We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Coty Stock Down 42% in a Year: Can the Beauty Giant Recover in 2025?
Read MoreHide Full Article
Coty Inc. (COTY - Free Report) has faced significant challenges in an evolving beauty market, which has led to a notable 42.7% drop in its share price over the past year. The beauty industry, which previously experienced exceptional growth, is now entering a more normalized phase, creating hurdles for Coty. The company is grappling with rising operational costs, poor performance in key international markets, such as China, and unfavorable currency fluctuations.
Coty’s decline is steeper than the 39% drop in the industry and the 3.7% decrease in the broader Consumer Staples sector over the past year. In addition, the company’s stock has underperformed the S&P 500, which saw an increase of 24.4% during the same period. With these ongoing issues, investors are left questioning the company's future performance and whether it can turn things around.
COTY’s Challenges in International Markets
The macroeconomic environment remains challenging, with the exceptional beauty market growth of recent years transitioning into a more normalized phase. Amid these headwinds, Coty continues to face headwinds in markets like the Chinese mainland and Asia Travel Retail. In the first quarter of fiscal 2025, Coty’s Asia Pacific segment reported net revenues of $190.2 million, marking a 5% decline on a reported basis due to lower revenues in the Prestige segment and divestiture of the Lacoste license.
On a like-for-like (LFL) basis, Asia Pacific net revenues declined by 5% in fiscal first-quarter. The region saw net revenue declines across the Prestige and Consumer Beauty divisions, driven by challenging market conditions in mainland China and the regional Travel Retail channel. Management continues to expect ongoing challenges in the Chinese mainland and Asia Travel Retail to persist in fiscal 2025. Our model suggests a decline of 1.2% in Asia Pacific LFL in fiscal 2025.
COTY's Price Performance
Image Source: Zacks Investment Research
Rising Costs Put Pressure on Coty’s Margins
One of the key challenges Coty faces is the significant rise in its operational costs. The company’s fiscal first-quarter results reveal a rise in selling, general and administrative (SG&A) expenses, which came in at $808 million, up from $767.4 million reported in the year-ago quarter. As a percentage of net revenues, SG&A expenses came in at 48.3%, up from 46.8% reported in the year-ago quarter.
The company’s advertising and consumer promotions (A&CP) spending reflected nearly 25% of sales for the fiscal first quarter, increasing 40 basis points year over year. Management anticipates its A&CP investment to remain at a high 20% level of sales in fiscal year 2025. A rise in such costs, if not controlled, might continue to dent the company’s margins and profitability in the upcoming quarters.
Currency Fluctuations Add to Coty’s Strain
As a global company, Coty is vulnerable to fluctuations in foreign exchange rates, which can impact its revenues and profitability. The company’s first-quarter fiscal 2025 net revenues reflect a 1% adverse impact from unfavorable foreign currency exchange. The continuation of these headwinds remains a threat for Coty.
Final Words on COTY Stock
While demand for beauty products remains strong, Coty’s ability to navigate through a slower growth phase, manage rising costs and overcome international market weaknesses is uncertain. Investors will need to monitor how effectively the company can address these challenges and whether it can regain its footing in an increasingly competitive market. At present, Coty carries a Zacks Rank #4 (Sell).
Top Three Picks
Abercrombie & Fitch Co. (ANF - Free Report) is a specialty retailer of premium, high-quality casual apparel. The company currently flaunts a Zacks Rank #1 (Strong Buy).
The Zacks Consensus Estimate for the company’s current fiscal-year sales and earnings implies growth of 15% and 69.4%, respectively, from the previous year’s reported number. ANF has a trailing four-quarter average earnings surprise of 14.8%.
The Gap Inc. (GAP - Free Report) is a premier international specialty retailer offering diverse clothing, accessories and personal care products. It currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Gap’s current fiscal-year earnings and sales calls for growth of 0.8% and 41.3%, respectively, from the previous year’s reported figures. GAP has a trailing four-quarter average earnings surprise of 101.2%.
Helen of Troy (HELE - Free Report) , a leading consumer products player that operates through a diversified portfolio of renowned brands, currently carries a Zacks Rank #2 (Buy). HELE has a trailing four-quarter negative earnings surprise of 4.3%, on average.
The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales and earnings suggests declines of almost 5% and 18.9%, respectively, from the year-ago quarter’s reported figures.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Coty Stock Down 42% in a Year: Can the Beauty Giant Recover in 2025?
Coty Inc. (COTY - Free Report) has faced significant challenges in an evolving beauty market, which has led to a notable 42.7% drop in its share price over the past year. The beauty industry, which previously experienced exceptional growth, is now entering a more normalized phase, creating hurdles for Coty. The company is grappling with rising operational costs, poor performance in key international markets, such as China, and unfavorable currency fluctuations.
Coty’s decline is steeper than the 39% drop in the industry and the 3.7% decrease in the broader Consumer Staples sector over the past year. In addition, the company’s stock has underperformed the S&P 500, which saw an increase of 24.4% during the same period. With these ongoing issues, investors are left questioning the company's future performance and whether it can turn things around.
COTY’s Challenges in International Markets
The macroeconomic environment remains challenging, with the exceptional beauty market growth of recent years transitioning into a more normalized phase. Amid these headwinds, Coty continues to face headwinds in markets like the Chinese mainland and Asia Travel Retail. In the first quarter of fiscal 2025, Coty’s Asia Pacific segment reported net revenues of $190.2 million, marking a 5% decline on a reported basis due to lower revenues in the Prestige segment and divestiture of the Lacoste license.
On a like-for-like (LFL) basis, Asia Pacific net revenues declined by 5% in fiscal first-quarter. The region saw net revenue declines across the Prestige and Consumer Beauty divisions, driven by challenging market conditions in mainland China and the regional Travel Retail channel. Management continues to expect ongoing challenges in the Chinese mainland and Asia Travel Retail to persist in fiscal 2025. Our model suggests a decline of 1.2% in Asia Pacific LFL in fiscal 2025.
COTY's Price Performance
Image Source: Zacks Investment Research
Rising Costs Put Pressure on Coty’s Margins
One of the key challenges Coty faces is the significant rise in its operational costs. The company’s fiscal first-quarter results reveal a rise in selling, general and administrative (SG&A) expenses, which came in at $808 million, up from $767.4 million reported in the year-ago quarter. As a percentage of net revenues, SG&A expenses came in at 48.3%, up from 46.8% reported in the year-ago quarter.
The company’s advertising and consumer promotions (A&CP) spending reflected nearly 25% of sales for the fiscal first quarter, increasing 40 basis points year over year. Management anticipates its A&CP investment to remain at a high 20% level of sales in fiscal year 2025. A rise in such costs, if not controlled, might continue to dent the company’s margins and profitability in the upcoming quarters.
Currency Fluctuations Add to Coty’s Strain
As a global company, Coty is vulnerable to fluctuations in foreign exchange rates, which can impact its revenues and profitability. The company’s first-quarter fiscal 2025 net revenues reflect a 1% adverse impact from unfavorable foreign currency exchange. The continuation of these headwinds remains a threat for Coty.
Final Words on COTY Stock
While demand for beauty products remains strong, Coty’s ability to navigate through a slower growth phase, manage rising costs and overcome international market weaknesses is uncertain. Investors will need to monitor how effectively the company can address these challenges and whether it can regain its footing in an increasingly competitive market. At present, Coty carries a Zacks Rank #4 (Sell).
Top Three Picks
Abercrombie & Fitch Co. (ANF - Free Report) is a specialty retailer of premium, high-quality casual apparel. The company currently flaunts a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for the company’s current fiscal-year sales and earnings implies growth of 15% and 69.4%, respectively, from the previous year’s reported number. ANF has a trailing four-quarter average earnings surprise of 14.8%.
The Gap Inc. (GAP - Free Report) is a premier international specialty retailer offering diverse clothing, accessories and personal care products. It currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Gap’s current fiscal-year earnings and sales calls for growth of 0.8% and 41.3%, respectively, from the previous year’s reported figures. GAP has a trailing four-quarter average earnings surprise of 101.2%.
Helen of Troy (HELE - Free Report) , a leading consumer products player that operates through a diversified portfolio of renowned brands, currently carries a Zacks Rank #2 (Buy). HELE has a trailing four-quarter negative earnings surprise of 4.3%, on average.
The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales and earnings suggests declines of almost 5% and 18.9%, respectively, from the year-ago quarter’s reported figures.