Coty aims for $130M in cost savings to drive growth

NEW YORK - Coty Inc. (NYSE: COTY), a global beauty company with a market capitalization of $4.3 billion, has announced the latest phase of its "All-in to Win" program, targeting approximately $130 million in fixed cost savings in addition to ongoing productivity savings of around $240 million over the next two years. The initiative aims to streamline operations and focus on innovation and market priorities. According to InvestingPro data, the company maintains impressive gross profit margins of 65.4%, demonstrating strong pricing power in its market segments.

CEO Sue Nabi emphasized the company’s commitment to building a more robust Coty poised for sustainable growth. The program, launched in response to COVID disruptions, has already achieved over $700 million in savings from FY21 to FY24, resulting in significant margin expansion and a strong revenue compound annual growth rate (CAGR) of 13%. While the stock has faced challenges, declining nearly 58% over the past year, InvestingPro analysis suggests the company is currently undervalued, with analysts projecting improved profitability this year. For detailed insights and 10+ additional ProTips about Coty’s financial health and growth prospects, explore the comprehensive Pro Research Report available on InvestingPro.

The new phase involves reorganizing market structures to improve operational efficiency, reducing duplication, and aligning with changes in the retail landscape. Support functions will be consolidated and centralized. Coty is also enhancing its innovation process by focusing on fewer, more impactful launches, supplemented by agile innovations to seize short-term opportunities.

This transformation is expected to enhance Coty’s operating model and reduce non-people fixed costs across all spending areas. The program, which will be executed through the first half of FY27, is projected to achieve $130 million in annual fixed cost savings before taxes, with significant reductions anticipated in FY26 and FY27.

The strategy is expected to impact around 700 positions, adhering to necessary regulations. Coty has projected one-time cash costs related to the program to be around $80 million, split between FY26 and FY27.

In addition to these measures, Coty’s ongoing productivity program is on track to meet its FY25 savings target of approximately $120 million, with similar savings expected in the following years, mainly in supply chain and procurement. The combined savings from the fixed cost program and ongoing productivity improvements are expected to total nearly $500 million between FY25 and FY27.

Coty, founded in Paris in 1904, operates across fragrance, color cosmetics, and skin and body care, selling products in over 120 countries. With annual revenue of $6.09 billion and EBITDA of $1.05 billion in the last twelve months, the company maintains a significant market presence. The company is focused on empowering self-expression and is committed to environmental protection. This news is based on a press release statement. Discover more detailed financial metrics and expert analysis in Coty’s InvestingPro Research Report, part of the platform’s coverage of 1,400+ US stocks.

In other recent news, Coty Inc. announced its second-quarter fiscal year 2025 results, revealing a 3.3% decline in sales, which was more than the expected decrease of 0.2% to 0.4%. Like-for-like sales also fell by 1%, with challenges noted in the beauty demand normalization across several regions, including China and the U.S. Despite these setbacks, Coty plans to focus on operational improvements and cost reductions to enhance long-term profitability. In terms of analyst actions, Stifel adjusted its price target for Coty to $6.50, maintaining a Hold rating, while Canaccord Genuity reduced its target to $8 but kept a Buy rating. Conversely, DA Davidson maintained a Buy rating with a $12 price target, citing strong social media performance and strategic asset sales as positive indicators. Jefferies also upheld a Buy rating with an $8 target, emphasizing Coty’s strategic divestiture of the Skkn brand to reduce debt and streamline its brand portfolio. Coty’s ongoing efforts to strengthen its financial position and brand presence remain a focal point for analysts and market observers.

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