Coty Inc. Reports 6% Revenue Decline and Strategic Business Review

Coty Inc. reported a decline in financial performance for the three months ended September 30, 2025, with net revenues of $1,577.2 million, down 6% from $1,671.5 million in the same period last year. The decrease was attributed to a 10% drop in unit volume, primarily driven by declines in the Consumer Beauty segment, particularly in color cosmetics and body care. However, the company experienced a 2% positive impact from foreign currency exchange and a 2% increase from pricing and product mix, reflecting a higher proportion of sales from Prestige brands. The Prestige segment saw a 4% revenue decline, while the Consumer Beauty segment faced a 9% decrease.

Coty's gross profit also fell, totaling $1,016.8 million, down from $1,094.6 million, leading to a gross margin decrease of approximately 100 basis points to 64.5%. The cost of sales decreased by 3% to $560.4 million, but as a percentage of net revenues, it increased to 35.5%, reflecting higher manufacturing and freight costs. Selling, general, and administrative expenses decreased by 2% to $793.5 million, but as a percentage of net revenues, they rose to 50.3%. Consequently, operating income dropped 22% to $185.0 million, with an operating margin of 11.7%, down from 14.2% in the prior year.

In terms of strategic developments, Coty is undergoing a comprehensive review of its Consumer Beauty business, focusing on its mass color cosmetics and Brazilian operations. This review aims to explore various alternatives, including partnerships and divestitures, to maximize long-term value. Additionally, the company is implementing a Fixed Cost Reduction Plan, with expected cash costs of approximately $80 million over fiscal years 2026 and 2027, aimed at streamlining operations and reducing fixed costs.

Coty's balance sheet showed total assets of $12,058.5 million as of September 30, 2025, an increase from $11,907.7 million at the end of June 2025. The company reported total liabilities of $8,003.0 million, up from $7,952.1 million, with long-term debt net of unamortized financing fees at $4,021.9 million. The company continues to focus on reducing its leverage, with plans to refinance existing debt and optimize its maturity profile.

Looking ahead, Coty anticipates that net revenue for the second quarter of fiscal 2026 will be roughly flat compared to the prior year, with a low to mid-single-digit percentage benefit from foreign exchange. The company expects gross margin pressures due to lower sales and tariff impacts, but anticipates a return to revenue growth in the second half of fiscal 2026, supported by major product launches across its segments.