Page 1

Coty Profit Momentum Continues in Q3 , Delivering Early Results Across Brand Portfolio Prestige Brands and Asia Pacific Region Resume Growth Over $ 180M Improvement in Reported Operating Income and Adjusted EBITDA , Fueled by Over 400bps of Gross Margin Expansion and Continued Cost Reductions Executing on Strategic Plan with Early Results in Each Pillar NEW YORK - May 10 , 2021-- Coty Inc. ( NYSE : COTY ) ( " Coty " or " the Company " ) today announced continued improvement in its financial results and early evidence of recovery across its operations for the third quarter of fiscal year 2021 , ended March 31 , 2021 . In Q3 , revenues declined 3 % , or 5.5 % LFL , in a persisting COVID context in Europe and select regions . At the same time results were buoyed by + 20 % LFL growth in Asia Pacific , 30 % growth in e - commerce , and a relatively stable performance in the Americas , including strong growth in U.S. prestige sales . Brands like Gucci , Burberry and Marc Jacobs were standouts , with double digit growth in the quarter , and Coty continued to build upon its newer prestige engines of growth in cosmetics and skincare . The 2 % LFL growth in the prestige sales was noteworthy , given Coty's higher commercial weighting in Europe and the continued active reduction of sales in low quality channels , which represented a high single digit negative impact to the prestige sales in the last two years . In the mass channel , Coty's strategic plans delivered early results , with CoverGirl gaining market share over the last 5 weeks according to the latest scanner data available ; a first in over 4 years . While Coty's mass beauty revenues in Q3 declined 14.5 % , the Company's mass beauty retail sell - out returned to growth in the month of March . Coty's progress on profitability over last two quarters continued in Q3 , with an adjusted EBITDA * of $ 183.2 million with a 17.8 % margin , up over $ 180 million versus last year , and a reported operating loss of $ 1.4 million , an improvement of nearly $ 300 million versus last year . This was supported by reported and adjusted gross margin expansion up 450 bps year - on - year to 62.2 % ; fueled by revenue and mix management , lower excess & obsolescence , and improved demand planning . During the quarter , Coty continued to reduce its costs base , with savings totaling approximately $ 110 million in the quarter . Fiscal year - to - date cost savings totaled over $ 270 million , and the Company remains on track to achieve its target of approximately $ 300 million in cost savings in FY21 . Fiscal year - to - date , adjusted EBITDA totaled $ 633.0 million , up 50 % versus the last year . As anticipated , Financial Net Debt at the end of Q3 totaled approximately $ 5.1 billion . With an increase in the value of Coty's retained Wella stake to approximately $ 1.25 billion at quarter - end , the Company's Economic Net Debt totaled approximately $ 3.9 billion . Coty also successfully raised $ 900 million in secured notes in April 2021 , extending the maturity profile of its debt . In line with Coty's recently unveiled growth acceleration strategy , the Company continues to make progress across each of its strategic pillars . This includes initial market share gains for CoverGirl in the U.S. , with the re - positioning plans for Rimmel and Max Factor in Europe on track for the fourth quarter . Luxury fragrance demand remained strong in the key U.S. market , with Coty's portfolio outperforming the market . In addition , Coty continues to build upon its newer prestige engines of growth in cosmetics and skincare , which includes very strong growth of Gucci Beauty globally as well as encouraging results of Lancaster in China , including in Hainan . Meanwhile , the performance of digital and e - commerce grew close to 30 % in Q3 . Commenting on the operating results , Sue Y. Nabi , Coty's CEO , said : " Our Q3 marked another strong milestone in our journey to rejuvenate Coty's position as a global beauty powerhouse . In less than a year , the leadership team and the broader organization have successfully mapped out our strategy , activated our brand and category plans , while generating operational improvements , and strengthening our financial position . From a results standpoint , in Q3 we saw a significant improvement in our sales trends even as we continued our efforts to strengthen the health of our business and brands by cutting sales in low quality channels . Importantly , the prestige sales returned to growth as the impact of the pandemic abated in many markets . We have seen strong momentum in several of our key markets , with China sales growing double - to - triple digits versus FY20 and FY19 , and U.S. prestige sales up high single digits in the quarter and nearly flat in the fiscal year - to - date . While Europe 1