5 Must-Read Analyst Questions From Coty’s Q1 Earnings Call

Coty’s first quarter performance drew a negative market reaction, with management highlighting a difficult mix of internal and external factors. CEO Sue Nabi cited ongoing weakness in the Consumer Beauty division, particularly in Color Cosmetics, as well as inventory tightening by retailers—especially in the U.S.—as key contributors to the company’s underperformance. In addition, Prestige cosmetics faced pressure from Asian markets and Chinese travel retail, while the company actively worked to clean up its baseline ahead of a major innovation pipeline. Nabi explained, “We are still seeing pressure coming on the Prestige cosmetics market, mainly coming from Asia, travel retail, and from China, which are still under pressure.”

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While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions Coty’s Q1 Earnings Call

• Rob Ottenstein (Evercore) asked about the causes of sharp sales deceleration, with CEO Sue Nabi attributing it mainly to baseline clean-up actions and ongoing Prestige market pressures in Asia and China.
• Filippo Falorni (Citi) inquired about geographical growth in Prestige fragrances. Nabi indicated that growth is strongest in the U.S. and Europe, with China lagging but expected to improve as penetration increases.
• Susan Anderson (Canaccord Genuity) questioned the focus on profitability and potential divestitures in Consumer Beauty. Nabi explained the strategy of reallocating resources to mass fragrances and cited Rimmel UK as a turnaround example, while Laurent Mercier addressed the challenging promotional environment.
• Oliver Chen (TD Cowen) asked about retailer inventory trends and organizational changes. Mercier discussed tighter retailer inventory management, and Nabi outlined the rationale for shifting more decision-making power to regional leaders for greater agility.
• Ashley Helgans (Jefferies) sought clarity on regional sell-in/sell-out trends and the scope of price increases. Mercier pointed to disconnects in the U.S. and specified that Prestige price hikes would focus on products sourced from Europe due to tariffs.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be tracking (1) the effectiveness of Coty’s new Prestige fragrance launches and the impact on category growth, (2) the execution and results of organizational restructuring in key markets, and (3) the company’s ability to mitigate tariff-related cost pressures through sourcing shifts and pricing. Progress on these fronts will shape Coty’s ability to regain momentum.

Coty currently trades at $4.62, down from $5.17 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).

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