Coty has released its latest financial results for the first half (1H25) and second quarter (Q2) of fiscal year 2025, showing a mix of strengths and challenges. While the company delivered strong gross and operating margin expansion, revenue declines in key markets and categories impacted overall performance, with CEO Sue Nabi describing FY25 as a “pivotal year” for the global beauty powerhouse.
While the overall beauty market continues to grow, Coty has faced both strengths and challenges across its portfolio.
“On the one hand, the global beauty market continues to grow at a healthy pace, even if growth has moderated off of the elevated levels of the last few years,” said Nabi. “Fragrances of all price points continue to outperform most other beauty categories, which strongly benefits Coty’s business as fragrances account for over 60% of our revenues and an even bigger portion of our profits.”
Coty’s fragrance portfolio remained robust, with volume growth across both prestige and mass-market segments. The company’s prestige fragrance sell-out grew by a high single-digit percentage in the first half of FY25, outperforming its sell-in figures. Strong momentum in brands such as Hugo Boss, Burberry, Chloe, and Marc Jacobs fuelled this growth, with key market milestones achieved.
“Hugo Boss became the #2 male fragrance in Europe, Marc Jacobs Daisy is now the #1 franchise in the UK, and Coty overall is the #1 prestige fragrance player in South Africa,” Nabi highlighted.
However, Nabi acknowledged significant challenges in China, Travel Retail Asia, Australia, and the US consumer beauty segment, which weighed on overall performance in Q2. “Despite a seemingly strong holiday period, where beauty performed strongly and consumers engaged with the category, this did not translate into improved replenishment orders for Coty as retailers managed their inventory very tightly,” she explained.
In response to these pressures, Coty activated strong cost-saving initiatives and safeguarded its cash flow. “In the quarter, our adjusted gross margin expanded by 170 basis points year on year, reflecting not only strong supply chain savings but also our disciplined approach to promotional activity at a time when many beauty players stepped up promotions and discounts,” Nabi said.
Looking ahead, Nabi sees long-term opportunities despite near-term uncertainties. “The beauty market has changed significantly since we first laid out our strategy and ambitions over three years ago,” she noted. While China is no longer a key short-term growth driver, the US remains a dynamic market, and fragrances continue to experience accelerated demand.
As Coty prepares for FY26 and beyond, the company plans to leverage new brand initiatives, expanded licenses—including Swarovski, Marni, Etro, and Marc Jacobs Makeup—and strengthened financials to drive future growth. “We remain confident in Coty’s ability to accelerate sales growth and outperform the beauty industry over the coming years, all while steadily expanding margins and cash flow, and significantly growing EPS,” Nabi concluded.
The company will provide further insights into its strategy and outlook at the upcoming CAGNY presentation on February 19th.
Read the SUMMER ’25 issue of Retail Beauty below:
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