EU CONSUMER CYCLICALS: Coty | 3Q Results (x5)

(COTY; Ba1/BBB-/BBB-; Stable) (Equities -11%)

Expecting a "better than Q4" trend in 1H26 (July–Dec), though still on declining revenues. The drag remains its Consumer Beauty division, particularly colour cosmetics (60% of the segment), which is under pressure. Consumer Beauty accounts for just over a third of sales; the balance is in Prestige, which is fragrance-heavy and performing better.

• There will be "some decline" in 1H (July-Dec '25) but "trend will be better than 4Q".
• The high-single digit 4Q revenue decline would only be mid-single digit negative without the purposeful clean-up in retailer inventories.
• Believes mid-single digit growth in prestige fragrance is sustainable - particularly in US and most European markets. Says tailwind is male teens and Gen Z seeking out niche fragrances.
• Flags it is adapting to new and fast growing retail channels like TikTok Shop (last year 20% of sales was e-comm). It flags this alongside strong "influencer content" and good product innovation helping Rimmel in UK stabilise market share for first time in 3-years.