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CORRESP
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February 29, 2024

By EDGAR, “CORRESP” Designation

Division of Corporation Finance

Office of Industrial Applications and Services

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549-7010

Attn: Ms. Tracey Houser and Ms. Jeanne Baker

Re:      Coty Inc.

Form 10-K for the Fiscal Year Ended June 30, 2023

Form 8-K Filed February 8, 20241

File No. 001-35964

Dear Ms. Houser and Ms. Baker:

On behalf of Coty Inc. (the “Company” or “we”), this letter responds to your letter, dated February 14, 2024 (“Comment Letter”) regarding the above-referenced Form 10-K for the Fiscal Year Ended June 30, 2023 (“fiscal 2023”) filed on August 22, 2023 and Form 8-K filed on February 7, 2024. Each of your comments is set forth below, followed by the corresponding response. For ease of reference, the headings and numbered paragraphs below correspond to the headings and numbered comments in the Comment Letter. Each response of the Company is set forth in ordinary type beneath the corresponding comment of the Staff of the Division of Corporation Finance (the “Staff”) from the Comment Letter appearing in bold type.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, page 31

1.Please expand your discussion and analysis to quantify the impact when multiple factors contribute to the changes in these line items. One example are the material factors listed as positively and negatively impacting net revenues for each of the reportable segments that provide no insight as to how each factor impacted net revenues. Further, net revenue analysis at the consolidated and segment levels should include quantification of the extent to which changes in volume, pricing and product mix impacted net revenues rather than on a combined basis. Refer to Item 303(b)(2) of Regulation S-K and Section 501.12 of the Financial Reporting Codification for guidance.

Response:

The Company acknowledges the Staff’s comment. We respectfully submit that we have considered the guidance in Item 303(b)(2) of Regulation S-K and Section 501.12 in preparing our disclosures to explain material changes in net revenue from period to period in Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”). In order to provide further insight in circumstances where multiple factors contribute to changes in line items, as raised in the Staff’s comment, we propose to update our disclosure in future filings, as applicable, beginning with our Form 10-Q for the

1 The Company respectfully notes that the referenced Form 8-K was filed on February 7, 2024.

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quarter ended March 31, 2024, to quantify the impact of such factors. For the Staff’s reference, below is the updated disclosure marked to show changes against the disclosure in our Form 10-K for the fiscal year ended June 30, 2023 (data as of June 30, 2023) as an example, for illustrative purposes only, of how the Company intends to expand its disclosures in future filings (underscored language indicates new disclosure and deletions are indicated in strike-through). We will implement similar changes to other line items, where applicable.

In considering the application of Item 303(b)(2)(iii) regarding disclosure of changes in line items that may be attributable to changes in price, volume or mix, we respectfully advise the Staff that due to the nature of the Company’s product offerings, changes in price and mix are often interrelated and Company management considers price and mix in combination when evaluating business performance. Furthermore, as separate price and mix data is not used in managing the business, the Company does not have in place the internal processes, system configurations, and controls to facilitate such a separation and quantification of price and mix data for inclusion in the MD&A. As the Staff is aware, the Company’s product categories consist of fragrances, color cosmetics, and skin and body care products, which are marketed through distinctive brands that address a variety of consumer preferences. Within some of these categories are thousands of product variations (e.g., sizes, packaging, formulations, etc.) that may be sold at different price points due to brand positioning and product type (e.g., skin care and fragrance products are generally priced higher than makeup products). As we have disclosed, we continually introduce new products, support new and established products, including product reformulations, and phase out existing products that no longer meet the needs of our consumers or our business objectives. In addition, the impact of new product launches and the related pricing effects on new and existing products further blur the distinction between the price and mix impact on our net revenues. Likewise, our premiumization strategy, which involves introducing new products at higher selling prices, results in a combined  price and mix impact when consumers shift from purchasing existing products to newer premium products. Similar to peers in the beauty industry, we propose to supplement our future disclosures to quantify material changes in net revenues attributable to volume, including volume changes driven by the impact of new product innovation, and pricing. As disclosed in the Overview section to the MD&A, volume remained stable year-over-year, therefore, in discussing our segment results, we did not disclose the impact when comparing fiscal 2023 to fiscal 2022 net revenues, as the change in volumes did not materially impact the change in net revenues. In addition, if material to our business as a whole, we will further expand such disclosures by product category and geographic region as appropriate.

Please refer below for a revised discussion of segment net revenue included on pages 37 and 38 of our Form 10-K for the fiscal year ended June 30, 2023 (data as of June 30, 2023). For our discussion of consolidated net revenue and all other line items where there are multiple factors that contribute to the change in activity between comparative periods, we will include quantification of such factors in future filings in a similar manner.

Sample Disclosure:

Prestige

In fiscal 2023, net revenues in the Prestige segment increased 5%, or $152.6 to $3,420.5 from $3,267.9 in fiscal 2022. Excluding net revenue from the second half of the prior period from Russia, net revenues increased 6% or $169.0 to $3,420.5 from $3,251.5, reflecting a positive price and mix impact of 11% (primarily due to the positive pricing impact as a result of global price increases and in line with the overall premiumization strategy) partially offset by a negative foreign currency exchange translation impact of 5%. The increase in net revenues primarily reflects:

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•Prestige fragrance sales grew $186.5, due to the continued success and growth of prestige fragrances, specifically of Burberry Hero, Burberry Her, Calvin Klein, Hugo Boss Boss Bottled, Gucci Flora, and Marc Jacobs Daisy, particularly in the U.S. due to positive market trends and innovation, and in travel retail across all major regions impacted by increased leisure travel compared to the prior year.

ii)     the positive pricing impact as a result of global price increases and in line with the overall premiumization strategy;

iii)    growth in travel retail net revenues in all major regions due to increased leisure travel compared to the prior year; and

iv)     growth in the U.S due to positive market trends and innovation in the prestige fragrance brands.

These increases were partially offset by:

•Prestige makeup sales declined $18.4, lower net revenues in the Prestige makeup category impacted by a decline in primarily due to Gucci makeup travel retail sales in the Asia Pacific region as a result of slow recovery from the lockdowns in China.; and

•Prestige skincare sales declined $10.6, primarily due to lower net revenues for philosophy due to less innovation and repositioning of the brand.

Consumer Beauty

In fiscal 2023, net revenues in the Consumer Beauty segment increased 5%, or $97.1, to $2,133.6 from $2,036.5 in fiscal 2022. Excluding net revenue from the second half of the prior period from Russia, net revenues increased 6% or $107.8 to $2,133.6 from $2,025.8, reflecting a positive price and mix impact of 10% (primarily due to price increases across the Consumer Beauty product portfolio) partially offset by a negative foreign currency exchange translation impact of 4%. The increase in net revenues primarily reflects:

•Color cosmetics sales grew $53.3, resulting from an increase in net revenues from color cosmetics brands, including CoverGirl due to positive pricing impact and higher sell-out resulting in lower returns and markdowns in the U.S., and Rimmel Manhattan due to brand innovation and positive price and mix impact in major European markets, such as Germany, Austria and Switzerland, and Australia.;

•Skin and body care  sales grew $52.8, resulting from an increase in net revenues from the skin and body care growth of brands in Brazil due to strong category momentum, and positive product mix impact within our Brazilian brands’ portfolio, as well as due to innovation in brands such as Monange and market share gains for Paixao.; and

(iii) due to price increases across the Consumer Beauty product portfolio.

These increases were partially offset by:

•Mass fragrance sales declined $8.6 These increases were partially offset by lower net revenues from the mass fragrance category, primarily due to negative foreign currency exchange translation impacts.

2.Please provide an analysis of the factors materially impacting your results of operations at the consolidated and segment levels. In this regard, we note you attribute the improvement in operating income from continuing operations to the changes in various types of costs without an analysis of the underlying causes. One example is to provide a discussion as to why there was a reduction in fixed costs and whether you expect this trend to continue. Similarly, we note you attribute the change in net revenues to a change in the mix of products without explaining how

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that change in the mix of products also impacted operating income and whether you expect the change to continue into the future. Finally, we note a more robust discussion of your operating results in your earnings press release. Refer to Item 303(b)(2) of Regulation S-K and Section 501.12.b. of the Financial Reporting Codification (i.e., Release 33-8350, Section III.B.) for guidance.

Response:

The Company acknowledges the Staff’s comment. We propose to update our disclosure in future filings, as applicable, beginning with our Form 10-Q for the quarter ended March 31, 2024. For the Staff’s reference, below is the updated disclosure marked to show changes against the disclosure in our Form 10-K for the fiscal year ended June 30, 2023 (data as of June 30, 2023) as an example, for illustrative purposes only, of how the Company intends to expand its disclosures in future filings. We will implement similar changes to other line items, where applicable. The following is illustrative of the disclosure updates we plan to incorporate into future filings (underscored language indicates new disclosure and deletions are indicated in strike-through) based on page 31 of the 10-K.

OVERVIEW

We expect that our net revenue for fiscal year 2024 will grow in the mid-to-high single digits versus the prior year, excluding the impact of foreign exchange and the early termination of the Lacoste fragrance license.

We anticipate that our annual gross margin will remain in the mid-sixties, providing us with opportunities to fund new product initiatives and support our brands through advertising and consumer promotional investments. We continue to target advertising and consumer promotional spending in the high-twenties percentage of net revenues. However, our level of advertising and consumer promotional spending will depend on various factors, including seasonality, the timing of product launches, and budgetary considerations. We anticipate that fixed costs as a percentage of our net revenues will incrementally improve annually as we continue to take steps to gradually optimize our fixed cost base.

The following is illustrative of the disclosure updates we plan to incorporate into future filings (underscored language indicates new disclosure and deletions are indicated in strike-through) based on page 40 of the 10-K for the fiscal year ended June 30, 2023 (tables are not shown).

OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS

In fiscal 2023, operating income from continuing operations was $543.7 compared to an income of $240.9 in fiscal 2022. Operating income as a percentage of net revenues, improved to 9.8% in fiscal 2023 as compared to Operating income as a percentage of net revenues of 4.5% in fiscal 2022. The improved operating margin is largely driven by lower fixed costs as a percentage of net revenues (approximately 150 basis points) primarily due to lower depreciation expense related to fully depreciated IT equipment, lower stock-based compensation as a percentage of net revenues (approximately 130 basis points) primarily related to a reduction in expense recognized in connection with a prior year’s grant made to the CEO, lower advertising and consumer promotional spending as a percentage of net revenues (approximately 100 basis points) primarily due to a reduction in working media, and an  decrease in asset impairment charges as a percentage of net revenues (approximately 60 basis points) related to the impairment of indefinite-lived intangibles recorded in the prior period. In addition, the greater proportion of higher margin Prestige product sales coupled with the fact that a higher proportion of Consumer Beauty sales were from lower margin Brazil brands, compared to the prior year, positively benefited our consolidated gross margin and operating income.

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In fiscal 2022, operating income from continuing operations was $240.9 compared to a loss of $48.6 in fiscal 2021. Operating income as a percentage of net revenues, improved to 4.5% in fiscal 2022 as compared to Operating loss as a percentage of net revenues of (1.0)% in fiscal 2021. The improved operating margin is largely driven by lower cost of goods sold as a percentage of net revenues (approximately 370 basis points) due to the above-mentioned drivers, a reduction in fixed costs as a percentage of net revenues (approximately 290 basis points) primarily due to a decrease in compensation expense related to a reduction in employee headcount,  a decrease in acquisition and divestiture related expenses as a percentage of net revenues (approximately 270 basis points), a decrease in gains recognized on sale of real estate as a percentage of net revenues (approximately 220 basis points), lower amortization expense as a percentage of net revenues (approximately 150 basis points) mainly due to the certain definite-lived intangible assets reaching the end of their useful lives, and a decrease in restructuring expense as a percentage of net revenues (approximately 150 basis points). These items were partially offset by an increase in advertising and consumer promotional costs as a percentage of net revenues (approximately 520 basis points) primarily do due to an increase in working media, higher stock-based compensation as a percentage of net revenues (approximately 310 basis points) primarily related to the CEO grant made on June 30, 2021, and an increase in asset impairment charges as a percentage of net revenues (approximately 60 basis points) related to the impairment of indefinite-lived intangibles.

The following is illustrative of the disclosure updates we plan to incorporate into future filings (underscored language indicates new disclosure and deletions are indicated in strike-through) based on page 41 of the 10-K for t