Coty Inc. has announced its preliminary first quarter results for the period ending September 30, 2024. The company reported a 4-5% increase in like-for-like (LFL) sales, slightly below its prior estimated growth of 6% LFL for the quarter. Despite the moderated sales growth, Coty anticipates moderate growth in LFL sales for the second quarter, with some acceleration expected in the second half of the year.
The company noted that its sell-in tracked well below sell-out in several markets, including the U.S., Australia, China, and travel retail Asia, due to tight order and inventory management by retailers. However, Coty's revenue growth across other key markets remained robust, with growth ranging from mid single-digit to double-digit percentages.
In terms of adjusted EBITDA, Coty expects it to be roughly flat to moderately lower year-over-year for the first quarter, despite strong gross margin expansion. The company attributed this to lower-than-anticipated order patterns in the second half of the quarter, investments behind strong ROI sell-out initiatives, the timing of certain fixed costs, and the profit impact from the divestiture of the Lacoste license.
Looking ahead, Coty is re-accelerating its cost reduction efforts across all parts of the profit and loss statement to deliver savings well above the initial FY25 target of approximately $75 million. The company aims to achieve continued sales growth, continuous gross margin expansion, and increased cost savings for FY25 and beyond, while maintaining advertising and promotional expenses in the high 20s percentage.
Coty reiterated its expectation for FY25 adjusted EBITDA to grow by 9-11% year-over-year, consistent with prior guidance, including resumed adjusted EBITDA growth in the second quarter. This target, along with more moderate revenue growth, reflects an even stronger adjusted EBITDA margin expansion in FY25, following a 30 basis points margin expansion in FY24.
The company plans to publish its full set of Q1 results and its prepared remarks webcast on November 6, 2024, with a live Q&A call for financial analysts and investors on November 7, 2024. This preliminary information is subject to change as the company has not completed its internal closing procedures and related controls with respect to the financial information for the period. Today the company's shares have moved -1.9% to a price of $8.03. For the full picture, make sure to review Coty's 8-K report.
