Coty's fiscal 2024 net revenues grew 10% (all figures on a reported basis), totaling $6,118.0 million, driven by growth in the prestige and consumer beauty sectors, across all regions and in each of its core categories.
That growth rate was faster than the 1% net revenue growth rate that Coty achieve in the final quarter of the year. Those results were reportedly hit by restocking challenges.
Looking ahead, the company is targeting fiscal 2025 adjusted EBITDA growth of 9-11%, totaling $1,186-1,208 million.
What's Driving Coty Prestige Beauty?
In fiscal 2024, prestige beauty grew 13% year-over-year, driven by fragrances, cosmetics and skin care. The sector grew at a slower 4% rate in the second half of the year, driven by growth across fragrances, cosmetics and skin care and partially offset "by a headwind from the divestiture of the Lacoste license," per Coty.
What's Driving Coty's Consumer Beauty Business?
Consumer beauty revenues grew 6% as reported, driven by color cosmetics, mass fragrances, and mass skin and body care. The sector's net revenue grew at a slower 4% rate in the second half of the year. Q4's 2% growth was driven by mass fragrance and skin care.
Coty's Regional & Channel Growth
EMEA net revenues grew 11% in fiscal 2024, trailed by the Americas (up 10%) and Asia Pacific (up 9%).
Weak points in APAC included China and the travel retail channel.
Coty's e-commerce channel reported net revenues grew by over 20% in fiscal 2024; per Coty, its "e-commerce penetration increased approximately 170 basis points year-over-year to nearly 20%."
Coty CEO: 'Beauty is at the Sweet Spot'
Commenting on the operating results, Sue Nabi, Coty's CEO, said:
Our FY24 results set a new milestone in Coty's sustained track record of top-notch execution and market outperformance. In a dynamic macroeconomic backdrop, beauty maintains its privileged position, being neither a consumer goods industry nor a luxury goods industry. Instead, beauty is at the sweet-spot of desire, well-being, self-confidence, affordability, ritual, indulgence, and many new things that we and our consumers will invent. This is what fuels the strong global beauty growth that we continue to see to this day and which we expect to continue for the quarters and years to come.
At Coty, having transformed our organization and strategic path several years ago, we are now performing as a beauty leader and more and more as a beauty trendsetter, which we believe is an opening for a new era for Coty as a beauty powerhouse. Importantly, a key element of this outperformance has been our unwavering strong investment into our marketing, regardless of the macroeconomic volatility, because we believe that this is what will create value for our brands for the long term.
In a year filled with many milestones for Coty, it's worth highlighting 4 key achievements of FY24.
First, we once again grew ahead of the underlying beauty market with 11% LFL growth compared to the beauty market growth of approximately 9%, fueled by our leadership in fragrances, strengthened performance in our core cosmetics business, and over-driving our growth channels, markets, and categories. In fact, in 8 out of the last 12 quarters, we have delivered LFL growth which is ahead of the leading global beauty companies. Coty’s consistent outperformance confirms that our top-notch growth is a result of our strategic vision, strong execution and our ability to not only seize but create big and fundamental beauty trends that are here to stay.
Second, we are building unique and hopefully best-in-class expertise in each of our core categories. For example, our unrivaled expertise in fragrances was exemplified by the blockbuster launch of Burberry Goddess, which was not only the biggest fragrance launch in Coty’s history, but also the #1 female fragrance launch for the industry. Goddess is a perfect example of Coty spearheading an industry trend, in this case an exclusive-quality vanilla-based fragrance, which has now rippled into many more vanilla-based fragrance launches first across Coty, including recent mega hits like the ambery-vanilla Cosmic Kylie Jenner, and then also across the broader industry.
Third, we are becoming an advocacy-led company, reaching our consumers through the platforms where they discover newness and build connections with brands. With the earned media value for both Rimmel and CoverGirl over 400% higher than a year ago and closing the gap with leading peers, we are seeing the strong results from this transformation. The next step is co-creating the trends that will shape the global beauty industry in the coming quarters and years.
And fourth, we have once again delivered double digit growth in our LFL sales and adjusted EPS, excluding the swap impact. This marks the third consecutive year of double digit growth in both metrics. Our margins continued to expand supported by premiumization and the strengthening of our business. We reached our mid 60s gross margin percentage target a year ahead of plan, and our FY24 adjusted EBITDA margin expansion of 30 basis points was at the top end of our guidance range. After raising our FY24 guidance 3 times over the past year, we have ended FY24 with results sightly above our raised outlook, reaffirming the steadiness of Coty's execution. The power of our financial algorithm has been on full display in recent years and reflected in our outlook, anchored on 6-8% LFL revenue growth, 9-11% adjusted EBITDA growth, and close to 20% adjusted EPS growth. And, this is building on the exceptional delivery in FY24 of 11% LFL revenue growth, 12% adjusted EBITDA growth, and 26% adjusted EPS growth excluding the equity swap.
Looking to FY25, we expect our financial results to be consistent with our medium-term algorithm, with our FY25 outlook further reinforced by our white space opportunities, our robust commercial plans, and the strength of our innovation pipeline, including Burberry Goddess Intense, Chloe Signature Intense, Gucci Flora Gorgeous Orchid, Lancaster Golden Lift, CoverGirl Eye Enhancer 3D Mascara and adidas Vibes, the first mass fragrance line designed and scientifically proven to enhance one's mood.
In sum, we are confident in delivering another year of growth in line with our medium-term targets, steady margin expansion, cash flow improvement and deleveraging progress. As we strengthen our position as a global beauty powerhouse, acting with the agility of smaller brands but also creating the beauty trends of today and tomorrow, Coty remains one of, if not the most compelling investment opportunities in our industry.
