On May 6, Coty Group released its financial results for the third quarter of fiscal year 2025, which ended on March 31, 2025. According to the report, Coty’s net revenue for the quarter was $1.30 billion, representing a 6% year-on-year decline on a reported basis and a 3% decline on a like-for-like (LFL) basis.
Adjusted operating income reached $147.9 million, marking a 3% increase year-on-year, while the adjusted operating margin expanded to 11.4%, up from 10.4% in the prior year. Reported operating income was $104.6 million, and the operating margin stood at 8.0%, flat versus the same period last year.
The quarter’s performance was impacted by a slowdown in the U.S. fragrance market, elevated retailer inventory levels, and soft demand in Asia, particularly in China and travel retail channels. Nevertheless, Coty continued to deliver margin expansion and maintained strong cost discipline.
By segment, Prestige net revenue of $829.4 million or 64% of Coty sales decreased 4% on a reported basis and included a 1% headwind from FX. On a LFL basis, net revenue declined 2.5% in the quarter. 3Q25 reported net revenue was impacted by declines in prestige makeup sales, a moderating prestige fragrance category and elevated prior year comparisons related to major fragrance launches.
In 3Q25, Consumer Beauty net revenue of $469.7 million, or 36% of Coty sales, decreased by 9% on a reported basis. The quarterly decline in reported net revenue was driven by lower revenue in color cosmetics and body care coupled with a negative impact from FX of 4%. These declines were partially offset by growth in mass fragrance and mass skin care. In both periods, reported and LFL sales were impacted by the continued weakening in the mass color cosmetics market globally, particularly in the U.S.
Regionally, Coty’s net revenue in the Americas was $529.7 million, reflecting a 10% year-on-year decline. This reported and LFL sales decline reflected lower Prestige net revenues in the U.S. in large part due to elevated innovation comparisons in the prior year and a higher level of retailer stock entering the year, lower Consumer Beauty net revenue in the U.S. impacted by the market deterioration in the quarter, and lower body care net revenue in Brazil.
In 3Q25, EMEA net revenue of $610.0 million decreased 3% on a reported basis reflecting by a 2% negative impact from FX coupled with by lower reported net revenue in Consumer Beauty and Prestige. On a LFL basis, EMEA net revenue decreased by 1% in the third quarter as growth in the Prestige segment was more than offset by lower net revenue in the Consumer Beauty segment.
Asia Pacific net revenue of $159.4 million, decreased 5% on a reported basis largely driven by declines in Prestige net revenue in the Chinese mainland and the Asia Travel Retail channel. On a LFL basis, Asia Pacific net revenue decreased 4% in the third quarter.
Coty CEO Sue Nabi acknowledged that the company is not satisfied with its current revenue results, but emphasized that its solid foundation and comprehensive strategy—focused on enhancing innovation, expanding distribution, and improving efficiency—make the company optimistic about the future.
In line with efforts to refine its strategy initially launched during the pandemic, Coty recently announced plans to eliminate up to 700 positions.
“At the height of the COVID-19 crisis in fiscal year 2020, we introduced the ‘All-in to Win’ initiative to strengthen our margins and increase reinvestment in our brands by cutting fixed costs, simplifying the supply chain, saving on procurement, and implementing strategic revenue management,” Nabi explained. “However, given the recent shifts in the beauty sector and global economy—such as the surge in e-commerce, consolidation among retailers and clients, and evolving consumer behaviors—Coty must once again transform to stay competitive.”
The updated strategy includes simplifying the company’s structure in key regions to enhance efficiency, improving the effectiveness of support roles, maximizing the impact of innovation, and cutting non-labor fixed costs across all operations.
The initiative is projected to deliver approximately $130 million in annual fixed cost savings before taxes, though it will incur a one-time cost of around $80 million.
Plus, Coty made a $71.1 million loss on the divestiture of Skkn, Kim Kardashian’s beauty business, the company said in its third-quarter earnings.
Coty took a 20 percent stake in Kardashian’s beauty interests in 2022 for $200 million and together they launched Skkn by Kim, a $630, nine-step skin care system. In January 2024, the brand dove back into color cosmetics, with a collection of lip liners, lipsticks and an eye shadow palette. Neither initiative seemed to have the success of the earlier offerings, and in between, both parties were relatively quiet about the brand — until the sale in March.
