Certain statements in this release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect Coty’s current views with respect to, among other things, Coty’s targets, outlook and/or guidance for FY19 and beyond (including extent and timing of revenue and profit trends, the Consumer Beauty division’s stabilization, and Net Debt / Adjusted EBITDA ratio), establishing Coty as a global leader and challenger in beauty, its future operations and strategy (including brand relaunches and performance in emerging markets and channels), synergies, savings, performance and integration relating to its recent acquisitions (including the P&G Beauty Business) and its ongoing and future cost efficiency and restructuring initiatives and programs, strategic transactions (including mergers and acquisitions, joint ventures, investments, divestitures, licenses and portfolio rationalizations), future cash flows and liquidity, future performance in digital and e-commerce and the expected impact of its digital transformation agenda, future effective tax rates , timing and size of cash outflows and debt deleveraging, and impact and timing of supply chain disruptions. These forward-looking statements are generally identified by words or phrases, such as “anticipate”, “are going to”, “estimate”, “plan”, “project”, “expect”, “believe”, “intend”, “foresee”, “forecast”, “will”, “may”, “should”, “outlook”, “continue”, “target”, “aim”, "potential" and similar words or phrases. These statements are based on certain assumptions and estimates that Coty considers reasonable, but are subject to a number of risks and uncertainties, many of which are beyond Coty’s control, which could cause actual events or results (including our financial condition, results of operations, cash flows and prospects) to differ materially from such statements, including risks and uncertainties relating to:
• Coty’s ability to achieve its global business strategies, compete effectively in the beauty industry and achieve the benefits contemplated by its strategic initiatives (including sell-through of its relaunched brands, enhancement of its innovation pipeline, focus on emerging markets and channels, improvement of in-store execution and reduction of discounts in certain markets) within the expected time frame or at all;
• Coty’s ability to anticipate, gauge and respond to market trends and consumer preferences, which may change rapidly, and the market acceptance of new products, including any launches or relaunches and their anticipated costs and discounting, and consumer receptiveness to its marketing and consumer engagement activities (including digital marketing and media);
• use of estimates and assumptions in preparing Coty’s financial statements, including with regard to revenue recognition, stock compensation expense, income taxes, the assessment of goodwill, other intangible assets and long-lived assets for impairment, the market value of inventory, pension expense and the fair value of acquired assets and liabilities associated with acquisitions;
• managerial, integration, operational, regulatory, legal and financial risks, including diversion of management attention to and management of cash flows, costs and expenses associated with Coty’s multiple ongoing and future strategic initiatives and internal reorganizations and restructuring activities;
• the continued integration of the P&G Beauty Business and other recent acquisitions with the Company’s business, operations, systems, financial data and culture and the ability to realize synergies, avoid future supply chain and other business disruptions, reduce costs and realize other potential efficiencies and benefits (including through Coty’s restructuring initiatives) at the levels and costs and within the time frames contemplated or at all;
• increased competition, consolidation among retailers, shifts in consumers’ preferred distribution and marketing channels (including to digital and luxury channels), shelf-space resets, compression of go-to-market cycles, changes in product and marketing requirements by retailers, and other changes in the retail, e-commerce and wholesale environment in which Coty does business and sells its products and its ability to respond to such changes;
• Coty and its brand partners' and licensors' ability to obtain, maintain and protect the intellectual property rights, including trademarks, brand names and other intellectual property used in its and their respective businesses, protect its and their respective reputations (including those of its and their executives), public goodwill, and defend claims by third parties for infringement of intellectual property rights;
• the effect of the divestiture and/or discontinuation of its non-core brands (including associated post-closing cost reduction programs) and rationalization of wholesale distribution by reducing the amount of product diversion to the value and mass channels;
• any change to Coty’s capital allocation and/or cash management priorities;
• any unanticipated problems, liabilities or other challenges associated with an acquired business which could result in increased risk or new, unanticipated or unknown liabilities, including with respect to environmental, competition and other regulatory, compliance or legal matters;
• Coty’s international operations and joint ventures, including enforceability and effectiveness of its joint venture agreements and reputational, compliance, regulatory, economic and foreign political risks, including difficulties and costs associated with maintaining compliance with a broad variety of complex domestic and international regulations;
• Coty’s dependence on certain licenses (especially in its Luxury division) and its ability to renew expiring licenses on favorable terms;
• Coty’s dependence on entities performing outsourced functions and third-party suppliers, including third party software providers;
• administrative, development and other difficulties in meeting the expected timing of market expansions, product launches and marketing efforts;
• global political and/or economic uncertainties, disruptions or major legal, regulatory or policy changes and/or the enforcement thereof that affect Coty’s business, financial performance, operations or its products,
including the impact of Brexit, the current U.S. administration, the results of elections in European countries and future elections in Brazil, changes in the U.S. tax code, and recent changes and future changes in tariffs, retaliatory and trade protection measures, trade policies and other international trade regulations in the U.S. and in other regions where Coty operates including the European Union;
• the number, type, outcomes (by judgment, order or settlement) and costs of legal, tax, regulatory or administrative proceedings, investigations and/or litigation;
• Coty’s ability to manage seasonal and other variability and to anticipate future business trends and business needs;
• disruptions in operations, including due to disruptions in supply chain, restructurings and other business alignment activities, manufacturing or information technology systems, labor disputes and natural disasters;
• restrictions imposed on Coty through its license agreements, credit facilities and senior unsecured bonds, Coty’s ability to repay, refinance or recapitalize debt, and changes in the manner in which Coty finances its debt and future capital needs;
• increasing dependency on information technology and Coty’s ability to protect against service interruptions, data corruption, cyber-based attacks or network security breaches, costs and timing of implementation and effectiveness of any upgrades or other changes to information technology systems, including Coty’s digital transformation initiatives, and its failure to comply with any privacy or data security laws (including the European Union General Data Protection Regulation) or to protect against theft of customer, employee and corporate sensitive information;
• the Company’s ability to attract and retain key personnel;
• the distribution and sale by third parties of counterfeit and/or gray market versions of the Coty’s products; and
• other factors described elsewhere in this document and from time to time in documents that Coty files with the SEC.
When used herein, the term “includes” and “including” means, unless the context otherwise indicates, including without limitation. More information about potential risks and uncertainties that could affect Coty’s business and financial results is included under the heading “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Coty’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018 and other periodic reports Coty has filed and may file with the SEC from time to time.
All forward-looking statements made in this release are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this release, and Coty does not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in future operating results over time or otherwise.
Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance unless expressed as such, and should only be viewed as historical data.
