Coty Inc. Reports Strong Q3 Revenue Growth and E-commerce Performance

Preview
Coty Inc. reported its financial performance for the third quarter (Q3) of the fiscal year 2024. Here are the key highlights:

Revenue

  • Coty reported total net revenues of $1.38 billion for Q3, marking an 8% increase year-over-year.
  • The company achieved significant like-for-like revenue growth of 10% in Q3 and 13% year-to-date, outperforming its guidance.

Earnings Per Share (EPS)

  • The company reported adjusted earnings of $43.8 million or $0.05 per share for the period. Analysts had projected $0.06 per share.
  • The upcoming report from Coty is expected to reveal quarterly earnings of $0.06 per share.

E-commerce and Travel Retail

  • Coty's e-commerce channel saw a net revenue growth of nearly 20% in Q3, following a rise of more than 20% in the first quarter.
  • The company continued to see strong momentum in its Travel Retail channel, with sales growth over 20% like-for-like in Q1, supported by distribution expansion and successful innovations.

Operating Income

  • Coty's Q3 operating income was $43.5 million, which was lower than the previous year's Q3 primarily due to a real estate gain recognized last year.

Analyst Expectations

  • Analysts expect Coty to report earnings of $0.19 per share in its upcoming report, representing a year-over-year increase.
  • The average price target for Coty, based on short-term price targets from 16 analysts, is $11.59, with forecasts ranging from $8.00 to $13.25.

Outlook

  • For the first half of fiscal 2024, Coty expects like-for-like sales growth to be between 11% and 13%, up from the previously raised guidance of 10% to 12%.
  • The company also anticipates modest fiscal 2024 gross margin expansion year-on-year, driven by strong year-on-year improvement in gross margins in the second half as the Q1 gross margin pressures abate.
Overall, Coty's Q3 performance showed strong revenue growth and positive trends in e-commerce and travel retail, although it slightly missed analyst expectations for EPS.