Travel retail’s “robust” recovery prospects will be underlined today by US beauty group Coty when it hosts a key investor event at the New York Stock Exchange.
Coty will reveal plans for above market growth through FY25 and beyond and unveil a range of major new product launches in mass and prestige skincare
The company will also provide an update on the significant progress made on its six strategic pillars, elaborate on key upcoming operational milestones, report on its comprehensive transformation ‘All-In To Win’ program, and announce its financial goals through FY25 and beyond.
Coty Chief Executive Officer Sue Y. Nabi said: “Coty has reclaimed its position as a true beauty powerhouse. We expect to outperform the beauty market through FY25 and beyond. I am very proud of the significant progress our teams have made, delivering against each of our strategic pillars. I am more confident than ever in Coty’s future and our ability to deliver significant value for all of our stakeholders.
“Coty’s unique and beautiful portfolio of brands, our talented team, and our single-minded focus on delivering sustainable, profitable growth, coupled with targeted reinvestment, are enabling us to evolve. We continue to capitalise on the tremendous growth opportunities in prestige fragrances, skincare, China, clean beauty and e-commerce.”
Event Overview
During today’s event, members of Coty’s leadership team will outline how the business has continued to deliver enhanced performance against its previously communicated strategic priorities, including:
- Stabilising and growing its Consumer Beauty business
- Accelerating luxury fragrances and establishing Coty as a key player in prestige make-up
- Building a skincare portfolio across its Prestige and Consumer Beauty divisions
- Enhancing e-commerce and Direct-to-Consumer (DTC) capabilities
- Expanding in China through Prestige and select Consumer Beauty brands
- Establishing Coty as an industry leader in sustainability
In addition, presenters will also provide insights into the Company’s growth framework and the numerous initiatives underway that are transforming and positioning Coty to succeed, including:
- The ‘All-In to Win’ programme, encompassing cost saving and capital deployment initiatives that have ignited the full potential of Coty, with an additional US$75 million of savings identified for FY24;
- Coty’s unique and differentiated brand portfolio, spanning key beauty categories across prestige and mass channels;
- The robust plans to accelerate Coty’s skincare business, that now incorporates a licensing agreement with the ultra-premium Orveda skincare brand, and the recently announced CoverGirl Clean Fresh Skincare line; and
- Coty’s outstanding growth opportunities that can be achieved by harnessing the power of its brands, distribution reach, R&D, IP, and category expertise.
Robust Financial Outlook
Coty is continuing to expand gross margin and cost savings, allowing it to reinvest into key strategic initiatives and simultaneously deliver annual profit growth, targeting an adjusted EBITDA of at a minimum US$900 million for FY22, and approaching US$1 billion in CY22.
“Over the coming years, Coty expects to benefit from an improving beauty market, including a stronger US and Chinese market, a robust rebound in travel retail, and steady improvement across Europe,” the company said. “Based on this favourable market backdrop, the strong performance of recent brand repositioning and product launches, and Coty’s robust category and market expansion plans, the Company is announcing the following financial targets through FY25 and beyond:
- Net Revenues to grow +6% to +8% annually LFL through FY25 and beyond, ahead of expected beauty market growth of +3% to +5%
- Gross Margin to reach mid 60% by FY25, and further annual expansion thereafter
- Adjusted operating margin expansion of 50-70bps annually through FY25 and beyond
- Adjusted EBITDA to grow at +9% to +11% annually through FY25 and beyond
- Adjusted EPS above +30% CAGR through FY25, with mid to high teens % growth thereafter
- Strong annual improvement in free cash flow
- Leverage target of approximately 4x by end of CY22 and 3x by end of CY23 through EBITDA and free cash flow expansion, with an optimal leverage level of below 2x
- Complete divestiture of remaining 26% stake in Wella by FY25, further strengthening Coty’s balance sheet and leverage
