook to the high end of its previous guidance range, expecting LFL revenue growth at the high end of the +9-11% range. Adjusted EBITDA margin expansion is anticipated at the upper end of the 10 to 30 basis point guidance range, with adjusted EPS projected at the high end of the $0.44 to $0.47 range, excluding the equity swap.
The company remains on track to reduce its leverage and targets the divestiture of its Wella stake by the end of CY25.