Slide 1: Coty 3Q21 Earnings Call
COTY 3Q21 EARNINGS CALL SINCE 1904
Slide 2: Key Messages
KEY MESSAGES STRONG SEQUENTIAL IMPROVEMENT IN REVENUE TRENDS, DESPITE MUCH OF EMEA BEING UNDER STRICT LOCKDOWNS ▪ PRESTIGE BUSINESS BACK TO GROWTH, WITH STRONG MOMENTUM IN THE U.S. AND CHINA VERY ROBUST PROFIT DELIVERY ▪ STRONG IMPROVEMENT IN GROSS MARGIN REACHING 62% COUPLED WITH CONTINUED COST RED
Slide 3: Improving Revenue Trends
IMPROVING REVENUE TRENDS TITLE OF THE PRESENTATION 3
Slide 4: U.S. Prestige and Asia Pacific Back to Growth
U.S. PRESTIGE AND ASIA PACIFIC BACK TO GROWTH APAC AMERICAS ASIA PACIFIC +20% LFL, WITH CHINA GROWING 14% TRIPLE-DIGITS YOY AND UP DOUBLE-DIGITS VERSUS 3Q19 3Q21 40% REVENUE AMERICAS -3% LFL, WITH STRONG GROWTH IN MIX U.S. PRESTIGE AND BRAZIL MASS 46% EMEA EMEA -13% LFL, OR -9% EXCLUDING TRAVEL RETA
Slide 5: Sales In-Line with Expectations, Led by Prestige Recovery
SALES IN-LINE WITH EXPECTATIONS, LED BY PRESTIGE RECOVERY PRESTIGE PRESTIGE +2% LFL DRIVEN BY U.S. AND CHINA, +2% LFL WITH STRONG DOUBLE-DIGIT GROWTH IN GUCCI, BURBERRY, MARC JACOBS, AND PHILOSOPHY 42% 3Q21 REVENUE MIX 58% MASS -15% LFL DUE TO ONGOING PRESSURE ON COSMETICS CONSUMPTION, WITH MASS MAS
Slide 6: 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 % 6
Slide 7: Strong Profit Delivery
STRONG PROFIT DELIVERY TITLE OF THE PRESENTATION 7
Slide 8: 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 9: Stepping Up Marketing Investment
STEPPING UP MARKETING INVESTMENT A&CP RATIO INCREASED SEQUENTIALLY, WITH INVESTMENTS CONCENTRATED IN FEWER INITIATIVES A&CP EXPECTED TO FURTHER STEP-UP IN 4Q21 WITH WORKING MEDIA DOLLARS ABOVE 4Q19 LEVELS A&CP AS PERCENT OF SALES ~23% ~20% 1H21 3Q21 9
Slide 10: 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 SUPPORTED BY: • STRONG GROSS MARGIN IMPROVEMENT $(1.4M) (0.1%) Margin • VERY FOCUSED MARKETING INVES
Slide 11: Fixed Cost Reduction Generating Fuel for Reinvestment and Profit Delivery
FIXED COST REDUCTION GENERATING FUEL FOR REINVESTMENT AND PROFIT DELIVERY • IN 3Q21, FIXED COSTS DECREASED 15% YOY • ACHIEVED APPROX. $110M OF SAVINGS IN Q3 • YEAR-TO-DATE ACHIEVED OVER $270M OF SAVINGS, LARGELY FROM STREAMLINED ORGANIZATION AND REDUCTIONS IN BUSINESS SERVICES • ON TRACK TO REACH FY
Slide 12: EPS Driven by Profit Growth and Wella Stake Appreciation
EPS DRIVEN BY PROFIT GROWTH AND WELLA STAKE APPRECIATION $ Millions 1H21 Q3 FYTD Adjusted EBITDA • Wella Fair Market Value increased 450 183 633 (Continuing Ops) by $64M in Q3, though mark-to- market change is excluded from Depreciation & adjusted EPS (181) (87) (268) Non-Cash Stock Comp Net Interes
Slide 13: Free Cash Flow Inline with Expectations
FREE CASH FLOW INLINE WITH EXPECTATIONS Q3 FYTD FREE CASH FLOW $ Millions • Q3 -$218M FCF REFLECTS: Adjusted EBITDA 183 633 ➢ TYPICAL SEASONAL WEAKNESS ➢ WELLA-RELATED WORKING CAPITAL REVERSAL OF >$100M Capex, WC, one-offs (366) (332) • TIGHT MANAGEMENT OF CAPEX AND ONE-OFF COSTS Interest and tax (3
Slide 14: Maintaining Tight Control on Debt
MAINTAINING TIGHT CONTROL ON DEBT $0.2 $0.1 $0.1 Positive FX $0.1 Closing of Wella WC KKW impact ~$1.25 Q3 Organic Reversal FCF $5.1 Wella 40% $4.8 Bn financial Bn stake ~$3.9 Bn Q2 FINANCIAL NET DEBT Q3 FINANCIAL NET DEBT Q3 ECONOMIC NET DEBT REFINANCING SOLID CAPITAL STRUCTURE • COMPLETED THE ISSU
Slide 15: Executing on Strategic Pillars
EXECUTING ON STRATEGIC PILLARS TITLE OF THE PRESENTATION 15
Slide 16: Consumer Beauty Category and Coty Sell-Out Inflecting Positive in March
CONSUMER BEAUTY CATEGORY AND COTY SELL-OUT INFLECTING POSITIVE IN MARCH 40% GLOBAL CONSUMER BEAUTY CATEGORY AND COTY CONSUMER 30% BEAUTY SELL-OUT INFLECTED 20% POSITIVE IN MARCH 10% 0% COTY IS NARROWING ITS PERFORMANCE GAP WITH THE MARKET -10% -20% -30% -40% Global Consumer Beauty Market Coty Sell-o
Slide 17: CoverGirl Records Market Share Gains for the First Time in Years
COVERGIRL RECORDS MARKET SHARE GAINS FOR THE FIRST TIME IN 4 YEARS FIRST FULL MONTH OF MARKET SHARE GAINS FUELED BY: ➢ NEW BRAND POSITIONING AND DISTINCTIVE COMMUNICATION ASSETS ➢ STRONG RESONANCE OF CLEAN BEAUTY LAUNCHES Source: U.S. Nielsen data through April 24, 2021 17
Slide 18: New Activations Behind Simply Ageless Franchise with Niki Taylor
MORE TO COME WITH NEW ACTIVATIONS BEHIND “SIMPLY AGELESS” FRANCHISE, WITH NIKI TAYLOR AS SPOKESPERSON ONCE A COVERGIRL, ALWAYS A COVERGIRL AIRING AT THE END OF APRIL 2021 18
Slide 19: New Rimmel Global Brand Spokesperson
NEW RIMMEL GLOBAL BRAND SPOKESPERSON ADWOA ABOAH ACTIVIST, MODEL, DESIGNER FOUNDED “GURLS TALK” IN 2015, AN ORGANIZATION TO ADVOCATE FOR THE MENTAL HEALTH OF YOUNG WOMEN GREW INTO AN NGO WITH A WEEKLY PODCAST AND SERIES OF LIVE EVENTS GLOBALLY ENCOURAGING PEOPLE TO FIND THEIR OWN VOICES 19
Slide 20: New Max Factor Global Brand Ambassador
NEW MAX FACTOR GLOBAL BRAND AMBASSADOR PRIYANKA CHOPRA-JONAS A POWERFUL , SELF MADE SUPERSTAR, GLOBAL ICON ‘ONE OF THE MOST POWERFUL WOMEN IN THE WORLD’ – FORBES TIMES MAGAZINE’S 100 MOST INFLUENTIAL PEOPLE WINNER OF MOTHER TERESA MEMORIAL AWARD 63M TITLE OF THE PRESENTATION 20
Slide 21: Strengthening Prestige Fragrances – Leading in the U.S.
STRENGTHENING PRESTIGE FRAGRANCES – LEADING IN THE U.S. FRAGRANCES CONTINUES TO DRIVE RECOVERY OF LUXURY CATEGORY WITH 7 MONTHS OF CONSECUTIVE SELL-OUT GROWTH, INCLUDING VERSUS FY19, WITH COTY OUTPERFORMING MARKET IN RECENT MONTHS THE ROBUST SELL-OUT GROWTH HAS BEEN DRIVEN BY: • MARC JACOBS ‘PERFECT
Slide 22: Strengthening Prestige Fragrances – Leading in APAC
STRENGTHENING PRESTIGE FRAGRANCES – LEADING IN APAC COTY FRAGRANCE SELL-OUT IN Q3 OUTPACING THE MARKET IN CHINA AND ACROSS REST OF APAC THE ROBUST SELL-OUT GROWTH HAS BEEN DRIVEN BY: • GUCCI SELL-OUT UP TRIPLE DIGITS IN CHINA AND DOUBLE DIGITS IN REST OF APAC • BURBERRY SELL-OUT UP TRIPLE DIGITS IN
Slide 23: Strengthening Luxury Fragrances
STRENGTHENING LUXURY FRAGRANCES CHLOE HUGO BOSS IS STRONG DOUBLE- MARC JACOBS CHLOÉ ATELIER SIGNATURE IS GAINING MARKET DIGIT GROWTH IN REVENUE IS UP DES FLEURS HAD SHARE IN FRANCE ASIA PACIFC REGION STRONG DOUBLE- NOW #2 GERMAN CYTD ACROSS BOTH DIGITS VS. FY19 IN THE OVER 800% SELL- FEMALE ONLINE A
Slide 24: Expanding Prestige Makeup
EXPANDING PRESTIGE MAKEUP VERY STRONG PERFORMANCE OF GUCCI AND BURBERRY MAKEUP ACROSS THE GLOBE IN THE US, GUCCI MAKE-UP SELL-OUT IS UP TRIPLE DIGITS IN FYTD, WITH STRONG SUPPORT FROM RECENTLY LAUNCHED BRONZING POWDER IN APAC, BOTH GUCCI AND BURBERRY MAKEUP SELL-OUT GREW TRIPLE DIGITS IN 3Q, LED BY
Slide 25: 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 26: 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 GENERIC FIXTURES AND NO MEDIA SUPPORT, BEAUTIFUL COUNTER WITH PERMANENT FIXTURES TO OPEN AT THE END OF MAY, WITH GRAND OPENING CER
Slide 27: Slide 27
Slide 28: Building Skincare Portfolio – Strengthening Philosophy
BUILDING SKINCARE PORTFOLIO – STRENGTHENING PHILOSOPHY IN THE U.S., COTY SKINCARE SELL-OUT GREW 2X THE MARKET IN MARCH, AND INCREASED NEARLY 10% VS. MARCH 2019 PHILOSOPHY IS NOW THE #2 LUXURY SKINCARE BRAND ON AMAZON, WITH TRIPLE-DIGIT SELL-OUT GROWTH IN MARCH, AHEAD OF LEADING INDIE BRANDS TITLE OF
Slide 29: Kylie Skin - Continuing to Strengthen Platform & Reach
KYLIE SKIN - CONTINUING TO STRENGTHEN PLATFORM & REACH STRENGTHENING KYLIE SKIN PLATFORM: ➢ SOCIAL FOLLOWERS NOW ~5.4M, +61% YOY ➢ OVER 20% GROWTH IN TRAFFIC FYTD ➢ GOOD BALANCE OF NEW AND RETURNING CUSTOMERS STRONG RECENT LAUNCHES IN RUSSIA’S GOLD APPLE (BEAUTY RETAILER) AND FRANCE’S GALERIES LAFAY
Slide 30: Accelerating E-Commerce with Innovative Digital Activations
ACCELERATING E-COMMERCE WITH INNOVATIVE DIGITAL ACTIVATIONS BRICK & CLICK SALES OVER AMAZON SALES DOUBLED 50% GROWTH IN 3Q AND FYTD IN 3Q AND FYTD • TIKTOK ACCELERATED COVERGIRL’S ‘SIMPLY AGELESS’ • SUPPORTED BY COVERGIRL & SALLY HANSEN THROUGH SPONSORSHIP OF MICROINFLUENCER LIVESTREAM EVENTS • LAST
Slide 31: Accelerating E-Commerce with Innovative Digital Activations
ACCELERATING E-COMMERCE WITH INNOVATIVE DIGITAL ACTIVATIONS COVERGIRL CLEAN BEAUTY KYLIE SKIN AMONG FIRST BRANDS TO TEST TIKTOK EVENT HAD RECORD VIEWERS SOCIAL COMMERCE FEATURES • IG LIVE EVENT HAD OVER 50K LIVE VIEWS (MORE THAN • SEAMLESS CHECKOUT PROCESS IN APP 400% HIGHER THAN AVERAGE) • PRODUCT
Slide 32: Strengthening China Presence
STRENGTHENING CHINA PRESENCE GUCCI TMALL PERFORMANCE THROUGH MARCH REMAINED STRONG, TOP 4 LUXURY BEAUTY BRAND LAUNCH SINCE 2018 WITH OVER 64K TRANSACTIONS BURBERRY MAKEUP OUTPERFORMING EXPECTATIONS ONLINE AND OFFLINE: ➢ MARCH SELL-OUT GROWING OVER 600% YOY ➢ NEW BURBERRY CUSHION FOUNDATION SOLD OUT
Slide 33: 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 34: Outlook
OUTLOOK TITLE OF THE PRESENTATION 34
Slide 35: FY21 Outlook
FY21 OUTLOOK • Maintain FY21 outlook: • Net revenues of ~$4.5-4.6B • Adjusted EBITDA of $750M, with meaningful step-up in Q4 A&CP to support key strategic initiatives heading into Beauty demand recovery • Continue to drive leverage ratio towards 5x exiting CY21 TITLE OF THE PRESENTATION 35
Slide 36: Conclusion
CONCLUSION WITH WORKING MEDIA INVESTMENTS ACCELERATING, WE REMAIN VERY WELL POSITIONED TO CONTINUING EXECUTING ON ALL KEY STRATEGIC GROWTH PILLARS IN 4Q AND FY22 ▪ FEWER, BIGGER, BETTER IS OUR UNDERLYING PRINCIPLE AS WE FOCUS ON THE KEY 15-20 BRANDS THE CYCLE IS IN MOTION AS GROSS MARGIN AND COST RE
Slide 37: 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
Slide 38: 38
38