Coty Q4 Earnings Call Highlights

Fourth-quarter sales improved sequentially , with like-for-like revenue down 1%, better than Coty’s expected mid-single-digit decline. However, full-year like-for-like sales fell 5%, and Coty continued to underperform broader beauty-market growth.

Profitability remained pressured: fourth-quarter adjusted gross margin fell 140 basis points, while adjusted EBITDA declined 26% year over year. Coty still generated more than $250 million in fiscal 2026 productivity savings and reduced net debt by nearly $840 million to $2.9 billion.

Coty expects fiscal 2027 to be a transition year, with first-quarter sales projected to decline at a low- to mid-single-digit rate and EBITDA down in the low teens. The company is preparing for the Gucci Beauty license exit in fiscal 2028 , using proceeds to reduce debt, invest in core brands and streamline costs.

Coty NYSE: COTY said its fourth-quarter fiscal 2026 results exceeded its expectations, although the beauty company continued to report lower sales and profitability as it prepares for a transition year centered on portfolio simplification, cost reductions and investment behind core brands. Executive Chairman and Interim Chief Executive Officer Markus Strobel said the company’s fourth-quarter performance was “an encouraging step” toward more consistent execution, while acknowledging that the business remains below its targeted performance level. Coty plans to use fiscal 2027 to strengthen core franchises, streamline its organization and prepare for the exit of the Gucci Beauty license in fiscal 2028.

Chief Financial Officer Laurent Mercier said fourth-quarter like-for-like sales declined 1%, improving from prior trends and outperforming Coty’s expectation for a mid-single-digit decline. The result reflected stronger-than-anticipated customer orders in the U.S. across prestige fragrances and mass cosmetics, along with a smaller-than-expected effect from the Middle East conflict. The Middle East conflict reduced fourth-quarter total sales by slightly more than 1%, compared with Coty’s prior estimate of a 2% to 3% impact. For the full fiscal year, like-for-like sales fell 5%.

Prestige like-for-like revenue declined 0.5% in the fourth quarter, while prestige fragrance revenue fell 1%. Prestige cosmetics posted double-digit sales and sellout growth, supported by Kylie, Burberry and the early contribution from Marc Jacobs makeup. Coty cited momentum from launches including Boss Bottled Beyond, Cosmic Kylie Jenner Intense and Calvin Klein Euphoria Elixir. Consumer Beauty like-for-like sales declined 3% in the fourth quarter, but the company said trends improved sequentially. Sally Hansen returned to sales growth, while COVERGIRL’s sellout trends improved and Rimmel gained volume market share in the U.K. during the latest three-month period. Lifestyle fragrances remained pressured, though sales trends improved from earlier quarters. Mercier said Coty’s sellout performance remained below broader beauty-market growth in both divisions during the second half of fiscal 2026. The prestige market grew approximately 6% in that period, while mass beauty grew about 5%. Coty’s prestige sellout declined 1% and Consumer Beauty sellout fell 2%.

Adjusted gross margin was 60.9% in the fourth quarter, down 140 basis points year over year. For fiscal 2026, adjusted gross margin was 63%, down 190 basis points. Coty attributed the decline to lower-volume cost absorption, elevated excess and obs...