Coty Inc. · NYSE:COTY
Coty — Deutsche Bank Global Consumer Conference 2021
47 slides from Coty's conference presentation, Jun 10, 2021
Slide 1: Coty Investor Presentation
COTY INVESTOR PRESENTATION UMER CONFERENCE 10, 2021 SINCE 1904 ARIMMEL LONDON
Slide 2: Investment Thesis
INVESTMENT THESIS ONE OF THE MOST BEAUTIFUL PORTFOLIOS, WITH TWO COMPLEMENTARY BRAND PORTFOLIOS ▪ ONE OF THE MOST BEAUTIFUL & COMPREHENSIVE BRAND PORTFOLIOS IN THE INDUSTRY, AND THE ONLY GROUP AT THIS LEVEL TO OPERATE TWO COMPLEMENTARY BRAND PORTFOLIOS RAPIDLY EXECUTING ON ALL KEY STRATEGIC GROWTH P
Slide 3: Coty Overview
COTY OVERVIEW TITLE OF THE PRESENTATION 3
Slide 4: Who We Are Today
WHO WE ARE TODAY… A GLOBAL LEADER IN FRAGRANCE AND COLOR COSMETICS STRONG POSITIONS IN KEY MARKETS WITH A DIVERSE BRAND PORTFOLIO in fragrances CY20 Net in color cosmetics Revenues #2 in Prestige Fragrances #2 in Prestige Fragrances #1 in Prestige Fragrances #2 in Mass Cosmetics #1 in Mass Cosmetics
Slide 5: Sales Diversified Across Channels
SALES DIVERSIFIED ACROSS CHANNELS 17% 3Q FYTD 46% REVENUE MIX 37% LUXURY B&M MASS B&M CONFIDENTIAL & FOR INTERNAL USE ONLY E-COMMERCE 5
Slide 6: Sales Diversified Across Categories
SALES DIVERSIFIED ACROSS CATEGORIES BODY CARE MASS PRESTIGE FRAGRANCES COSMETICS 7% 6% PRESTIGE 3% SKINCARE 5% Q3 FYTD 26% REVENUE MIX MASS COSMETICS 53% PRESTIGE FRAGRANCES CONFIDENTIAL & FOR INTERNAL USE ONLY 6
Slide 7: Sales Diversified Across Geographies
SALES DIVERSIFIED ACROSS GEOGRAPHIES 3Q FYTD REVENUE MIX GLOBAL TRAVEL RETAIL 4% WESTERN NORTH AMERICA EUROPE (INCL. KYLIE) 26% 32% EASTERN EU & MIDDLE EAST CHINA 19% 4% APAC BRAZIL 7% & LATAM 8% 7
Slide 8: A Portfolio of Iconic Brands Across Key Price Tiers
A PORTFOLIO OF ICONIC BRANDS ACROSS KEY PRICE TIERS Kim Kardashian’s skincare 8
Slide 9: Coty's Strategy
COTY’S STRATEGY TITLE OF THE PRESENTATION 9
Slide 10: Our Strategic Priorities
OUR STRATEGIC PRIORITIES STABILIZE CONSUMER BEAUTY MAKE-UP BRANDS & MASS FRAGRANCES ACCELERATE LUXURY FRAGRANCES & BECOME A KEY PLAYER IN PRESTIGE MAKE UP BUILD SKINCARE PORTFOLIO ACROSS BOTH DIVISIONS BUILD E-COMMERCE AND DIRECT-TO-CONSUMER EXPERTISE AND CAPABILITIES EXPAND IN CHINA ON LUXURY AND S
Slide 11: Key Consumer Trends as Markets Emerge Post-COVID
KEY CONSUMER TRENDS AS MARKETS EMERGE POST-COVID EMERGING CONSUMER BEHAVIOR TRUSTED BRANDS WELLNESS & FANTASY & ESCAPISM MENTAL HEALTH #1 FACTOR INFLUENCING #2 FACTOR INFLUENCING BEAUTY AS ANTIDOTE TO BEAUTY PURCHASES BEAUTY PURCHASES ANXIETY, BOREDOM & FATIGUE COTY’S STRATEGIC ALIGNMENT CORE BRANDS
Slide 12: (1) Stabilizing Consumer Beauty
(1) STABILIZING CONSUMER BEAUTY 12
Slide 13: Cosmetics Demand Accelerating as Markets Re-open
COSMETICS DEMAND ACCELERATING AS MARKETS RE-OPEN COSMETICS DEMAND TRENDS IN KEY MARKETS IMPROVING ON A 1-YR AND 2-YR BASIS U.K. Mass Cosmetics Sell-out Growth U.S. Mass Cosmetics Sell-out Growth China Lux Cosmetics Sell-out 83% 17% 63% 9% 4% 18% -10% -17% Last 12 Mos YoY Last 3 Mos YoY Last 1 Mo YoY
Slide 14: Each CB Brand Now Has a Distinctive Sense of Purpose
EACH CB BRAND NOW HAS A DISTINCTIVE SENSE OF PURPOSE THE UPLIFTING POWER OF MAKE UP THE FREEING POWER OF MAKE UP FROM ORDINARY TO EXTRAORDINARY 14
Slide 15: OPEX Playbook/How to win/Brow
OPEX Playbook/How to win/Brow 15
Slide 16: Simply Ageless Results
SIMPLY AGELESS RESULTS 757M IMPRESSIONS FOR PR CAMPAIGN +45% WKLY SALES AVG MAY VS. JAN +2.4P MARKET SHARE MAY VS. JAN Source: Nielsen Data w/e 5/8 16
Slide 17: CoverGirl Records Sustained Market Share Gains
COVERGIRL RECORDS SUSTAINED MARKET SHARE GAINS FOR THE FIRST TIME IN 4 YEARS 9 STRAIGHT WEEKS OF MARKET SHARE GAINS Source: U.S. Nielsen through May 22, 2021 17
Slide 18: (2) Accelerate in Luxury Fragrances & Build Prestige Makeup Portfolio
(2) ACCELERATE IN LUXURY FRAGRANCES & BUILD PRESTIGE MAKEUP PORTFOLIO 18
Slide 19: Focused Approach to Prestige Fragrance Portfolio
FOCUSED APPROACH TO PRESTIGE FRAGRANCE PORTFOLIO CONCENTRATED BRAND PORTFOLIO KEY STRATEGIC CRITERIA TOP 6 BRANDS FASHION-DRIVEN BRANDS THAT CAN ~80% BECOME FRAGRANCE POWERHOUSES OF PRESTIGE FRAGRANCE SALES MULTI-CATEGORY POTENTIAL RESONATE IN KEY FOCUS MARKETS LIKE CHINA 19
Slide 20: Prestige Fragrance Growth Outpacing Beauty Category in U.S. and China
PRESTIGE FRAGRANCE GROWTH OUTPACING BEAUTY CATEGORY IN U.S. AND CHINA BOTH U.S. AND CHINA SEEING DOUBLE DIGIT GROWTH IN PRESTIGE FRAGRANCE DEMAND ON A 2-YR BASIS, OUTPACING SKINCARE & COSMETICS U.S. Prestige Beauty Growth vs. 2 Yrs Ago China Prestige Beauty Growth vs. 1 Yr Ago 31% 124% Prestige Beau
Slide 21: Strong Coty Prestige Launch Calendar for 1HFY22
STRONG COTY PRESTIGE LAUNCH CALENDAR FOR 1HFY22 ➢ REVAMPED FEMALE ➢ NEW MALE FRAGRANCE FRAGRANCE PILLAR PILLAR ➢ REFRESHED COSMETIC ➢ NEW MALE FRAGRANCE PRODUCT PORTFOLIO & PILLAR INTEGRATED DTC WEBSITE 21
Slide 22: Starting to Build Prestige Cosmetics Portfolio
STARTING TO BUILD PRESTIGE COSMETICS PORTFOLIO PREMIUM+ ENTRY PRESTIGE 22
Slide 23: Expanding Prestige Makeup
EXPANDING PRESTIGE MAKEUP VERY STRONG PERFORMANCE OF GUCCI AND BURBERRY MAKEUP ACROSS THE GLOBE IN THE U.S., GUCCI MAKE-UP SELL-OUT IS UP TRIPLE DIGITS IN FYTD, WITH STRONG SUPPORT FROM BRONZING POWDER & SHINY LIPSTICK IN APAC, BOTH GUCCI AND BURBERRY MAKEUP SELL-OUT GREW TRIPLE DIGITS IN 3Q, LED BY
Slide 24: Strong Gucci Makeup Expansion Plans
STRONG GUCCI MAKEUP EXPANSION PLANS # OF DOORS EUROPE NORTH AMERICA FY21: 53 doors & 14 dotcom FY21: 59 doors & 8 dotcom FY22 (est): 120 doors & dotcom ASIA PACIFIC FY22 (est): 95 doors & dotcom FY21: 56 doors & 17 dotcom FY22 (est): 125 doors and dotcom TRAVEL RETAIL FY21: 39 doors & 4 dotcom FY22
Slide 25: Consumer Engagement with Kylie Remains Exceptional
CONSUMER ENGAGEMENT WITH KYLIE REMAINS EXCEPTIONAL RELAUNCHED KYLIE LIP BALM SET (ASP $35) ON JUNE 2ND ➢ IN FIRST HOUR SAW 300 ORDERS PER MINUTE ➢ BALANCED MIX OF NEW AND RETURNING CUSTOMERS RESULTS REINFORCE THE CONTINUED CONSUMER EXCITEMENT AROUND KYLIE AND HER BEAUTY BRAND, HEADING INTO THE LAUNC
Slide 26: (3) Build Skincare Portfolio in Both Divisions
(3) BUILD SKINCARE PORTFOLIO IN BOTH DIVISIONS 26
Slide 27: We Can Build a Comprehensive Skincare Portfolio
WE CAN BUILD A COMPREHENSIVE SKINCARE PORTFOLIO DESIGNERS’ SKIN CARE DESIGNER BRANDS THE REGENERATIVE MEDICINE EXPERT KIM KARDASHIAN’S MOST POPULAR PROCEDURES-INSPIRED SC SKINCARE THE GREEN + CLEAN CEUTICAL SC SKIN THE GEN-Z DESTINATION BASIC AND PERFORMANCE SC AT SELECT CB BRANDS MOVING INTO SKINCA
Slide 28: Building Skincare Portfolio – Elevating Lancaster in China
BUILDING SKINCARE PORTFOLIO – ELEVATING LANCASTER IN CHINA LANCASTER SALES IN HAINAN DUFRY ON PAR WITH TOP 20 SKINCARE BRANDS IN MARCH AND INCREASED 2X IN APRIL, DESPITE INITIAL GENERIC FIXTURES AND NO MEDIA SUPPORT BEAUTIFUL COUNTER WITH PERMANENT FIXTURES OPENED IN HAINAN IN JUNE 4 DEDICATED LANCA
Slide 29: Building Skincare Portfolio – Strengthening Philosophy
BUILDING SKINCARE PORTFOLIO – STRENGTHENING PHILOSOPHY PHILOSOPHY IS NOW THE #2 LUXURY SKINCARE BRAND ON AMAZON, WITH TRIPLE-DIGIT SELL-OUT GROWTH IN MARCH, AHEAD OF LEADING INDIE BRANDS PHILOSOPHY’S ‘PURITY’ REMAINS THE #1 CLEANSER IN THE U.S. IN THE U.S., COTY SKINCARE SELL-OUT GREW 2X THE MARKET
Slide 30: (4) Build E-commerce and DTC
(4) BUILD E- COMMERCE AND DTC 30
Slide 31: E-commerce Continues Strong Growth
E-COMMERCE CONTINUES STRONG GROWTH FYTD % OF 3Q21 YoY REVENUES LUXURY +21% YoY MID TWENTIES % CONSUMER +56% YoY HIGH SINGLE DIGIT % BEAUTY COTY +28% YoY HIGH TEENS % 31
Slide 32: Driving Huge Reach Through a Holistic Social Ecosystem
DRIVING HUGE REACH THROUGH A HOLISTIC SOCIAL ECOSYSTEM COTY BRANDS CORE TALENTS 5M IG FOLLOWERS 3M IG FOLLOWERS 1M IG FOLLOWERS 2M IG FOLLOWERS 2.4M IG FOLLOWERS 800K IG FOLLOWERS TOTAL - 16M IG FOLLOWERS KIM KARDASHIAN PRIYANKA CHOPRA JONAS HARRY STYLES 226M IG FOLLOWERS 64M IG FOLLOWERS 39M IG FOL
Slide 33: (5) Expand in China
(5) EXPAND IN CHINA 33
Slide 34: Strengthening Prestige Fragrances in China
STRENGTHENING PRESTIGE FRAGRANCES IN CHINA COTY FRAGRANCE SELL-OUT IN Q3 OUTPACING THE MARKET IN CHINA THE ROBUST SELL-OUT GROWTH HAS BEEN DRIVEN BY: • GUCCI SELL-OUT UP TRIPLE DIGITS • BURBERRY SELL-OUT UP TRIPLE DIGITS • CALVIN KLEIN SELL-OUT UP DOUBLE DIGITS • CHLOÉ ATELIER DES FLEURS #1 PRODUCTI
Slide 35: Building Prestige Makeup Presence in China
BUILDING PRESTIGE MAKEUP PRESENCE IN CHINA GUCCI BEAUTY LAUNCH ON TMALL, TOP 4 LUXURY BEAUTY BRAND LAUNCH SINCE 2018 TREMENDOUS RESPONSE TO GUCCI BEAUTY BAR IN SHANGHAI: • 7 DAYS • >15 KEY OPINION LEADERS • FULL GUCCI BEAUTY ASSORTMENT, HIGHLIGHTING RECENTLY LAUNCHED ‘BRILLIANT’ LIPSTICK • ATTENDED
Slide 36: Continuing to Expand Footprint in Hainan
CONTINUING TO EXPAND FOOTPRINT IN HAINAN RAPIDLY EXPANDING STORE FOOTPRINT AND E- COTY REVENUES IN CHINA TRAVEL COMMERCE PRESENCE IN HAINAN RETAIL GUCCI AND BURBERRY MAKEUP >20% OF SALES FRAGRANCE SALES LED BY GUCCI, BURBERRY, CHLOÉ, AND MIU MIU Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-2
Slide 37: (6) Become a Beauty Leader in Sustainability
(6) BECOME A BEAUTY LEADER IN SUSTAINABILITY 37
Slide 38: Upcycling Carbon Emission into Sustainable Ethanol for Our Fragrances
11 ooo Oooo INDUSTRIAL OFF-GAS. DIRECT AIR CAPTURE Sj ELECTROLYSIS III SOLID WASTE UPCYCLING CARBON EMISSION INTO SUSTAINABLE ETHANOL FOR OUR FRAGRANCES BIOCATALYST & \ yo S FERMENTATION ea ETHANOL PURIFICATION FRAGRANCES HIGH-PURITY SUSTAINABLE CHEMICALS Mice GASIFICATION COMPRESSION SEPARATION
Slide 39: Financial Cycle in Motion
FINANCIAL CYCLE IN MOTION TITLE OF THE PRESENTATION 39
Slide 40: Outstanding Gross Margin Delivery
OUTSTANDING GROSS MARGIN DELIVERY ADJUSTED GROSS MARGIN GROSS MARGINS REACHED ABOVE 60%, +450 bps 62.2% DELIVERING ON STRATEGIC FRAMEWORK YoY YEAR-OVER-YEAR GROSS MARGIN IMPROVEMENT OF 58.7% 57.7% 450BPS DRIVEN BY: • ~40% MIX & REVENUE MANAGEMENT • ~60% SUPPLY CHAIN IMPROVEMENT THROUGH BETTER DEMAND
Slide 41: Robust Profit Growth
ROBUST PROFIT GROWTH ADJUSTED EBITDA • 3Q21 ADJUSTED EBITDA OF $183M, INCREASING >$180M YOY $183M 17.8% Margin • EBITDA MARGIN UP 18PPS TO 17.8% • DESPITE SALES DECLINE, SIGNIFICANT YOY PROFIT GROWTH • YEAR-TO-DATE ACHIEVED OVER $270M OF SAVINGS $(1.4M) (0.1%) Margin • ON TRACK TO REACH FY21 TARGET
Slide 42: FY21 Is the Baseline for Coty's Sales & Profit Acceleration
FY21 IS THE BASELINE FOR COTY’S SALES & PROFIT ACCELERATION NET REVENUE AND EBITDA MARGINS Confirming near term targets: $6.3B ~16-17% ▪ On track to end FY21 with net ~$0.3B Adj EBITDA revenues of ~$4.5-4.6B ~$0.3B Margin ~$4.5-4.6B ▪ Confirming FY21 adjusted EBITDA ~$0.1B 13.3% ~$1.2B ~$0.3B target
Slide 43: Luxury Business to Drive Future Revenue & Profit Growth
LUXURY BUSINESS TO DRIVE FUTURE REVENUE & PROFIT GROWTH SKINCARE CHINA PRESTIGE COSMETICS (Prestige + Mass; (% of Total Net Revenues) (% of Total Net Revenues) % of Total Net Revenues) High Single Over 10% Over 10% Digit % ~6% ~3% ~3% FY21 FY25 FY21 FY25 FY21 FY25 Est Target Est Target Est Target 43
Slide 44: Conclusion
CONCLUSION TITLE OF THE PRESENTATION 44
Slide 45: Investment Thesis
INVESTMENT THESIS ONE OF THE MOST BEAUTIFUL PORTFOLIOS, WITH TWO COMPLEMENTARY BRAND PORTFOLIOS ▪ ONE OF THE MOST BEAUTIFUL & COMPREHENSIVE BRAND PORTFOLIOS IN THE INDUSTRY, AND THE ONLY GROUP AT THIS LEVEL TO OPERATE TWO COMPLEMENTARY BRAND PORTFOLIOS RAPIDLY EXECUTING ON ALL KEY STRATEGIC GROWTH P
Slide 46: Disclaimer
DISCLAIMER Forward-Looking Statements Certain statements in this presentation are forward-looking statements. 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
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