Coty Q4 Earnings Call Highlights

Coty is shifting its internal focus toward retail sell-out and market-share gains as it works through a fiscal 2027 transition year, following a period in which sell-out trailed the broader beauty category. Executive Chairman and Interim Chief Executive Officer Markus Strobel said the company historically had been more focused on sell-in, or shipments to retailers, and is now changing incentives to better align with consumer demand at the shelf. Market share and sell-out have become important measures in Coty’s fiscal 2027 bonus systems, he said.

Our objective is to drive sell-out and to drive market share,” Strobel said. He said Coty expects first-quarter trends to resemble the past two quarters before improving sequentially, supported by incremental innovation, more disciplined spending and a narrower set of investment priorities. Strobel said the pace at which Coty can reduce its sell-out gap versus the market represents a key source of potential upside or risk. Faster progress would benefit results, while a slower recovery would require the company to manage accordingly.

Coty has begun a Consumer Beauty performance-improvement effort called Color the Future, which Strobel described as a consumer-focused version of its Coty.Curated initiative. The program began in the U.S. in January and includes simplifying product lineups, reducing the number of SKUs, concentrating investment behind fewer initiatives and prioritizing stronger innovation. The initial efforts have focused largely on COVERGIRL and Sally Hansen. Strobel said both brands materially reduced their gap versus the category during the year, while Sally Hansen has begun to grow ahead of the market in value. He attributed the progress more to equity-building advertising and targeted innovation than increased promotions. COVERGIRL has returned to national television advertising, aimed at Gen X consumers, with investment concentrated behind its Simply Ageless and LashBlast franchises. Sally Hansen has also resumed national advertising in nail care, while its Insta-Dri innovation has received a strong consumer response, Strobel said. The company expects the actions to support Consumer Beauty profitability over time by reducing returns and obsolescence. Strobel said that selling fewer, faster-moving SKUs should lower excess inventory and the risk of products being returned by U.S. retailers when innovation does not sell through. Coty plans to extend the approach across Europe. The company has already rolled out initiatives in the U.K. and said Rimmel has shown initial traction there, catching up with the category in the latest month. Strobel said brands including Max Factor, Bourjois and Manhattan will be among the European brands rec...