Coty Inc. (COTY): history, ownership, mission, how it works & makes money

A Brief History of Coty Inc.

Coty Inc. has established itself as a significant player in the global beauty industry, known for its diverse portfolio of beauty brands. As of 2024, Coty continues to evolve through strategic acquisitions and a focus on innovation and sustainability.

Financial Performance Overview

For the three months ended September 30, 2024, Coty reported a net income attributable to Coty Inc. of $82.9 million, a substantial increase from $1.6 million during the same period in 2023. This marked an increase of over 100% year-over-year. The adjusted net income attributable to Coty Inc. also rose to $128.1 million from $74.1 million, reflecting a 73% increase.

Segment Performance

Operating income by segment for the same period showed significant variation. The Prestige segment reported operating income of $241.5 million, up from $221.6 million, while the Consumer Beauty segment saw a drop to $14.0 million from $32.0 million. Corporate expenses improved, with losses decreasing from $56.1 million to $17.7 million.

Cash Flow and Investments

Net cash provided by operating activities was $67.4 million for Q3 2024, a decrease from $186.2 million in Q3 2023. This decline was primarily attributed to higher cash outflows from working capital. In terms of investing activities, Coty reported cash used of $75.3 million, compared to $62.2 million in the previous year.

Market Position and Strategic Developments

As of 2024, Coty Inc. holds a strong market position, with JAB Beauty B.V. as its largest stockholder, owning approximately 55% of the Class A Common Stock. The company continues to focus on expanding its brand portfolio and enhancing its sustainability initiatives.

In February 2024, Coty executed a forward repurchase contract for a cash payment of $200 million, exchanging it for 27 million shares of its Class A Common Stock, reflecting its ongoing commitment to shareholder value.

Tax Information

The effective income tax rate for Coty for the three months ended September 30, 2024, was 31.7%, significantly lower than the prior year's 80.0%. This decrease was mainly due to the revaluation of deferred tax liabilities in Switzerland impacting the previous year's tax rate.

A Who Owns Coty Inc. (COTY)

Major Shareholders

As of September 30, 2024, the largest stockholder of Coty Inc. is JAB Beauty B.V. ("JAB"), which beneficially owns approximately 55% of Coty’s Class A Common Stock. This ownership includes all voting interests of Mr. Peter Harf, the Company's Chairman, and HFS Holdings S.à r.l., which is also beneficially owned by Mr. Harf. This ownership includes shares of Convertible Series B Preferred Stock on an if-converted basis.

Stock Structure

The total authorized shares of Class A Common Stock as of September 30, 2024, is 1,250.0 million, with 867.8 million shares outstanding. The total authorized shares of preferred stock are 20.0 million, comprising one class: Series A Preferred Stock, with 1.0 million shares authorized, issued, and outstanding.

Shareholder Breakdown

Convertible Preferred Stock

Coty has issued 1.0 million shares of Convertible Series B Preferred Stock. These shares were sold to KKR Rainbow Aggregator L.P. in 2020, at a price of $1,000 per share. The total value of this issuance was $1.0 billion.

Equity Compensation

As part of an equity transfer agreement, JAB completed the transfer of 10.0 million shares of Common Stock to the Company’s CEO, Sue Nabi, on October 29, 2021, and 5.0 million shares on September 18, 2023. These transfers were part of her sign-on award of restricted stock units.

Recent Stock Offerings

On September 29, 2023, Coty issued a total of 33.0 million shares of Class A Common Stock at a public offering price of $10.80 per share. The net proceeds from this offering were approximately $348.4 million, after deducting underwriting fees and other expenses related to the offering.

Market Performance

As of October 31, 2024, the market capitalization of Coty Inc. was approximately $9.4 billion.

Financial Performance Indicators

Coty Inc. (COTY) Mission Statement

Mission Overview

Coty Inc. aims to be a global leader in beauty by delivering innovative, high-quality products to enhance the lives of consumers. The company focuses on sustainability, inclusivity, and empowerment, emphasizing the importance of diversity and representation within its product offerings and marketing strategies.

Financial Performance and Strategic Goals

As of September 30, 2024, Coty Inc. reported a net income attributable to the company of $82.9 million, a significant increase from $1.6 million in the prior year. This improvement reflects the company's strategic focus on enhancing operational efficiency and driving revenue growth across its segments.

Segment Performance

Coty operates through two primary segments: Prestige and Consumer Beauty. For the three months ended September 30, 2024, the segment results were as follows:

Sustainability Initiatives

Coty has committed to sustainable practices across its operations. The company aims to reduce its carbon footprint and improve packaging sustainability by utilizing recyclable materials. As part of its mission, Coty emphasizes environmental responsibility and aims for a significant reduction in greenhouse gas emissions by 2030.

Conclusion of Financial Data

As of September 30, 2024, Coty Inc. maintained total assets of $12,516.0 million and total liabilities of $6,860.9 million, reflecting the company's solid financial standing and ability to fund its mission-driven initiatives.

Overall, Coty Inc. continues to align its mission with robust financial performance, focusing on growth, sustainability, and innovation in the beauty industry.

How Coty Inc. (COTY) Works

Company Overview

Coty Inc. operates as a global beauty company specializing in cosmetics, skincare, fragrances, and hair color. As of September 30, 2024, Coty reported a total asset value of $12,516.0 million.

Financial Performance

For the three months ended September 30, 2024, Coty achieved net revenues of $1,671.5 million, up from $1,641.4 million in the same period of 2023, reflecting a 2% increase.

Segment Performance

Coty's performance is segmented into Prestige and Consumer Beauty divisions. As of September 30, 2024, the operating income for the Prestige segment was $241.5 million, while the Consumer Beauty segment reported an operating income of $14.0 million.

Cost Structure

For the three months ending September 30, 2024, Coty reported a cost of sales of $576.9 million, down from $599.5 million in the previous year. This resulted in a gross margin increase of approximately 200 basis points.

Cash Flow and Liquidity

For the three months ended September 30, 2024, Coty reported net cash provided by operating activities of $67.4 million, compared to $186.2 million in the same period of 2023.

Debt and Equity

Coty's total liabilities as of September 30, 2024, stood at $8,042.9 million, with long-term debt of $3,934.4 million. The company has a share repurchase program with $796.8 million remaining as of the same date.

Market Position

Coty continues to leverage its brand portfolio, focusing on expanding its digital and e-commerce channels, which contributed positively to its revenue growth in 2024.

How Coty Inc. (COTY) Makes Money

Revenue Streams

Coty Inc. generates revenue through two primary segments: Prestige and Consumer Beauty.

Prestige Segment Performance

In the Prestige segment, Coty reported a revenue increase of 5% primarily driven by strong sales in fragrance lines such as Burberry, Chloe, and Hugo Boss. The positive price and mix impact contributed significantly, reflecting the company's premiumization strategy.

Key drivers include:

• Prestige fragrance sales growth of $83.2 million.
• Successful brand innovations like Gucci Flora Gorgeous Orchid.
• Positive market trends across major markets.

Consumer Beauty Segment Performance

The Consumer Beauty segment saw a revenue decline of 3%. This was attributed to:

• A $29.7 million decline in color cosmetics, primarily from Covergirl.
• Declines in mass bodycare sales, notably Monange in Brazil.
• Negative foreign currency exchange translation impacts of 3%.

Operating Income

For the three months ended September 30, 2024, Coty reported the following operating income:

Net Income

Coty's net income for the three months ended September 30, 2024, was $82.9 million, compared to $1.6 million in the prior year, marking an increase of over 100%.

Adjusted Operating Income

Adjusted operating income for the same period was reported as follows:

Cost of Sales

Cost of sales decreased by 4% to $576.9 million in Q1 2024, resulting in a gross profit margin of 64.5%.

Selling, General and Administrative Expenses

SG&A expenses increased by 5% to $808.0 million, accounting for 48.3% of net revenues.

Cash Flow from Operating Activities

Coty reported net cash provided by operating activities of $67.4 million for the three months ended September 30, 2024.

Share Repurchase Program

Coty has a share repurchase program with $796.8 million remaining as of September 30, 2024, reflecting ongoing capital management strategies.

Market Position and Strategy

Coty's strategy focuses on premiumization, innovation in product offerings, and expanding its digital and e-commerce channels. The company aims to enhance its market position in the beauty sector while managing cost efficiencies and optimizing its supply chain.

Updated on 16 Nov 2024

Resources:

1. Coty Inc. (COTY) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Coty Inc. (COTY)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Coty Inc. (COTY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.