Coty Delivers Strong 1Q22 Results, Well Ahead of Expectations

Prestige Launches Drive Sales Momentum and Consumer Beauty Back to Growth

Strong Gross Margin Expansion and Cost Control Fuel Reinvestment And Progress on Each Strategic Pillar

FY22 Sales Growth Outlook Raised to Low to Mid Teens Growth at Current FX Levels

November 18th Investor Day to Detail Strategic Progress and Medium Term Trajectory

NEW YORK–(BUSINESS WIRE)–Coty Inc. (NYSE: COTY) (“Coty” or “the Company”) today announced another quarter of improvement in its financial results and further progress across each of its strategic growth pillars for the first quarter of fiscal year 2022, ended September 30, 2021.

In Q1, revenues increased 22%, or 20.6% LFL, surpassing guidance of high-teens LFL growth, with a combination of strong brick & mortar growth and 23% growth in e-commerce. Coty’s Prestige business delivered superior 35% reported and 34% LFL growth in the quarter, despite a low single digit negative impact from the continued reduction of sales in low quality channels. Prestige fragrance sales increased strongly across nearly all brands, with particularly strong performance from Gucci, Burberry, Hugo Boss, Marc Jacobs, Calvin Klein, and Chloe. This momentum was fueled by a very strong fragrance launch calendar in Q1 with particular standout results from Gucci Flora Gorgeous Gardenia and Burberry Hero. At the same time, Prestige cosmetics sales more than doubled year-on-year, led by Gucci makeup and the relaunch of Kylie Cosmetics. Regionally, the U.S. and China continued to deliver very robust performance, Travel Retail more than doubled led in particular by Asia and Europe, while trends in many Western European markets continued to improve.

During the quarter, Consumer Beauty revenues increased 4% as reported and 3% LFL, as the global mass beauty category returned to growth and Coty continued to make progress towards share stabilization. CoverGirl generated double digit percent sell-in and sell-out growth, growing market share in 4 of the last 7 months, with outsized momentum in the Magnificent 8 franchises. Meanwhile, the re-positioning of both Rimmel and Max Factor, which kicked off in the summer, have also been showing solid progress across key European markets. Rimmel’s Wonder’Extension mascara has become its most successful mascara launch in the critical UK and German markets, with momentum building exiting Q1 with the launch of Rimmel’s first-to-mass Kind & Free range of clean, vegan and cruelty free cosmetics products. At the same time, Max Factor’s launch of its Facefinity foundation with Priyanka Chopra Jonas as spokesperson have propelled Max Factor to market share gains in the UK for the first time in years.

The strong topline growth was matched by very robust profitability growth in Q1, supported by both significant gross margin expansion and additional cost reductions, enabling a significant step-up in marketing spend, with working media doubling year-on-year. Reported gross margins expanded 460 bps in the quarter to 63.2%, while adjusted gross margin was up 480 bps to 63.4%, above pre-pandemic levels, driven by a combination of product and channel mix, improved excess & obsolescence, pricing and mix benefits, and higher production volumes. This substantial expansion fueled reinvestment behind key strategic initiatives. In addition, Coty continued to lower its cost base, with year-over-year savings of approximately $60 million, showing significant progress towards the FY22 savings target of over $90 million. The Company has now cumulatively achieved close to $400M of cost savings versus the FY20 baseline, and remains on track to achieve approximately $600M of savings by FY23. The gross margin improvement and cost reductions allowed Coty to continue to reinvest behind its brands and highest ROI opportunities, as working media more than doubled versus last year, and total A&CP remained consistent sequentially at ~26% of sales. At the same time, Coty delivered 1Q22 reported operating income of $17.2 million and adjusted EBITDA of $278.5 million, increasing 67% from last year and resulting in an adjusted EBITDA margin of 20.3% or 550 bps improvement versus 1Q21.

Financial Net Debt improved by approximately $200 million to just under $5 billion at the end of 1Q. Free cash flow was strong in a seasonally weaker quarter at $240.7 million. With an increase in the value of Coty’s 40% Wella stake at quarter end to approximately $1.65 billion at quarter-end, the Company’s Economic Net Debt totaled approximately $3.3 billion.

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

“Our objective coming into fiscal 2022 was to build on the great results we delivered last year and further execute on our strategic growth pillars. I am very pleased to say that we are off to a great start, building upon our success. Q1 marks the fifth consecutive quarter of Coty delivering results inline to ahead of expectations. Importantly, our Q1 results exemplify the virtuous cycle that we have been working to create, where our strong topline performance coupled with sustained gross margin expansion and cost initiatives, fuel both profit expansion and targeted re-investments to support future growth.

Coty’s successful execution across each of our strategic pillars is exemplified in our Q1 performance. The repositioning of three key Consumer Beauty brands – CoverGirl, Rimmel and Max Factor – are taking hold, returning the overall segment to growth and pushing the Consumer Beauty business to share stabilization. Gucci Flora and Burberry Hero are well on their way to becoming global fragrance icons, helping to accelerate our prestige fragrance portfolio, while the assortment and distribution expansion of Gucci and Kylie cosmetics are solidifying Coty as a key player in prestige cosmetics. In skincare, Lancaster is building momentum in Hainan as the lead market for its repositioning, with several exciting initiatives to come in our skincare portfolio in the coming months. Our e-commerce sales continued its momentum, with strong growth across both Prestige and Consumer Beauty, with total e-commerce sales up 23%. And the combination of these areas fueled close to 50% growth in China. Finally, on sustainability, we have concluded our footprint study reflecting Coty’s scope following the Wella divestiture, and will be publishing our second sustainability report very soon.

Importantly, even as we tracked industry-wide headwinds ranging from select component shortages, supply chain bottlenecks, and inflationary pressure in materials and freight, the strength of our business model and the agility of our teams allowed to us to exceed our sales guidance and deliver nearly 500 bps of gross margin expansion. We feel confident about our prospects for the remainder of the year and we are therefore raising our FY22 sales outlook to low-to-mid teens growth from our previous guidance of low teens growth. While inflation impact is expected to step up in the second half of FY22, we believe the impact is quite manageable, particularly as we double-down on accretive innovations and premiumizing our portfolio. As a result, we continue to expect gross margin expansion for the year as compared to FY21. We expect FY22 adjusted EBITDA of $900M at a minimum, as we are intentionally reinvesting our gross margin gain and costs savings in our brands to maximize value.

Fifteen months into our turnaround, I am highly encouraged by the strength of our portfolio, our people, and our strategic path, which together are delivering results in record time as we transform Coty into a true leader in beauty. I look forward to sharing more details on our progress and medium term trajectory at our Investor Day in New York City next week on November 18th.”

*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 Wella capital structure as of September 30, 2021



  • 1Q22 net revenues increased 22% as reported and 20.6% LFL. Net revenue trends were led by robust Prestige growth and growth in Consumer Beauty, as well as e-commerce channels.
  • Reported operating income was $17.2 million.
  • 1Q22 adjusted operating income increased to $200.5 million from an adjusted operating income of $85.7 million, with 700 bps of margin expansion to 14.6%.
  • 1Q22 adjusted EBITDA of $278.5 million, increased 67%, with an adjusted EBITDA margin of 20.3% reflecting over 500bps of margin expansion.
  • 1Q22 reported EPS of $0.13 and adjusted EPS of $0.08, improved from $(0.01) last year.
  • Cost reductions remained solid with approximately $60 million of additional reductions.
  • 1Q22 free cash flow of $240.7 million improved by $269.0 million from last year driven by higher cash generating net income, strong working capital improvement, and reductions to capex spend.
  • Financial Net Debt in line with expectations at $4,955.1 million, which decreased sequentially fueled by the free cash flow generation, bringing the financial leverage to 5.7x. Economic Net Debt is now $3,305.1 million at quarter end.


Entering 2Q22, Coty continues to see beauty market momentum, including continued strength in the U.S. and China, a strong rebound in Travel Retail, and steady improvement in Western Europe. Given this market backdrop, coupled with very strong performance of Coty’s recent product launches, Coty raises its FY22 LFL sales outlook to low-to-mid teens percentage growth, up from its previous guidance of low teens growth.

The Company also expects FY22 adjusted EBITDA of $900 million at a minimum, on a constant currency basis, as Coty intentionally reinvests gross margin gain and costs savings in its brands to maximize value. This reflects strong EBITDA margin expansion YoY. With significant progress made to date in simplifying its capital structure, Coty anticipates FY22 adjusted EPS in the $0.19-0.23 range.

In addition, the Company continues to target leverage moving towards 5x exiting CY21, and a further reduction in leverage to approximately 4x exiting CY22.

Financial Results*

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.


  • 1Q22 reported net revenues of $1,371.7 million increased 22.0% year-over-year, including a positive foreign exchange (FX) impact of 1.4%. LFL revenue increased 20.6%, driven by a 33.6% increase in Prestige, and a 3.0% increase in Consumer Beauty.

Gross Margin:

  • 1Q22 reported gross margin of 63.2% increased from 58.6% in the prior-year period, while adjusted gross margin of 63.4% increased from 58.6% in 1Q21. The increase was due positive mix-shift, including in both Prestige and Consumer Beauty, excess & obsolescence improvement, better absorption, and improved volumes.

Operating Income and EBITDA:

  • 1Q22 reported operating income of $17.2 million improved from a reported operating loss of $66.0 million in the prior year due to a $20.3 million reduction in restructuring and other business realignment costs, a $42.3 million reduction in acquisition and divestiture related expenses, and higher gross margin, partially offset by higher SG&A expenses stemming from increased marketing investment.
  • 1Q22 adjusted operating income of $200.5 million rose from $85.7 million in the prior year, while the adjusted EBITDA of $278.5 million increased 67% from $166.6 million in the prior year. The increase was driven by a higher gross margin and continued fixed cost reductions, partially offset by higher A&CP expenses, primarily within working media. For 1Q22, the adjusted operating margin increased 700 bps to 14.6%, while the adjusted EBITDA margin increased 550 bps to 20.3%.

Net Income:

  • 1Q22 reported net income of $103.0 million improved from a net income of $95.9 million in the prior year, primarily due to the $390.0 million change in fair value of investment in Wella and the aforementioned increase in reported operating income, partially offset by higher taxes compared to the year-ago period.
  • The 1Q22 adjusted net income of $63.1 million increased from a loss of $9.8 million in the prior year period.

Earnings Per Share (EPS) – diluted:

  • 1Q22 reported earnings per share of $0.13 remained consistent with a reported earnings per share of $0.13 in the prior year.
  • 1Q22 adjusted EPS of $0.08 improved from $(0.01) in the prior year.

Operating Cash Flow:

  • 1Q22 cash from operations totaling $285.7 million improved from $42.6 million in the prior-year period, reflecting an increase in net income on a cash basis and strong working capital.
  • 1Q22 free cash flow of $240.7 million improved from a free cash outflow of $28.3 million in the prior year driven by the increase in operating cash flow of $243.1 million coupled with a $25.9 million reduction in capex.

Financial Net Debt:

  • As expected, Financial Net Debt of $4,955.1 million on September 30, 2021 decreased from $5,228.0 million on June 30, 2021. The decrease was driven by the strong free cash flow generated in the quarter.

Immediate Liquidity:

  • Coty ended Q4 with $376.9 million in cash and cash equivalents, and immediate liquidity of $2,526.8 million.

First Quarter Business Review by Segment*


In 1Q22, Prestige net revenues of $870.7 million or 63% of Coty sales, increased by 35.1% versus the prior year. On a LFL basis, Prestige net revenues delivered robust growth of 33.6%, driven by continued strength in the U.S. and China, as well as many key markets in the EMEA region and Travel Retail. In addition, LFL growth was broad-based across fragrances and makeup.

During the quarter, our U.S. Prestige fragrance sell-out continued to generate very robust growth, up strong double-digits versus last year, with particularly favorable performance from Burberry, Marc Jacobs, Gucci, and Chloe. Encouragingly, our recent key innovations such as Gucci Flora Gorgeous Gardenia and Burberry Hero are delivering stellar early results. In the EMEA region, Prestige fragrance continued to improve in 1Q22 as many markets remained on their re-opening trajectories. Similar to the U.S., the EMEA region also benefited from very strong results of the recent Prestige fragrance launches. Despite a resurgence of COVID-19 during the quarter, China continued to deliver solid results, with revenue increasing almost 50%.

Coty continued to execute on its newest growth pillars: expanding its presence in Prestige skincare and cosmetics. Within cosmetics, Gucci generated robust triple-digit sell-out growth across many key markets including in the U.S. and China. On skincare, the revitalization of Lancaster in Hainan continues to take hold with traffic and sales rebounding in September, following a brief COVID-related slowdown in August.

E-commerce sales for the segment continued to increase 21% in Q1, with solid growth across regions. E-commerce penetration was in the 20% level at the end of 1Q22.

The Prestige segment generated a reported operating income of $132.1 million in 1Q22, compared to a reported operating income of $34.0 million in the prior year. The 1Q22 adjusted operating income was $177.0 million, up from an adjusted operating income of $85.7 million in the prior year, driven by gross margin improvement and fixed cost reduction, partially offset by higher working media expenses. Adjusted EBITDA for the Prestige segment rose to $215.0 million from $119.8 million in the prior year, with a margin of 24.7%.

Consumer Beauty

In 1Q22, Consumer Beauty net revenues of $501.0 million, or 37% of Coty sales, increased by 4.4% versus the prior year. On a LFL basis, Consumer Beauty net revenues increased 3.0%.

During the quarter, Coty progressed towards share stabilization in Consumer Beauty. In the U.S., CoverGirl continues to prove it is on significantly stronger footing, with the Magnificent 8 franchises outperforming the cosmetics category and the brand returning to market share gains exiting Q1 and into Q2. Meanwhile, Sally Hansen also continued to deliver strong performance, gaining share throughout the quarter with sell-out tracking above 2019 levels.

Coty’s stabilization efforts in Europe continue to take hold through the re-positioning of Rimmel and Max Factor. Capitalizing on the success the Company has had with clean beauty in the U.S., Coty recently launched Rimmel Kind & Free, the biggest Consumer Beauty launch of FY22. Meanwhile, Max Factor is already realizing solid market share gains in the UK and Netherlands, with the overall brand maintaining or gaining share in over 75% of its markets.

1Q22 Consumer Beauty e-commerce sales grew 27%, driving e-commerce penetration as a percentage of sales to the high-single-digit percentage level.

Reported operating income was $11.4 million in 1Q22 versus reported operating loss of $13.7 million in the prior year. The 1Q22 adjusted operating income of $23.5 million increased from an adjusted operating loss of $0.0 million in the prior year, driven by a higher gross margin and solid fixed cost reductions, partially offset by a reinvestment in marketing expenses, particularly towards working media. During the quarter, adjusted EBITDA increased to $63.5 million from $46.8 million in the prior year, with a margin of 12.7%.

First Quarter Fiscal 2021 Business Review by Region*


  • In 1Q22, Americas net revenues of $581.5 million, or 42% of Coty sales, increased 23.6% as reported and increased 22.9% LFL. This was driven by particularly strong growth of Prestige, and to a lesser extent, Consumer Beauty sales growth. Prestige fragrances continued to benefit from robust category trends in the U.S., coupled with Coty’s strong pipeline of fragrance innovations. CoverGirl grew in the double digits, with good market share momentum exiting Q1 and into Q2, while Sally Hansen also gained share.


  • In 1Q22, EMEA net revenues of $627.1 million, or 46% of Coty sales, increased 18.2% as reported and 16.6% LFL. Similar to what we experienced in the Americas region, Prestige sales growth was strongest, while Consumer Beauty grew at a more moderate pace.

Asia Pacific

  • In 1Q22, Asia Pacific net revenues of $163.1 million, or 12% of Coty sales, increased 32.5% as reported and 29.0% LFL. Sales were driven by strong performance in China, particularly within Prestige fragrances, while prestige skincare and cosmetics also delivered very robust growth.

*As previously disclosed, we have realigned our reportable segments to a principally product category-based structure, comprised of a Prestige business segment and a Consumer Beauty business segment. In addition, we have amended the definition of stock compensation expense for use in certain Non-GAAP Financial Measures. In order to reflect these changes, the Company has recast reported net revenue by segment, reported operating income (loss) by segment, adjusted operating income (loss) by segment and total, adjusted EBITDA by segment, and total adjusted income (loss) before income taxes and total adjusted net income (loss) from continuing operations for all comparative periods shown.


Noteworthy Company Developments

Other noteworthy company developments include:

  • On September 27, 2021, Coty announced a multi-channel agreement with leading beauty tech solutions provider Perfect Corp. that will embed a suite of best-in-class augmented reality and artificial intelligence experiences into the digital marketing toolkits of its beauty brands.
  • On October 1, 2021, Coty announced a definitive agreement to sell an approximate 9% stake in Wella to KKR in exchange for the redemption of approximately half of KKR’s remaining convertible preferred shares in Coty, reducing its total shareholding in the professional beauty company to 30.6%.
  • As of November 5, 2021, Coty has obtained binding commitments from lenders under the 2018 Coty Credit Agreement to replace its two existing classes of revolving commitments, having an aggregate principal amount of $2,750.0 million, with a single class of revolving commitments, having an aggregate principal amount of $2,000.0 million. The resulting class of revolving commitments will have substantially the same terms as the new class of revolving commitments established pursuant to the 2021 Coty Revolving Credit Facility, including a maturity in April 2025, and will be subject to customary closing conditions. Coty expects the transaction to close in the second quarter of FY22.
  • On November 8, 2021, Coty announced a definitive agreement to sell an additional approximate 4.7% stake in Wella to KKR in exchange for the redemption of approximately 56% of KKR’s remaining convertible preferred shares in Coty, reducing its total shareholding in the professional beauty company to 25.9%. The two Wella exchange transactions reflect a key milestone in the simplification of Coty’s capital structure and result in approximately $65 million in annual dividend cash savings, when combined with the KKR secondary share offering that closed in September.

Conference Call

Coty Inc. will host a conference call at 8:00 a.m. (ET) today, November 8, 2021 to discuss its results. The dial-in number for the call is (800) 895-3361 in the U.S. or (785) 424-1062 internationally (conference passcode number: COTY1Q22). The live audio webcast and presentation slides will be available at The conference call will be available for replay.

About Coty Inc.

Coty is one of the world’s largest beauty companies with an iconic portfolio of brands across fragrance, color cosmetics, and skin and body care. Coty is the global leader in fragrance, and number three in color cosmetics. Coty markets, sells and distributes the products in approximately 130 countries and territories. Coty and its brands are committed to a range of social causes as well as seeking to minimize its impact on the environment. For additional information about Coty Inc., please visit

Forward Looking Statements

Certain statements in this Earnings Release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company’s current views with respect to, among other things, the impact of COVID-19 and potential recovery scenarios, the Company’s comprehensive transformation agenda (the “Transformation Plan”), strategic planning, targets, segment reporting and outlook for future reporting periods (including the extent and timing of revenue, expense and profit trends and changes in operating cash flows and cash flows from operating activities and investing activities), the impact of the Wella divestiture and the related transition services (the “Wella TSA”), the Company’s future operations and strategy (including the expected implementation and related impact of its strategic priorities), ongoing and future cost efficiency, optimization and restructuring initiatives and programs, strategic transactions (including their expected timing and impact), the Company’s capital allocation strategy and payment of dividends (including suspension of dividend payments and the duration thereof and any plans to resume cash dividends or to continue to pay dividends in cash on preferred stock) , investments, licenses and portfolio changes, synergies, savings, performance, cost, timing and integration of acquisitions, including the strategic partnership with Kylie Jenner and the strategic partnership with Kim Kardashian West, future cash flows, liquidity and borrowing capacity (including any debt refinancing activities), timing and size of cash outflows and debt deleveraging, the timing and extent of any future impairments, and synergies, savings, impact, cost, timing and implementation of the Company’s Transformation Plan, including operational and organizational structure changes, operational execution and simplification initiatives, fixed cost reductions, supply chain changes, e-commerce and digital initiatives, the expected impact of global supply chain challenges or inflationary pressures, and the priorities of senior management.


Investor Relations
Olga Levinzon, +1 212 389-7733

Antonia Werther, +31 621 394495 /

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