COTY INC. (COTY) Business

Item 1. Business.

Overview

Founded in 1904, Coty Inc. 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 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 leveraging our leadership position and capabilities in global fragrances to fuel expansion. We will continue expanding our presence in a limited number of structurally profitable and growing beauty categories, in growth channels such as e-commerce and the Travel Retail channel, all while establishing Coty as an industry leader in sustainability. We have sharpened our priorities to capitalize on structural tailwinds in the fragrance market. We are leveraging our leadership in fragrance innovation, licensing, and manufacturing to expand across price points, from mass to ultra-premium. With slower growth in China’s beauty market, we have shifted focus to a broader set of emerging markets and the U.S. In Prestige, we are accelerating our fragrance business with exceptional new launches and franchise-building extensions, expanding our premium and ultra-premium category portfolio, extending into the rapidly growing fragrance mist adjacency with multiple brands, while also enhancing assortment of our Prestige cosmetic products. In Consumer Beauty, we aim to improve performance and profitability through agile innovation, social media advocacy, and expansion into body mists and masstige fragrances. Skincare remains a strategic focus, but achieving scale takes time, and we will pursue this while remaining very mindful of the investment demands. We also continue to advance key sustainability priorities.

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

Segments

Operating and reportable segments (referred to as “segments”) reflect the way the Company is managed and for which separate financial information is available and evaluated regularly by the Company’s chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. The Company has designated its Chief Executive Officer as the CODM.

For segment financial information and information about our long-lived assets, see Note 3— Segment Reporting in the notes to our Consolidated Financial Statements.

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Brands

The following chart reflects our iconic brand portfolio:

Marketing

We have a diverse portfolio of brands, some owned and some licensed, and we employ different engagement models to create a distinct image and personality suited to each brand’s equity, distribution, product focus and consumer base. For our licensed brands, we work with licensors to promote brand image. Each of our brands is promoted with logos, packaging and advertising designed to enhance the image and the uniqueness of each brand. 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 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 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, 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 that aim to engage consumers through sampling and “gift-with-purchase” programs designed to stimulate product trials.

We have dedicated marketing and sales forces in most of our significant markets. These teams leverage local insights to strategically promote our brands and product offerings and tailor our creative marketing to fit local tastes and resonate with consumers most effectively.

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 have implemented artificial intelligence (“AI”) tools to

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power our media allocation models and support content creation and optimization, including search engine optimization copy generation and translation, to improve efficiency and reach of our marketing campaigns.

Distribution Channels and Retail Sales

We market, sell and distribute our products in approximately 123 countries and territories, with dedicated local sales forces in most of our significant markets. We have a balanced multi-channel distribution strategy which complements our product categories. Our mass beauty brands are primarily sold through hypermarkets, supermarkets, drug stores and pharmacies, mid-tier department stores, traditional food and drug retailers, and dedicated e-commerce retailers. The prestige products are primarily sold through prestige retailers, including perfumeries, department stores, e-retailers, direct-to-consumer websites and duty-free shops. We continue to focus on expanding our e-commerce and direct-to-consumer channels. We also sell our products through third-party distributors. In fiscal 2025, no retailer accounted for more than 10% of our global net revenues; however, certain retailers accounted for more than 10% of net revenues within certain geographic markets and segments. In fiscal 2025, Walmart and A.S. Watson, our top retailers, each accounted for approximately 4% of total Coty Inc. net revenues.

Innovation

Innovation is a pillar of our business. We innovate through brand-building and new product lines, as well as through new technology. Our research and development teams, which include scientists, engineers, analysts, and other specialists involved in product and packaging innovation, work with our marketing and operations teams to identify recent trends and consumer needs and to bring products quickly to market.

We are continuously innovating to increase our sales by elevating our digital presence, including e-commerce and digital, social media and influencer marketing designed to build brand equity and consumer engagement. We have also focused our efforts on meeting evolving consumer shopping preferences and behaviors, both on-line and in-store. We have introduced new ways to customize the consumer experience, including using AI-powered tools to provide personalized advice on selecting and using products, and augmented reality tools that invite customers to virtually try products with curated looks, tutorials and product recommendations.

In addition, we continuously seek to improve our products through research and development. Our basic and applied research groups, which conduct longer-term and “blue sky” research, seek to develop proprietary new technologies for first-to-market products and for improving existing products. This research and development is done both internally and through affiliations with various universities, technical centers, supply partners, industry associations and technical associations. A number of our products incorporate patented, patent-pending or proprietary technology. In addition, several of our products and/or packaging for our products are covered by design rights protections.

Our principal research and development centers are located in the U.S. and Europe, with global centers of excellence for fragrance (Switzerland), skincare (Monaco), body care (Brazil) and cosmetics (U.S.). See “Item 2. Properties.”

We do not perform, nor do we commission any third parties on our behalf, to perform testing of our products or ingredients on animals except where required by law. In the few jurisdictions requiring animal testing, we actively apply for exemptions and work with local authorities and organizations to authorize alternative methods of product testing.

Supply Chain

During fiscal year 2025, we continued to manufacture and package approximately 81% of our products, primarily in facilities located in the United States, Brazil and various countries in Europe. We recognize the importance of our employees at our manufacturing facilities and have in place programs designed to ensure operating safely. In addition, we implement programs designed to ensure that our manufacturing and distribution facilities comply with applicable environmental rules and regulations, as well as initiatives to support our sustainability goals. To capitalize on innovation and other supply chain benefits, we continue to utilize a network of third-party manufacturers on a global basis who produce approximately 19% of our finished products.

The principal raw materials used in the manufacture of our products are primarily essential oils, alcohols and specialty chemicals. The essential oils in our fragrance products are generally sourced from fragrance houses. As a result, we realize material cost savings and benefits from the technology, innovation and resources provided by these fragrance houses.

We purchase the raw materials for all our products from various third parties. We also purchase packaging components that are manufactured to our design specifications. We collaborate with our suppliers to meet our stringent design and creative criteria. We believe that we currently have adequate sources of supply for all our products. We review our supplier base periodically with the specific objectives of improving quality, increasing innovation and speed-to-market, ensuring supply sufficiency and reducing costs.

We have experienced disruptions in our supply chain from time to time, including in connection with our past restructuring efforts and, more recently due to global supply disruptions, and we work to anticipate and respond to actual and potential

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disruptions. 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 have begun to implement advanced digital solutions to streamline and enhance our supply chain operation, including AI and machine learning tools for demand planning, and continue to explore options to further optimize our supply chain operations. In fiscal 2025, we established a global supply chain hub in Barcelona to centralize supply chain operations and drive efficiencies to improve service levels, inventory management and carbon impact, and we will continue to evaluate our full manufacturing and sourcing ecosystem to enable the delivery of consistent improvement in costs of goods sold.

Competition

There is significant and increasing competition within each market where our products are sold. We compete against manufacturers and marketers of beauty products, salon professional nail products and personal care products. In addition to the established multinational brands against which we compete, small targeted niche brands continue to enter the beauty market. We also have competition from private label products sold by retailers.

We believe that we compete primarily on the basis of perceived value, including pricing and innovation, product efficacy, service to the consumer, promotional activities, advertising, special events, new product introductions, e-commerce initiatives, direct sales and other activities (including influencers) and the ability to effectively leverage existing and emerging digital technologies, such as AI and data analytics, to gain more commercial insights and develop relevant marketing concepts and advertising to reach consumers. It is difficult for us to predict the timing, scale and effectiveness of our competitors’ actions in these areas or the timing and impact of new entrants into the marketplace. For additional risks associated with our competitive position, see “Risk Factors—The beauty industry is highly competitive, and if we are unable to compete effectively, our business, prospects, financial condition and results of operation could suffer”.

Intellectual Property

We generally own or license the trademark rights in key sales countries in Trademark International Class 3 (covering cosmetics and perfumery) for use in connection with our brands. When we license trademark rights we generally enter into long-term licenses, and we are generally the exclusive trademark licensee for all Class 3 trademarks as used in connection with our products. We or our licensors, as the case may be, actively protect the trademarks used in our principal products in the U.S. and significant markets worldwide. We consider the protection of our trademarks to be essential to our business.

A number of our products also incorporate patented, patent-pending or proprietary technology in their respective formulations and/or packaging, and in some cases our product packaging is subject to copyright, trade dress or design protection. 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 48% of our fiscal 2025 net revenues are manufactured and marketed under brands owned by us or under licenses which are effectively perpetual. Products representing 37% of our fiscal 2025 sales are under exclusive license agreements granted to us for use on a worldwide and/or regional basis with a remaining duration spanning from 7 to 25 years. As of June 30, 2025, we maintained 22 brand licenses. In addition, approximately 60% of our fiscal 2025 net revenues were attributable to prestige fragrance, of which approximately 91% was from our top seven prestige fragrance brands. Approximately 81% of the revenues from our top seven fragrance brands were from licenses with remaining durations spanning from approximately 7 to 20 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. We believe that we are currently in material compliance with the terms of our material brand license agreements.

Our license agreements have an average duration of approximately 24 years. Most brand licenses have renewal options for one or more terms, which can range from two to ten years. 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 are up for non-automatic renewal before 2028, with an average remaining duration of 13 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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Human Capital

Workforce. As of June 30, 2025, we had approximately 11,636 full-time employees in over 36 countries. In addition, we typically employ a large number of seasonal contractors during our peak manufacturing and promotional season.

Our employees in the U.S. are not covered by collective bargaining agreements. Our employees in certain countries in Europe are subject to works council arrangements and collective bargaining agreements. We have not experienced a material strike or work stoppage in the U.S. or any other country where we have a significant number of employees.

Our employees are a key source of competitive advantage and their actions, guided by our Code of Conduct and our global compliance program, Behave Beautifully, are critical to the long-term success of our business. We recognize the importance of our employees to our business and believe our relationship with our employees is satisfactory.

Environmental, Social and Governance

Our sustainability framework, Beauty That Lasts, is a multi-pillared strategy which aims to contribute to a more sustainable and inclusive future. We focus on three pillars: Beauty of our Planet, Beauty of our People and Governed Beautifully, while the Beauty of our Products sits at heart of everything we do.

We report annually on our progress towards our sustainability targets through a separate sustainability report. Our sustainability reports and other information on our sustainability initiatives and achievements are available on our website. Changing circumstances, including evolving expectations for sustainability, or changes in standards and the way progress is measured, may lead to adjustments in, or the discontinuation of, our pursuit of certain goals, commitments, or initiatives (see additional discussion in “Forward-looking Statements—Cautionary Note Regarding Sustainability Information”). 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.

Governed Beautifully

At Coty, we believe that sustainability needs to be integrated into the business, with each area of impact led by the relevant business functions. The Executive Committee (“EC”) and Senior Leadership Team (“SLT”) are responsible for the development of strategy, targets and driving progress for their respective material topics. The global Sustainability Office develops the transversal sustainability strategy and is responsible for ESG reporting and governance, under the oversight of the Chief Scientific & Sustainability Officer. The Sustainability Office provides formal updates to both the EC and the Board at least once a year. Our Board provides oversight, including through its committees and our Board member for ESG.

The Sustainability Office and our business leaders work to drive change and lead our reporting and due diligence efforts. Our Sustainability Office also works closely with Coty’s brands and external partners to implement, evolve, and communicate Beauty that Lasts.

To enable our sustainability strategy to reflect our impact, the views of our stakeholders, and the risks and opportunities sustainability issues have for our business, in fiscal 2025, we completed a double materiality assessment in line with European Sustainability Reporting Standards (“ESRS”) guidance. Our identified material topics will guide our program and inform our future reporting.

Governed Beautifully also means conducting business ethically and responsibly. Our global compliance program, ‘Behave Beautifully,’ is designed to detect and prevent unlawful behavior and promote a culture of ethical business practice. We also expect our suppliers to implement responsible practices and aim to manage any negative environmental, social, or economic impacts through our Code of Conduct for Business Partners, supplier assessments and ethical sourcing practices.

The Beauty of Our Planet

Conserving and protecting the natural environment is a vital part of our responsibility as a business. We are committed to minimizing the environmental impact of our operations.

Our short-term greenhouse gas (“GHG”) emissions targets are approved by the Science Based Target initiative (“SBTi”). The targets cover our GHG emissions for scopes 1 and 2, renewable electricity commitment and our GHG reduction for scope 3. In November 2023, we committed to the SBTi to set emissions reduction targets in line with science-based net-zero1.

We continue to focus on the implementation of these targets with the development of operational plans. We are currently implementing our climate strategy focusing on areas: packaging, formula, sourcing, transportation, media, merchandising and the impact of our own operations.

For the first time, we conducted a climate risks assessment in line with Task Force on Climate-related Financial Disclosures (“TCFD”) framework to improve our risks and opportunities assessment.

Our products have an important role to play in building a sustainable future for the beauty sector.We are changing the way we design, formulate and manufacture in order to minimize our environmental impact and create innovative products. We have

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

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introduced an internal product ‘Carbon Kind’ score, which acts as launch acceptance criteria for all new products, embedding a quantitative measure of eco-design into our design process.

Packaging contributes to our environmental footprint. In 2024, we shared ambitious new packaging targets to promote circular design. We also introduced our first water target to reduce our water withdrawal, strengthening our commitments to reducing our environmental impact.

We recognize that sustainability efforts require collaboration which goes beyond our own organization. In 2024, we rejoined the Ellen MacArthur Foundation Network as a Member to support us to implement and scale circular design.

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

The Beauty of Our People

We are committed to playing our part in creating an inclusive business and society and helping to build a beauty industry that respects and protects human rights across the value chain.

We celebrate the beauty of our people and aspire to build a workplace where all employees are welcome and included. We recognize the importance of diverse leadership and perspectives. We have been focused on making progress on pay equity for similar roles and performance, regardless of gender, and will report our progress in our upcoming sustainability report.

We continue to focus on the development of our associates to foster their career growth. 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.

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. Consumer safety is a top priority. In fiscal year 2025, we published our Product and Ingredient Policy, outlining the standards and procedures we follow when selecting ingredients and materials for usage in our products.

Our impact on people reaches across our entire value chain. Managing our supply chain responsibly involves diligent attention to raw materials that may pose potential human rights risks. In calendar year 2024, we conducted a new third-party human rights risk mapping of Coty’s procurement functions against leading recognized indicators.

Government Regulation

We and our products are subject to regulation by various U.S. federal regulatory agencies as well as by various state and local regulatory authorities and by the applicable regulatory authorities in the countries in which our products are produced or sold. Such regulations principally relate to the ingredients, labeling, manufacturing, packaging, advertising and marketing and sales and distribution of our products. Because we have commercial operations overseas, we are also subject to the U.S. Foreign Corrupt Practices Act as well as other countries’ anti-corruption and anti-bribery regimes, such as the U.K. Bribery Act.

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 GHG emissions, 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 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. and non-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. and non-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. We continuously assess our compliance obligations and the impact the European Union Deforestation Regulation (“EUDR”) will have on our business as it will require due diligence on our value chain to ensure covered commodities and related products do not contribute to global deforestation and forest degradation. In addition, the E.U.’s Corporate Sustainability Due Diligence Directive (“CSDDD”), expected to apply from 2027, may subject certain of our E.U. and non-E.U. entities to engage in 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, have proposed and adopted legislation relating to corporate climate disclosures, chemical disclosure and other requirements related to the content of our products. For more information, see “Risk Factors—

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Changes in laws, regulations and policies that affect our business or products could adversely affect our business, financial condition and results of operations.”

Seasonality

The Company’s sales generally increase during the second fiscal quarter as a result of increased demand associated with the winter holiday season. Financial performance, working capital requirements, sales, cash flows and borrowings generally experience variability during the three to six months preceding the holiday season. 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.

Availability of Reports

We make available financial information, news releases and other information on our website at www.coty.com. There is a direct link from our website to our SEC filings via the EDGAR database at www.sec.gov, where our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge as soon as reasonably practicable after we file such reports and amendments with, or furnish them to, the SEC. Stockholders may also contact Investor Relations at 350 Fifth Avenue, New York, New York 10118 or call 212-389-7300 to obtain hard copies of these filings without charge.

We use our website as a channel for routine distribution of important information, including news releases, presentations, and financial information. We have also posted on our website our: (i) Principles of Corporate Governance; (ii) Code of Conduct (and any amendments or waivers); (iii) Code of Conduct for Business Partners; (iv) Charters for the Audit and Finance Committee and Remuneration and Nomination Committee; and (v) sustainability information, including information on our sustainability strategy, Beauty that Lasts. The information on our website is not, and will not be deemed to be, a part of this annual report on Form 10-K or incorporated into any of our other filings with the SEC.