What changed in this filing

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Item 1. Business

2024-08-20 compared with 2023-08-22 · 88 added, 69 removed, 142 unchanged (53% of the section changed)

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is one of the world’s largest beauty companies with an iconic portfolio of brands across fragrance, color cosmetics, and skin and body care.

Over the past few years we have been implementing a comprehensive transformation agenda (the “Transformation Plan”), focusing on our core go-to-market competencies, simplifying our capital structure and deleveraging our balance sheet.

As we transform the Company, we continue to make progress on our strategic priorities, including stabilizing and growing our consumer beauty brands through leading innovation and improved execution, accelerating our prestige fragrance brands and ongoing expansion into prestige cosmetics, building a comprehensive skincare portfolio leveraging existing brands, enhancing our e-commerce and direct-to-consumer (“DTC”) capabilities, expanding our presence in China and travel retail through prestige products and select consumer beauty brands, and establishing Coty as an industry leader in sustainability.

In fiscal 2021, we completed the sale of a majority stake in Coty’s Professional and Retail Hair business, including the Wella, Clairol, OPI and ghd brands, (together, the “Wella Business”).

As of June 30, 2023, Coty owned a 25.9% stake in

Rainbow JVCO LTD and subsidiaries (together, “Wella” or the “Wella Company”).

On July 18, 2023 we announced that we entered into a binding letter of intent to sell a 3.6% stake in Wella to investment firm IGF Wealth Management for $150.0.

The closing of the transaction is subject to, among other things, completion of due diligence and the satisfaction of certain closing conditions, including the approval of the transaction by KKR.

Assuming the transaction closes, we would retain 22.3% of the Wella Company.

Over the past few years we have implemented a comprehensive transformation agenda (the “Transformation Plan”), focusing on our core go-to-market competencies, simplifying our capital structure and deleveraging our balance sheet.

Following this transformation, we continue to make progress on our strategic priorities, including stabilizing and growing our consumer beauty brands through leading innovation and improved execution, accelerating our prestige fragrance brands and ongoing expansion into prestige cosmetics, building a comprehensive skincare portfolio over the mid-to-long term leveraging existing brands, enhancing our organizational growth capabilities including digital and research and development, expanding our presence in the travel retail channel, China and other growth markets, and establishing Coty as an industry leader in sustainability.

All dollar amounts in the following discussion are in millions of United States (“U.S.”) dollars, unless otherwise indicated.

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The Company has designated its Chief Executive Officer as the CODM.

For segment financial information and information about our long-lived assets, see Note 5— Segment Reporting in the notes to our Consolidated Financial Statements, and for information about recent acquisitions or dispositions, see Note 4—Business Combinations, Asset Acquisitions and Divestitures in the notes to our Consolidated Financial Statements.

For segment financial information and information about our long-lived assets, see Note 4— Segment Reporting in the notes to our Consolidated Financial Statements.

The following chart reflects our iconic brand portfolio:

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Beckham Calvin Klein

Biocolor* Chloe

Bozzano* Davidoff

Bourjois* Escada*

Bruno Banani Gucci

CoverGirl* Hugo Boss

Jovan* Jil Sander

Max Factor* Joop!*

Mexx Kylie Jenner

Monange* Lancaster*

Nautica Marc Jacobs

Paixao* Miu Miu

Rimmel* Orveda

Risque* philosophy*

Sally Hansen* SKKN BY KIM

Bozzano* Chloe

Bourjois* Davidoff

Bruno Banani Escada*

CoverGirl* Gucci

Jovan* Hugo Boss

LeGer by Lena Gercke Infiniment Coty Paris*

Max Factor* Jil Sander

Monange* Kylie Cosmetics by Kylie Jenner

Nautica Lancaster*

Paixao* Marc Jacobs

Rimmel* Miu Miu

Risque* Orveda

Sally Hansen* philosophy*

Vera Wang SKKN BY KIM

Tiffany & Co.

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We manage our creative marketing work through a combination of our in-house teams and external agencies that design and produce the sales materials, social media strategies, advertisements and packaging for products in each brand.

We promote our brands through various channels to reach and engage beauty consumers, through traditional media, through in-store displays, on digital and social media, and through collaborations, product placements and events.

We promote our brands through various channels to reach and engage beauty consumers to build brand awareness, affinity and loyalty, through traditional media, through in-store displays, on digital and social media, and through collaborations, product placements and events.

In addition, we seek editorial coverage for products and brands in both traditional media and digital and social media to drive influencer amplification and to build brand equity.

We also leverage our relationships with celebrities and on-line influencers to endorse certain of our products.

Our marketing efforts benefit from cooperative advertising programs with retailers, often in connection with in-store marketing activities designed to engage consumers so that they try, or purchase, our products, including sampling and “gift-with-purchase” programs designed to stimulate product trials.

We are focused on accelerating our digital advocacy strategy to amplify our brand and product innovations, leverage consumer analytics and insights, and improve the return on investment of our marketing activities.

We leverage our relationships with celebrities, on-line influencers and brand ambassadors to endorse certain of our products, and we seek to attract and engage existing and new consumers through buzz-worthy activations, unexpected creativity and unique collaborations.

Our marketing efforts also benefit from cooperative advertising programs with retailers, often in connection with in-store marketing activities designed to engage consumers so that they try, or purchase, our products, including sampling and “gift-with-purchase” programs designed to stimulate product trials.

We have dedicated marketing and sales forces in most of our significant markets.

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We utilize in-depth brand and market data analytics to develop branding, merchandising and marketing execution strategies to maximize the consumer experience and build a better business.

We continue to concentrate working media resources on select products, channels and markets, which we believe represents a significant opportunity for revenue and gross margin improvement, and to implement a tactical, in-store strategy for the others.

Distribution Channels and Retail Sales

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In fiscal 2024, Walmart, our top retailer, accounted for approximately 5% of total Coty Inc.

net revenues from continuing operations.

net revenues.

Innovation is a pillar of our business.

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In light of these challenges, we are continually benchmarking the performance of our supply chain, and we augment our supply base, adjust our distribution networks and manufacturing footprint, enhance our forecasting and planning capabilities and adjust our inventory strategy based upon the changing needs of the business.

We continue to explore options to further optimize our supply chain operations.

We continue to explore options to further optimize our supply chain operations, including the implementation of advanced digital solutions to streamline and enhance our supply chain operations.

There is significant competition within each market where our products are sold.

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While we consider our patents and copyrights, and the protection thereof, to be important, no single patent or copyright, or group of related patents or copyrights, is material to the conduct of our business.

Products representing 63% of our fiscal 2023 net revenues from continuing operations are manufactured and marketed under exclusive license agreements granted to us for use on a worldwide and/or regional basis.

Products representing 50% of our fiscal 2024 net revenues are manufactured and marketed under brands owned by us or under licenses which are effectively perpetual.

Of the remaining portfolio, 34% of our fiscal 2024 sales are under exclusive license agreements granted to us for use on a worldwide and/or regional basis with a remaining duration spanning from 6 to 30 years.

As of June 30, 2024, we maintained 24 brand licenses.

In addition, approximately 54% of our fiscal 2023 net revenues from continuing operations were attributable to prestige fragrance, of which approximately 88% was from our top seven prestige fragrance brands.

In addition, approximately 56% of our fiscal 2024 net revenues were attributable to prestige fragrance, of which approximately 91% was from our top seven prestige fragrance brands.

Approximately 82% of the revenues from our top seven fragrance brands were from licenses with remaining durations spanning from approximately 8 to 21 years, or perpetual.

Our licenses impose obligations and restrictions on us that we believe are common to many licensing relationships in the beauty industry, such as paying annual royalties on net sales of the licensed products, maintaining the quality of the licensed products and the image of the applicable trademarks, achievement of minimum sales levels, promotion of sales and qualifications and behavior of our suppliers, distributors and retailers.

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Certain brand licenses provide for automatic extensions, so long as minimum annual royalty payments are made, while renewal of others is contingent upon attaining specified sales levels or upon agreement of the licensor.

None of our top seven licenses, which account for approximately 88% of our prestige fragrance sales, are up for non-automatic renewal before 2028, with an average remaining duration of 13 years.

We are currently in the process of renewing a smaller license which is up for renewal during fiscal 2024.

None of our top seven licenses are up for non-automatic renewal before 2028, with an average remaining duration of 14 years.

For additional risks associated with our licensing arrangements, see “Risk Factors— Our brand licenses may be terminated if specified conditions are not met, and we may not be able to renew expiring licenses on favorable terms or at all ” and “Risk Factors— Our failure to protect our reputation, or the failure of our brand partners or licensors to protect their reputations, could have a material adverse effect on our brand images ”.

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Environmental, Social and Governance

Coty’s sustainability commitment, Beauty That Lasts, is a multi-pillared strategy which aims to contribute to a more sustainable and inclusive future.

With a focus on products, planet and people we see sustainability as the ultimate driver of innovation.

Our sustainability framework, Beauty That Lasts, is a multi-pillared strategy which aims to contribute to a more sustainable and inclusive future.

With a focus on product, planet and people, we aim to contribute towards delivering a more sustainable and inclusive world.

We report annually on our progress towards our sustainability targets through a separate sustainability report.

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The content of our sustainability reports and information on our website are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC.

On March 31, 2022, the SEC issued a proposed rule on climate-related disclosures by U.S.

On March 6, 2024, the SEC adopted a rule on climate-related disclosures by U.S.

public companies.

The proposed rule is not yet final.

We are unable to predict if or when the rule will be finalized and the extent to which a final rule will apply or deviate from the proposal.

On April 4, 2024, the SEC stayed the rule pending the completion of judicial review of the consolidated Eighth Circuit petitions.

We are unable to predict if or when the stay will be lifted, and the extent to which the outcome of the petitions may result in changes to the final rules and the timing of the effectiveness of such rules.

The Beauty of Our Product

Our products have an important role to play in building a sustainable future for the beauty sector.

To respond to evolving social and environmental challenges, sustainability is at the heart of our product creation, from design and development through to sourcing of materials.

To respond to evolving social and environmental challenges, we are putting sustainability at the heart of our product creation, from design and development through to sourcing of materials.

We see sustainability as the ultimate driver of innovation.

We are changing the way we design, formulate and manufacture in order to minimize our environmental impact and create innovative products.

Since 2020, we have an operational Beauty That Lasts Index in place, which is a qualitative tool for evaluating the social and environmental profile of new product developments.

We have ambition to reduce the amount of packaging we use across our portfolio, while sourcing from more sustainable sources.

In fiscal 2023, we introduced refillable packaging solutions into our global portfolio, including Chloé Rose Naturelle Intense Eau de Parfum and Adidas Active Skin and Mind range of shower gels which delivered a packaging weight reduction compared to the original baseline body care range.

In addition, we work to reduce the environmental impact of our product formulas and our new products, for example integrating carbon captured alcohol into our fragrances.

In fiscal 2023, we launched Gucci, The Alchemist’s Garden, Where My Heart Beats Eau de Parfum, which was the first globally distributed fragrance manufactured using 100% carbon captured alcohol.

Since 2020, we have an operational Beauty That Lasts Index in place, which is a qualitative tool for evaluating the sustainability profile of new product developments.

We have an ambition to reduce the amount of packaging we use across our portfolio, while sourcing from more sustainable sources.

In fiscal 2024, we are continuing to steadily expand refillable formats, including Burberry Goddess , Cosmic Kylie Jenner and Infiniment Coty Paris .

We are implementing screw neck caps for new prestige fragrance bottle designs to further enable refill potential.

In addition, we work to reduce the environmental impact of our product formulas and our new products.

In fiscal 2024, Infiniment Coty Paris is the first globally distributed full fragrance collection manufactured using 100% carbon-captured ethanol.

We recognize that sustainability efforts require collaboration which goes beyond our own organization.

To that end we are members of several industry initiatives, including the Responsible Beauty Initiative and Responsible Mica Initiative, focused on responsible sourcing, and the Sustainable Packaging Initiative for Cosmetics, focused on creating common guidelines and tools for eco-design of packaging.

To that end we are members of several industry initiatives, including the Responsible Beauty Initiative and Responsible Mica Initiative, focused on responsible sourcing.

We are also part of the EcoBeautyScore Consortium – a breakthrough initiative which aims to develop an industry-wide environmental scoring system for cosmetics products, with the aim of empowering consumers to make sustainable beauty choices.

We are also active members of the Sustainable Packaging Initiative for Cosmetics — SPICE — where we partner with other companies in the cosmetics industry to collectively shape the future of sustainable packaging.

We continue to evaluate and modify our processes and activities to further limit our impact on the environment as we implement our sustainability strategy.

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We are committed to minimizing the environmental impact of our operations and preserving resources for generations to come.

During fiscal year 2023, our greenhouse gas emissions targets were approved by the Science Based Target initiative.

Our short-term greenhouse gas emissions targets are approved by the Science Based Target initiative (“SBTi”).

The targets cover our greenhouse gas emissions for scopes 1 and 2, renewable electricity commitment and our greenhouse gas reduction for scope 3.

In November 2023, we committed to the SBTi to set emissions reduction targets in line with science-based net-zero 1 .

We continue to focus on the implementation of these targets with the development of operational plans.

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our product impact, our transportation and the impact of our own operations.

In fiscal 2023, we have extended existing efforts made on our supply chain sites (factories and distribution centers) to our R&D centers and Corporate Offices.

Accordingly, our offices and R&D centers are developing energy reduction and transition plans.

For example, our Paris Headquarter has now transitioned to renewable electricity and we have completed an extensive energy audit in our Amsterdam Headquarter with very positive results.

In our efforts to reduce our impacts on the environment, none of the waste from our factories and distribution centers was sent to landfill, while most was reused, recycled, or composted.

In fiscal 2024, we have expanded our solar panel use across four sites and we now have eight carbon neutral sites, labs and offices 2 .

Air freight emissions have decreased by more than 50% since 2019 due to the efforts of our transport and supply chain teams to improve planning and educating internal stakeholders about the importance of shifting to less carbon intense modes of transport.

In our efforts to reduce our impacts on the environment, none of the waste from our factories and distribution centers 3 was sent to landfi

1 Per SBTi target setting process, targets will be set within 24 months of November 2023.

2 Scope 1 and 2 emissions .

3 The scope for our waste reporting is our factories and distribution centers managed by Coty.

For our reporting on our emissions, energy usage and water consumption our scope covers our factories and distribution centers managed by Coty and our corporate offices (14 factories and distribution centers, and 40+ offices and R&D centers) and excludes third-party operated factories and distribution centers.

ll, while most was reused, recycled, or composted.

We have implemented several measures to reduce water consumption across our plants and distribution centers.

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We celebrate diversity in all its forms and continue to work towards building a more inclusive business.

We recognize the importance of diversity at a leadership level and throughout our whole organization, including diversity of gender, ethnicity, ability, background, religion, gender identity, and sexual orientation.

We recognize the importance of diversity at a leadership level and throughout our whole organization.

In fiscal 2024, we made strides in advancing our Diversity, Equity, and Inclusion (DE&I) initiatives.

Through the Coty Academy, we enhanced our training programs to include DE&I fundamentals, unconscious bias, and cultural awareness.

Additionally, we launched a global toolkit to facilitate Learning Festivals aimed at bolstering interpersonal communication, collaboration, and DE&I skills across our organization.

Additionally, we strive for gender balance in leadership.

Our Executive Committee and our Board of Directors are majority female.

For associates, we rolled out a new training to broaden knowledge of our sustainability framework, Beauty That Lasts.

This training introduced the three-pillared framework and included short modules on climate change and DE&I topics such as bias and microaggressions.

In July 2022, we implemented a sustainability objective for all employees eligible to the bonus plans, as part of their annual goals.

This applies for employees’ fiscal 2023 bonuses.

The accomplishment of these objectives is considered when assessing eligibility for annual bonuses.

As of October 2022, we were proud to achieve our commitment to pay equity for similar roles and performance, regardless of gender by reducing the gap in every level of our global management categories.

To further gender equality within our business, we also launched a gender-neutral Parental Leave Policy.

From November 2022, all employees, regardless of gender, have access to the same number of fully paid weeks of parental leave offered in their local region when starting or extending a family.

We also strive to reflect the communities we serve through our brands, which champion the diversity of beauty and beauty of diversity.

In fiscal 2023, Sally Hansen & CoverGirl continued their multi-year partnership with LGBTQ advocacy organization GLAAD.

Marc Jacobs Fragrance celebrates the third year of its partnerships with US-based NGO The Lesbian, Gay, Bisexual & Transgender Community Center (The Center) and second year with UK-based charity, akt.

We are committed to creating opportunities for our associates to develop skills, advance their careers and nurture their long-term employability.

Our associates undergo an annual performance review process, and work with their manager to build customized development plans.

We offer our employees a range of development activities, from learning formally through e-learning courses and trainings, and on the job.

In fiscal 2024, Max Factor UK entered the second year of partnership with UNICEF to support Skills4Girls.

This program is helping give young girls the tools and resources to reach their full potential and become the next generation of successful leaders, entrepreneurs, and change-makers.

A notable development this year was the introduction of a pilot program with new performance management philosophy for senior leaders, centered around Co-Creation Principles.

This new approach is pivotal in our efforts to transform our workplace culture into a more inclusive and empowering environment.

We have expanded our parental leave policy to offer 14 weeks of fully paid leave to all employees globally, regardless of gender, further reinforcing our commitment to creating supportive and equitable work environments.

Our dedication to DE&I has been recognized through various accolades, including one of our UK subsidiaries’ ranking among Stonewall’s Top 100 LGBTQIA+ Employers and our recognition as a leader in LGBTQ+ workplace inclusion in the US Corporate Equality Index.

Additionally, two of our UK subsidiaries have achieved certification as Disability Confident Committed Employers, underscoring our commitment to accessible and inclusive work settings.

We continue to focus on the development of our associates to foster their career growth and long-term employability.

Our training programs at the Coty Academy are designed to align with business priorities and to enhance essential skills such as personal effectiveness, people management, and leadership.

Annual Learning Festivals have been hosted at most of our largest sites and are supported by our Leadership Team.

The Learning Festivals feature a strategic and experiential agenda, that have been extremely well-received.

These festivals are crucial in our commitment to building capabilities aligned with our strategic priorities.

They include a comprehensive delivery and communication plan along with training modules focused on interpersonal skills, collaboration, and DE&I content, effectively training thousands of participants on a variety of topics.

These initiatives collectively reflect our ongoing commitment to not only embrace diversity but also to actively nurture and develop the potential of every associate within our global community.

As of October 2023, we maintained our commitment to pay equity for similar roles and performance, regardless of gender by reducing the gap in every level of our global management categories.

Our global Health and Safety Policy governs the management of work-related health and safety risks across all our manufacturing and distribution sites, including corporate offices.

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Foreign Corrupt Practices Act (the “FCPA”) as well as other countries’ anti-corruption and anti-bribery regimes, such as the U.K.

We are subject to numerous foreign, federal, provincial, state, municipal and local environmental, health and safety laws and regulations relating to, among other matters, safe working conditions, product stewardship and environmental protection, including those relating to emissions to the air, discharges to land and surface waters, generation, handling, storage, transportation, treatment and disposal of hazardous substances and waste materials, and the registration and evaluation of chemicals.

We maintain policies and procedures to monitor and control environmental, health and safety risks, and to monitor compliance with applicable environmental, health and safety requirements.

We are subject to numerous foreign, federal, provincial, state, municipal and local environmental, health and safety laws and regulations relating to, among other matters, safe working conditions, product stewardship, and environmental protection, including those relating to emissions to the air, discharges to land and surface waters, deforestation and land use, generation, handling, storage, transportation, treatment and disposal of hazardous substances and waste materials, and the registration and evaluation of chemicals.

We maintain policies and procedures to monitor and control environmental, health and safety risks,

and to monitor compliance with applicable environmental, health and safety requirements.

Compliance with such laws and regulations pertaining to the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had a material effect upon our capital expenditures, earnings or competitive position.

However, environmental and social responsibility laws and regulations have tended to become increasingly stringent and, to the extent regulatory changes occur in the future, they could result in, among other things, increased costs and risks of non-compliance for us.

For example, certain states in the U.S., such as California, and the U.S.

However, environmental and social responsibility laws and regulations have tended to become increasingly stringent which has increased our compliance costs and, to the extent regulatory changes occur in the future, they could result in, among other things, increased costs and risks of non-compliance for us.

Due to our dual-listing structure, certain of our E.U.

entities will be subject to new sustainability-related laws being implemented by E.U.

policymakers and member states.

In particular, certain of our E.U.

entities will be subject to the extensive disclosure requirements of the Corporate Sustainability Reporting Directive (“CSRD”), which has entailed, and will continue to entail, significant compliance efforts and costs.

Regulators increased focus on climate change and other sustainability issues may lead to more scrutiny by investors and other stakeholders in Europe.

In fiscal year 2025, we are assessing our compliance obligations and the impact the European Union Deforestation Regulation (“EUDR”) will have on our business as it will require companies trading in certain commodities, including, but not limited to, palm oil, wood, as well as products derived from these commodities, to ensure these commodities and related products do not result from deforestation or forest degradation in order to sell such products in the European Union.

In addition, the E.U.’s Corporate Sustainability Due Diligence Directive (“CSDDD”), adopted in July 2024, may subject certain of our E.U.

entities to additional due diligence obligations and governance requirements with respect to their own operations and “chain(s) of activities,” as promulgated, and activities of their external suppliers in their upstream value chain.

In the U.S., certain states, such as California, and the U.S.

Congress have proposed legislation relating to chemical disclosure and other requirements related to the content of our products.

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Product innovations, new product launches and the size and timing of orders from the Company’s customers may also result in variability.

However, the mix of product sales can vary considerably as a result of changes in seasonal and geographic demand for particular types of products, as well as other macroeconomic, operating and logistics-related factors, as evidenced by the impact of the COVID-19 pandemic.

Availability of Reports

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business