Coty Maintains Momentum in Q2

Continued Improvement In Profit and Net Debt Reduction, with Revenues In Line

FY21 Fixed Cost Savings Target Increased to ~$300M

Strong Strategic Progress in Prestige Business Especially in U.S. and China, and E-Commerce

NEW YORK–(BUSINESS WIRE)–Coty Inc. (NYSE: COTY) today announced continued improvement in financial results for the second quarter of fiscal year 2021, ended December 31, 2020.

In Q2, Coty reported adjusted operating income of $188.4 million, up 7% versus last year, with a reported operating income of $17.0 million. Strong profit performance in the quarter was fueled by fixed costs savings, which totaled approximately $80 million, consistent with Q1. The strong delivery in 1H21 coupled with the acceleration of certain projects into the year are driving an increase to the savings target for FY21, now expected to be approximately $300 million compared to the previous target of over $200 million. For the quarter, the operational improvements and stringent cost controls resulted in Adjusted EPS for Total Coty of $0.17, which includes two months of contribution from Wella, while reported EPS was $(0.36) driven by the impact of the cost of the Wella transaction as well as additional restructuring accruals under the fixed cost savings plan.

The Wella divestiture closed as planned on November 30, delivering $2.9 billion gross proceeds. Combined with free cash flow of $389.4 million, Financial Net Debt fell to approximately $4.8 billion at the end of Q2. Economic Net Debt, which includes the stake in Wella valued at quarter end at approximately $1.2 billion1, fell to approximately $3.6 billion. Coty has elected to recognize its Wella stake on a fair value basis going forward, as permitted by U.S. GAAP. Separately, Coty will now use Adjusted EBITDA as a key performance measure, in order to more directly drive and highlight its focus on cash flow and deleveraging, which remains a priority. Adjusted EBITDA was $449.9 million for 1H21, up 6% versus the last year, and is expected to be $750 million in FY21.

Revenues continued to improve in the second quarter, with a 16% revenue decline on a reported basis, or an 18% LFL decline which was 1 percentage point ahead of Q1, despite the resurgence of COVID and related lockdowns in multiple parts of the world. The Prestige business saw the biggest gain, with LFL trends better by 9 percentage points sequentially, even as the travel retail channel remained under pressure. Within the prestige business, which accounted for approximately 60% of net revenues in the first half of FY21, highlights for the quarter included strong retail sales momentum in the U.S. and China, and broad-based strength in e-commerce.

Coty continues to make progress on its strategic priorities, including digital and e-commerce acceleration, which grew 40% in Q2, expanding into white space opportunities including prestige cosmetics and skincare, building out its presence in China, and strengthening its core prestige fragrance business and stabilizing share in the mass beauty business through leading innovation and improved execution.

Commenting on the operating results, Sue Y. Nabi, Coty’s CEO, said:

“Our strong second quarter results build on the momentum of the first quarter, as the entire organization continued to act with discipline, flexibility and creativity in an uncertain environment. With revenues delivering on our objectives and profit, cash flow and debt all ahead of expectations, including 6% EBITDA growth, it is clear that a much stronger Coty is emerging, which we believe will weather any near-term market headwinds while simultaneously positioned strongly to capture the opportunities of the eventual global recovery. Entering Q3, January trends are starting inline with our expectations.

The strong execution on our fixed cost savings plan, with approximately $160 million of savings generated in the first half of FY21, and a solid pipeline of projects for the second half, give us confidence to raise our savings target for the full year to approximately $300 million. The additional savings will allow us to protect our profitability in the coming months of uncertainty while simultaneously freeing up funds to increase our A&CP investments in the second half of FY21 to support our carefully chosen strategic initiatives.

We continued to progress on our strategic objectives during the quarter. Our e-commerce momentum, with 40% sales growth was broad-based, spanning the prestige and mass businesses, across key regions, and fueled by success in pureplay e-retailers, brick & click retailers, and DTC. Our China prestige business continues to grow, with strong fragrance sell-out and the more than doubling of retail sales for both Gucci and Burberry cosmetics, speaking to the strong appeal of both brands to Chinese consumers. And we have continued building on Gucci’s momentum in China, with the opening this week of the Gucci Beauty flagship store on Tmall, for which we see tremendous potential in the coming years. And in our core business, we continue to deliver leading innovation in both prestige and mass. I am delighted to see Marc Jacobs Perfect ending the year as the #1 fragrance launch of CY20 in the U.S., U.K, Canada and Australia, while Hugo Boss delivered strong innovation behind Alive and Boss Bottled. Meanwhile, we continued to build our prestige cosmetics footprint, with sales growing double digits in Q2. In mass, Rimmel’s revamped Lasting Finish 25H foundation helped strengthen its market share in the UK and Italy, while Cover Girl continued to strengthen its positioning as the brand leading on clean, vegan and cruelty free products, through its Clean Fresh line-up and the more recent launch of Lash Blast Clean mascara. Additionally, we are gradually stabilizing market share in our mass beauty business, fueled by the strong momentum of our brands online, including nearly a doubling of share on Amazon.

At the same time, we have strengthened the Coty leadership team with Stefano Curti joining as Chief Brands Officer, Consumer Beauty; Alexis Vaganay as Chief Commercial Officer, Consumer Beauty; Laurent Mercier elevated to Coty CFO and Stephane Delbos promoted to Chief Procurement Officer. The new Coty team is now in place, bringing strong beauty and business experience, deep knowledge of Coty, and relevant knowledge of new areas like skincare. At the same time, we are supported by a strong and female-majority Board of Directors, including the recent additions of two new directors, Anna Adeola Makanju and Mariasun Aramburuzabala Larregui.

As we have finalized our strategic review, including new growth opportunities, brand equity mapping, and a repositioning plan for our core mass brands, we will share our strategic priorities around accelerating growth in mid-April, with a full Investor Day planned for Fall 2021.

I am excited by the tremendous opportunities and exciting journey ahead for Coty, and look forward to sharing this vision in the coming months.”

*Adjusted financial metrics used in this release are non-GAAP. See reconciliations of GAAP results to Adjusted results in the accompanying tables.

1Based on fair market value, reflecting the final Wella capital structure


  • 2Q21 net revenue trends show moderate sequential improvement, despite resurgence of COVID and related lockdowns, with Continuing Operations net revenues declining 16% as reported and 18% LFL
  • Continuing Operations reported operating income of $17.0 million
  • Solid growth in 2Q21 Continuing Operations adjusted operating income of $188.4 million, up 7% YoY, with 280 bps of margin expansion to 13.3%
  • 2Q21 adjusted EBITDA of $284.1 million brings the 1H21 adjusted EBITDA to $449.9 million, with an adjusted EBITDA margin of 17.7%
  • 2Q21 cost reductions remained strong with an additional approximately $80 million of savings, bringing the year-to-date total to over $160 million; Coty raises FY21 cost reduction target to approximately $300 million from previous expectations of over $200 million, which will protect profitability in 2H21 and support increased reinvestment behind upcoming FY22 initiatives
  • Strong 2Q21 free cash flow of $389.4 million was ahead of internal expectations, driven primarily by solid profit growth
  • Financial Net Debt better than expected at $4,842.6 million, supported by the proceeds from the Wella transaction and strong free cash flow, partially offset by negative FX impact. Economic Net Debt now $3,656.1 at quarter end.
  • Significant immediate liquidity of $2,832.1 million at end-quarter, with comfortable headroom under Coty’s financial debt covenants. Given Coty’s financial position and free cash flow characteristics, Coty expects to be in full compliance of covenant requirements going forward.


Despite continued disruptions to sales channels and short-term orders related to the COVID-19 pandemic, we remain focused on our strategic priorities and the improvement of our sell-out trends, and will start raising our commercial investments to fuel improvements ahead of FY22.

This is made possible by the decrease of our fixed costs, which we expect to reach approximately $300M for this fiscal year and will contribute to an expected adjusted EBITDA of $750M for FY21. With a financial net debt that has now crossed below $5B, we will continue to drive our leverage ratio towards 5x by the end of CY21, in line with our prior guidance.

Our strong cost discipline and cash flow dynamics are key drivers for building profitable growth and positioning Coty as a best-in-class beauty company.

Financial Results

Note: Discussions of “Total Coty” results reflect the full scope of Coty’s revenues and costs, inclusive of Wella, through the closing date of the Wella transaction on November 30, 2020. “Continuing Operations” results reflect Total Coty results less the revenues and directly attributable costs of the divested Wella business through the transaction closing date, but include the TSA cost reimbursement received from Wella for the month of December 2020.

Refer to “Non-GAAP Financial Measures” for discussion of the non-GAAP financial measures used in this release; reconciliations from reported to adjusted results can be found at the end of this release.

Continuing Operations


  • 2Q21 reported net revenues of $1,415.6 million decreased 15.9% year-over-year, including a negative foreign exchange (FX) impact of 0.5%. LFL revenue decreased 17.9%, driven by LFL decreases in the EMEA segment of 24.8%, Asia Pacific segment of 17.2%, and Americas of 7.4%. By channel, the prestige business decline 15.6%, showing a significant improvement from -25.0% in Q1, while the mass business declined 21.6%.
  • Year-to-date reported net revenues of $2,539.7 million decreased 17.9% year-over-year, including a negative FX impact of 0.3%. LFL revenue decreased 18.4%, driven by LFL decreases in the Asia Pacific segment of 26.8%, EMEA of 24.6%, and Americas of 6.1%.

Gross Margin:

  • 2Q21 reported and adjusted gross margin of 58.7% decreased from 62.4% in the prior-year period, due to the negative impact from the regional and category sales mix as well as the decline in sales volume.
  • Year-to-date reported and adjusted gross margin of 58.7% decreased from 61.4% in the prior-year period, primarily due to mix impact as well as lower production volumes.

Operating Income and EBITDA:

  • 2Q21 reported operating income from Continuing Operations of $17.0 million increased from a reported operating loss of $80.5 million in the prior year due to a $112.2 million reduction in restructuring and other business realignment costs, as well as lower SG&A, partially offset by higher acquisition and divestiture related expenses of 15.7 million.
  • 2Q21 adjusted operating income for Continuing Operations of $188.4 million rose 7% from $176.4 million in the prior year, while the adjusted EBITDA for Continuing Operations of $284.1 million increased 6% from the prior year. The increase was driven by continued fixed cost reductions across both people and non-people costs, combined with active management of marketing investments. For 2Q21, the adjusted operating margin for Continuing Operations increased 280 bps to 13.3%, while the adjusted EBITDA margin increased 420.0 bps to 20.1%.
  • Year-to-date reported operating loss from Continuing Operations of $49.0 million increased from a reported operating loss of $16.5 million due to lower sales, reduced gross profit, as well as higher acquisition and divestiture related expenses, partially offset by lower media investments and fixed cost expenses. Year-to-date adjusted operating income for Continuing Operations increased 11.4% to $269.5 million, with a margin of 10.6%, while the adjusted EBITDA totaled $449.9 million with a margin of 17.7%.

Total Coty

Net Income:

  • 2Q21 reported net loss for Total Coty, which includes two months of contribution from Wella, of $275.4 million declined from a net loss of $21.1 million in the prior year, due to the impact of the Wella transaction costs as well as additional restructuring accruals under the fixed cost savings plan.
  • The 2Q21 adjusted net income for Total Coty of $133.8 million compared to $205.2 million in the prior year period, reflecting in part only 2 months of contribution from Wella in the current period.
  • Year-to-date reported net loss for Total Coty of $74.8 million compared to net income of $31.2 million in the prior year. Year-to-date adjusted net income of $217.4 million declined from $255.7 million in the prior year.

Earnings Per Share (EPS) – diluted:

  • 2Q21 reported loss per share for Total Coty of $(0.36) compared to a reported loss per share of $(0.03) in the prior year.
  • 2Q21 adjusted EPS for Total Coty of $0.17 versus $0.27 in the prior year, reflecting in part only 2 months of contribution from Wella in the current period.
  • Year-to-date reported loss per share for Total Coty of $(0.10) compared to reported net earnings per share of $0.04 in the prior year.
  • Year-to-date adjusted EPS for Total Coty of $0.28 versus $0.34 in the prior year.

Operating Cash Flow:

  • 2Q21 cash from operations totaled $430.1 million compared to $422.1 million in the prior-year period, reflecting an increase in net income on a cash basis. First half operating cash flow totaled $472.7 million, an increase of $10.7 million from the same period of the prior year.
  • 2Q21 free cash flow of $389.4 million increased from a free cash flow of $363.5 million in the prior year driven by the increase in operating cash flow of $8.0 million coupled with a $17.9 million reduction in capex. First half free cash flow of $361.1 million increased by $44.1 million from the prior year.

Financial Net Debt:

  • Financial Net Debt of $4,842.6 million on December 31, 2020 declined from $7,864.5 million on September 30, 2020. The decline was driven by gross proceeds of $2.9 billion from the closing of the Wella transaction, including $2.5 billion of proceeds from disposition and $0.4 billion return of capital, as well strong free cash flow generation of $389.4 million, partially offset by over $300 million of negative FX impact.

Immediate Liquidity:

  • Coty ended Q2 with $549.1 million in cash and cash equivalents, and immediate liquidity of $2,832.1 million, with comfortable headroom under its financial debt covenants

Second Quarter Business Review by Segment (Continuing Operations)


In 2Q21, Americas net revenues of $539.5 million or 38% of total Coty Continuing Operations, decreased by 7.2% versus the prior year. On a LFL basis, Americas net revenues decreased by 7.4%, or a mid-single digit decline when excluding the impact from the heavily impacted Travel Retail channel. While the mass beauty business was pressured by softness in the color cosmetics market, the prestige business recorded tremendous results with high single digit revenue growth supported by strength in prestige fragrances, cosmetics, and skincare.

During the quarter, we continued to see strength within U.S. prestige fragrances, with Marc Jacobs, Gucci, and Burberry delivering robust growth. We are particularly encouraged by the continued strong performance of Marc Jacobs Perfect, which was the #1 national fragrance launch in calendar 2020, and remains on track to be the largest Coty U.S. fragrance launch in 15 years. Once again Gucci saw robust sell-out across both fragrances and cosmetics. Gucci fragrance performance was supported by Gucci Bloom Profumo and Gucci Guilty. Meanwhile, Gucci cosmetics generated triple-digit sell-out growth, fueled by bronzer and mascara. In January, we further expanded the line to include a foundation and primer, with very strong initial results.

Within our mass beauty business, the cosmetics and fragrance categories remained pressured, with further deceleration in Q2 as COVID cases accelerated in parts of the U.S., impacting both store traffic and make-up usage occasions. At the same time, we continued to make headway in strengthening our focus brands. CoverGirl maintained momentum in its Clean Fresh franchise of face makeup, which we are continuing to build upon with the Q3 launch of Lash Blast Clean mascara. CoverGirl also continued to gain market share in the cosmetics category on Amazon. Meanwhile, Sally Hansen continued to be a solid market share winner in the U.S. In Brazil, our local brands remain well positioned amid the current environment, with our brands growing market share in the quarter, particularly in nail and deodorants.

During the quarter, e-commerce sales for the region increased over 50% in Q2 and over 60% in 1H21, with strong growth across both prestige and mass fueled by strong execution across e-retailers, brick & click, and DTC with E-commerce penetration as a percentage of sales in the Americas region increased to the low teens, including significantly higher penetration in the prestige business.

The reported sales for the Americas segment benefited from the contribution from the Kylie Jenner joint venture, with Q2 sales consistent with Q1.

The Americas segment generated a reported operating income of $31.6 million in 2Q21, compared to a reported operating income of $21.5 million in the prior year. The 2Q21 adjusted operating income was $56.9 million, up from $34.2 million in the prior year, driven by close management of marketing investment and strong fixed cost reduction more than offsetting the sales decline. The adjusted operating margin was 10.5% versus 5.9% in the prior year.


In 2Q21, EMEA net revenues of $708.9 million, or 50% of total Coty continuing operations, declined by 21.9% versus the prior year. On a LFL basis, EMEA net revenues declined 24.8%. While the LFL was pressured, sales trends remained consistent with Q1, despite a second wave of COVID-19 and multiple market lockdowns impacting the region exiting Q2,

In our prestige fragrance business, we continued to see strong performances of recent launches including Marc Jacobs Perfect, Hugo Boss Alive, and Hugo Boss Bottled. Marc Jacobs Perfect continued to be the #1 prestige fragrance launch in the U.K. for CY20, supporting market share growth for the overall brand. Hugo Boss Alive saw great performance as the #1 fragrance launch in Germany in CY20, and contributing to double digit sell-out growth for Hugo Boss female fragrances in the U.K. In our mass beauty business, Rimmel grew market share in the U.K., its top market, as well as Italy, Poland, and Spain, aided by the strong consumer reception to its Lasting Finish 25H foundation relaunch. Meanwhile, Sally Hansen gained share across the region, driven by market share growth in the U.K., Italy, and France.

2Q21 EMEA e-commerce sales grew approximately 30%, driving e-commerce penetration as a percentage of sales to the mid-20s percentage level, with strong growth in both prestige and mass.

Reported operating income was $88.0 million in 2Q21 versus reported operating income of $98.9 million in the prior year. The 2Q21 adjusted operating income of $118.4 million declined from $130.7 million in the prior year, driven by the lower sales, partially offset by controlled marketing spend and solid fixed cost reductions. For 2Q21, the adjusted operating margin rose to 16.7% from 14.4% in the prior year.

Asia Pacific

2Q21 Asia Pacific net revenues of $167.2 million, or 12% of total Coty continuing operations, decreased 13.9% on a reported basis and declined 17.2% LFL. Similar to last quarter, the bulk of the LFL decline was due to continued significant pressure in the travel retail channel, and to a lesser extent, the continued active reduction of sales to low value channels. Despite these headwinds, LFL trends showed a meaningful sequential improvement from Q1. Of note, our prestige business recorded high single digit sell-out growth in the region, fueled by both brick & mortar and online.

In China, sell-out trends for our prestige beauty brands in both brick & mortar and e-commerce remained strong, particularly in Gucci and Burberry. During the quarter, we continued see momentum in Gucci and Burberry’s prestige cosmetics businesses, with Burberry make-up sell-out up 48% and Gucci make-up sell-out up over 400%. In fact, Gucci make-up ranked the #2 make-up brand among all beauty brands in social business, WeChat.

E-commerce sell-out in the region continued to grow solidly, particularly in prestige with over 20% growth, partially tempered by continued proactive reduction of low value sales.

Reported operating income in 2Q21 of $6.4 million increased from reported operating income of $5.6 million in the prior year. The 2Q21 adjusted operating income of $12.5 million rose from $11.8 million in the prior year, driven by reduced fixed costs and lower marketing investments. The 2Q21 adjusted operating margin of 7.5% increased from 6.1% in the prior year.

Second Quarter Fiscal 2021 Business Review by Channel (Continuing Operations)


  • 2Q21 Prestige net revenues of $903.7 million, or 63.8 % of Coty Continuing operations, decreased 11.1% as reported and decreased 15.6% LFL, reflecting significant sales trend improvement from the mid 20s decline in Q1. Continued pressure in Travel Retail accounted for half of the decline in the prestige business. Reported sales were aided by the inclusion of Kylie Beauty sales in the current quarter.
  • The improvement in sales trends vs. Q2 came despite additional waves of COVID, particularly in the EMEA region, which led certain markets to close or place additional restrictions on non-essential stores. Encouragingly, Prestige e-commerce sales grew over 40% in the quarter, representing a mid 20s penetration rate of Prestige sales in 2Q21. While Kylie’s cosmetics business remained pressured from broader cosmetics category weakness, we saw good momentum in the Kylie Skin DTC business as well as strong consumer engagement with the brand.


  • 2Q21 Mass net revenues of $511.5 million, or 36.1 % of Coty continuing operations, decreased 23.3% as reported and decreased 21.6% LFL. Mass sales continue to be challenged, largely due to lower demand for color cosmetics stemming from fewer usage occasions and reduced in-store traffic, particularly amid additional waves of COVID. Despite this pressure, Mass e-commerce sales continued to grow at a double-digit pace in the quarter, and represented a high-single-digit percent of our Mass business in 2Q21. Encouragingly, Coty brands continued to generate very strong growth both on retailer websites and on Amazon in the U.S., U.K., and Germany, with market share on Amazon nearly doubling in the quarter.

Discontinued Operations

Wella Business

  • 2Q21 Wella net revenues of $419.9 million decreased 36.5% as reported and decreased 3.2% LFL, driven by pent up consumer demand for services following the global salon closures in 4Q20 and associated inventory replenishment for both retail and professional hair products, continued strength within retail hair, and solid e-commerce growth.


Investor Relations
Olga Levinzon, +1 212 389-7733

Antonia Werther, +31 621 394495 /

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