Coty has reported a -1% year-on-year net revenue decline (-2% like-for-like LFL) to US$1.56 billion for its first quarter ended 30 September.
However, the beauty house’s six core Prestige brands – Burberry, Hugo Boss, Calvin Klein, Marc Jacobs, Chloé and Kylie Cosmetics – collectively returned to growth, with year-on-year sales increasing +5% in the quarter and partially offsetting declines in other areas of the portfolio.
The results come as Coty advances its Coty.Curated strategic framework, focusing investment on core brands and markets while reducing portfolio complexity and simplifying its organisation.
Coty Executive Chairman and Interim Chief Executive Officer Markus Strobel commented: “Our Coty.Curated framework is beginning to deliver results. Over the past year, we have increasingly concentrated investment behind our Top 6 core Prestige brands, which represented 73% of Prestige sales in Q1.
“These brands moved from a -6% like-for-like decline in the first half of fiscal 2026 to +5% like-for-like growth in the first quarter, with five of the six growing and combined sell-out returning to growth.
“Our first-half launches, including BOSS Bottled Beyond for Her, Burberry Goddess Amber Vanilla, Mood Stones by Kylie Jenner, and Marc Jacobs Beauty makeup, are resonating with consumers and tracking ahead of plan.”
Reported and adjusted gross margin declined by 120 basis points to 63.3%, reflecting higher freight and material costs linked to the Middle East conflict, alongside increased excess and obsolescence costs.
Reported operating income fell -8% to US$170.4 million, while adjusted operating income also decreased -8% to US$220.5 million. Reported operating margin contracted to 11%, while adjusted operating margin decreased by 100 basis points to 14.2%.
Reported net income grew to US$106.2 million, while adjusted net income rose to US$146.1 million.
“Our first-quarter results were ahead of expectations on sales, adjusted EBITDA and EPS, alongside a significant improvement in free cash flow, supported by the focus of Coty.Curated,” Strobel added.
“Our like-for-like sales decline narrowed to -2%, broadly in line with the fourth quarter and a clear improvement from the declines of -6% and -4% in the first and second halves of fiscal 2026, reflecting improvements in key markets like the USA, Asia Pacific and Latin America.
“While our progress in the first quarter is encouraging, we have more work to do to translate green shoots into a broad-based recovery.” {Story continues below the panel that follows}
Mette Engell on curating Coty’s next chapter in travel retail Coty is sharpening its focus on six priority brands, expanding its makeup offer and preparing new fragrance launches under its Coty.Curated strategy. Speaking to The Moodie Davitt Report Brands Director Hannah Tan at the TFWA World Exhibition in Cannes, Coty Senior Vice President Global Travel Retail Mette Engell discusses the portfolio priorities, recruiting younger travellers and the role of advocacy in driving conversion. She also outlines how makeup is supporting fragrance sales and why generative engine optimisation is emerging as a new area of focus. Click here for the full interview. |
Performance by division
Prestige net revenue, accounting for 68% of group sales, decreased -1% on both a reported and like-for-like basis to US$1.06 billion. Moderate declines in Prestige fragrance and skincare were partially offset by growth in cosmetics led by Marc Jacobs Beauty.
The company said BOSS Bottled Beyond for Her, Mood Stones by Kylie Jenner and Marc Jacobs contributed 2% to the growth of the Prestige Core brands. Kylie Cosmetics achieved double-digit like-for-like sales growth, supported by its fragrance collection and new lip kits.
Coty extended the Marc Jacobs license, agreeing a 40-year duration for the brand and building on a partnership that began in 2003. Coty said Marc Jacobs Beauty sales have already exceeded expectations.
Strobel commented: “I am proud that we have extended the Marc Jacobs license, securing a 40-year license duration for the brand. Since our partnership began in 2003, Coty has built multiple iconic fragrances, with Marc Jacobs fragrances now ranking among the Top 10 to 15 prestige female fragrances across the USA, UK, Canada and Australia.
“The recent launch of Marc Jacobs Beauty makeup is also off to a strong start across these markets. The multi-decade agreement provides Coty with a strong platform to build on that momentum while enhancing the long-term visibility of Coty’s Prestige portfolio.
“This extension is also a powerful testament to Coty’s position as a partner of choice for the world’s leading luxury fashion and lifestyle brands.”
Further Prestige priorities include increasing marketing investment behind Burberry fragrance and makeup, alongside the selective retail launch of its ultra-premium Prorsum fragrance collection. Coty said Burberry Goddess Amber Vanilla was performing ahead of expectations and ranked among the top five female fragrance launches.
The company is also supporting Hugo Boss’s female fragrance business through BOSS Bottled Beyond for Her, while preparing further launches across Calvin Klein, Chloé and Davidoff. Etro fragrances are are scheduled to debut in the second half of FY27, followed by Swarovski fragrances in 2027.
Consumer Beauty revenue, which represents 32% of group sales, fell -2% on a reported basis and -3% like-for-like in the period to US$496.8 million. Lower colour cosmetics and mass fragrance sales were partially offset by growth in mass bodycare.
Coty is concentrating investment on four core Consumer Beauty brands: CoverGirl, Rimmel, Sally Hansen and adidas.
The company is pursuing fewer, higher-impact launches under its Color the Future programme. These include CoverGirl Clean Fresh Yummy Big Oil Stick, Rimmel Oh My Gloss! Slip Stick, Max Factor Lasting Blur and seasonal Sally Hansen collections.
Strobel commented: “In Consumer Beauty, the like-for-like decline narrowed to 3% from 8% in the first half of fiscal 2026. CoverGirl and Sally Hansen in the USA and Rimmel in the UK are narrowing their retail sales gap to their categories. Sally Hansen regained the number one position among US mass nail brands in the overall nail category.
“The prestige and mass beauty markets continue to grow despite macroeconomic uncertainty, while our overall sell-out still trails the market in both divisions. Our priority is to translate investment into stronger sell-out and market share gains, with market share embedded in how we reward performance across the organisation.”
Regional performance
Asia Pacific reported revenue increased US$19.4 million year-on-year for the reported period, primarily driven by higher sales in China, Southeast Asia and Asia travel retail.
Americas revenue increased US$3.4 million, mainly reflecting growth in Brazil. EMEA revenue declined US$44.8 million as lower sales in the Middle East and Europe outweighed gains in Africa.
Outlook
Coty expects second-quarter FY27 like-for-like revenue to decline by a low-single-digit percentage, broadly consistent with the preceding two quarters, while its six core Prestige brands are expected to continue growing.
FY27 is expected to be a transition year as Coty completes its strategic review and advances the early-stage implementation of Coty.Curated.
The company is providing guidance for the second quarter at this stage and expects to issue a broader outlook following the anticipated completion of its strategic review by the end of calendar 2026.
“We remain committed to completing the strategic review by the end of calendar 2026,” Strobel concluded. “Alongside it, we are designing the organisation and cost structure to improve execution and prioritise reinvestment behind our brands. We will continue to build on our strengths: a portfolio of leading brands, strong category positions, and a differentiated end-to-end global platform.
“As we’ve previously shared, FY27 will be a transition year. We expect the recovery to be uneven, and implementation will take time. We know confidence is earned through consistent delivery, and our goal is to steadily improve execution and translate it into shareholder value in the years ahead.”
Coty Chief Financial Officer Soraya Benchikh commented, “I joined Coty at a pivotal moment, with clear priorities to deliver quality growth, improve productivity to fund disciplined reinvestment, and strengthen cash generation and conversion.
“The first quarter shows encouraging early progress on each, although sustainable improvement will take time. We delivered adjusted EBITDA ahead of our guidance, supported by better-than-expected sales and cost control, while continuing to invest in our brands. The year-over-year decline in adjusted EBITDA moderated to -7% from steeper declines in fiscal 2026.
“On cash, better payables and receivables performance helped improve free cash flow to US$85 million. Our free cash flow, together with the initial US$250 million of Gucci Beauty proceeds, reduced net debt by over US$300 million since June.
Benchikh continued, “Our objective is to create value over time through a virtuous cycle: focused investment drives quality growth, while better gross margins and a more efficient cost base strengthen earnings.
“Converting those earnings into cash supports deleveraging and reinvestment in the next phase of sustainable growth. This is the model we are focused on executing with discipline and accountability, quarter after quarter.” ✈
