Coty sees FY24 adjusted EPS 44c-47c, consensus 48c

Entering FY24, the beauty market remains a strong and outperforming category, with ongoing premiumization trends. Coty is continuing to benefit from these positive trends, with momentum across its core categories, a strong innovation pipeline, and early wins in key white spaces. The combination of these factors are fueling the Company’s expectations for FY24 for the core business to grow at the top of Coty’s medium term target range of 6-8% LFL. Reported FY24 revenues are expected to include neutral to 2% benefit from FX, primarily in first half of FY24, and a 1-2% scope headwind from the divestiture of the Lacoste license, concentrated in the second half of FY24. Coty is targeting FY24 adjusted EBITDA margin expansion of 10-30bps, with similar performance in 1H24 and 2H24, implying FY24 adjusted EBITDA of $1,065-1,075M based on current FX rates and inclusive of the profit headwind from the divestiture of the Lacoste license. Within this outlook, Coty expects modest FY24 gross margin expansion year on year, with some negative phasing impacts in 1H24, followed by strong improvement in 2H24. Coty targets total FY24 adjusted EPS, excluding equity swap, of $0.44-0.47, implying strong +16-25% YoY growth. Finally, the company continues to target further reduction in leverage toward ~3x exiting CY23, ~2.5x exiting CY24 and ~2x exiting CY25.