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COTY
Earnings call · Jun 2026 (Q4 FY26)

COTY Q4 FY26 earnings call COTY

Aug 19, 2026 Source

Executive summary

Coty Q4 FY26 — Ahead of Expectations with Strong Free Cash Flow and Strategic Portfolio Simplification

Coty exceeded Q4 expectations with improved like-for-like sales and strong free cash flow, driven by disciplined working capital and cost savings. Fiscal 2027 is positioned as a transition year, focusing on strengthening core brands, simplifying the portfolio, and optimizing the cost structure, particularly in light of the early Gucci license exit by FY28. Management is implementing the Coty.Curated framework to drive more consistent growth and profitability, with a strategic review of Consumer Beauty ongoing.

Highlights

5

  • Q4 like-for-like sales declined 1%, ahead of guidance for a mid-single-digit decline.

  • FY26 free cash flow was $348 million, an increase of approximately $70 million year-over-year and well ahead of guidance.

  • The All-in-to-Win program delivered over $250 million in productivity and fixed cost savings in FY26.

  • Net debt declined by nearly $840 million year-over-year, with leverage at approximately 3.4x.

  • Prestige Cosmetics delivered double-digit sales and sell-out growth in Q4.

Concerns

5

  • FY26 like-for-like sales declined 5%.

  • Adjusted gross margin was 60.9% in Q4, down 140 basis points year-over-year, and 63% for the full fiscal year, down 190 basis points.

  • Adjusted EBITDA declined 26% year-on-year in Q4 and 22% in fiscal year '26.

  • Consumer Beauty adjusted EBITDA declined 67% year-over-year in Q4.

  • No full-year FY27 guidance was issued due to it being a transition year and ongoing strategic review.

Guidance & targets

CategoryTargetConfidence
Q1 FY27 Like-for-like revenue
decline by a low to mid-single-digit percentage
high materiality
High
Q1 FY27 Adjusted gross margins
declining by approximately 50 to 100 basis points year-over-year
medium materiality
High
Q1 FY27 Adjusted EBITDA
decline by low teens percentage
high materiality
High
Q1 FY27 Adjusted EPS (excluding equity swap)
$0.11 to $0.13 per share
high materiality
High
H1 FY27 Free cash flow
over $300 million
high materiality
High
FY27 Oil price impact on COGS
limited to $20 million to $30 million
medium materiality
High
FY27 Tariff refund
up to $30 million
medium materiality
Medium
Long-term leverage target
approximately 2x
high materiality
High
Underlying portfolio (excluding Gucci) growth
return to growth
high materiality
Medium
Profit recovery
resuming in fiscal '29 and beyond
high materiality
Medium
Net debt
continue to steadily lower from $2.9 billion
high materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Prestige
Q4 like-for-like sales exceeded expectations. Adjusted EBITDA declined 17% in Q4 and 12% in FY26, driven by COGS absorption, higher trade spending, and tariffs. Strong adjusted EBITDA margin in FY26 highlights resilience.
Prestige Fragrance like-for-like revenues: declined 1% in Q4Prestige Fragrance like-for-like revenues: approximately 4% in H2Prestige Cosmetics: double-digit sales and sell-out growthMiddle East conflict impact on Prestige sales: approximately 1.5% in Q4Prestige sell-out: declined 1% in H2Prestige sell-out: slightly negative for full FY
—down 0.5%improved sequentially20.5% adjusted EBITDA margin (FY26)
Consumer Beauty
Q4 like-for-like sales improved sequentially. Profitability heavily pressured by supply chain cost under absorption, higher excess and obsolescence, and tariffs. Adjusted EBITDA improved $32 million sequentially from Q3.
Consumer Beauty sell-out: declined 2% in H2Consumer Beauty sell-out: 4% decline for full FYSally Hansen sales: returned to growthCoverGirl sales: returned to mid-single-digit growth in Q4Rimmel U.K. volume market share: gained in last 3 monthsMass Fragrances like-for-like sales: low-single-digit decline in Q4adidas fragrances like-for-like growth: high-single-digit in Q4
—declined 3%improved sequentiallydeclined 67% YoY in Q4

Product announcements

ProductTypeDetails
BOSS Bottled Beyond for Herlaunch
Marc Jacobs makeuplaunch
Burberry Goddess Amber Vanillalaunch
Kylie Cosmetics Mood Stones fragranceslaunch
Etro fragrance collectionlaunch
Swarovski fragranceslaunch
CoverGirl's Trublend Sun and Stop Bronzing Glow serumlaunch
Rimmel Oh My Gloss! Slip Sticklaunch
Max Factor's Lasting Blurlaunch
Sally Hansen's Miracle Gel and Insta-Dri seasonal shade storieslaunch
The Scent (Hugo Boss)launch
Marc Jacobs fragrance mistlaunch

Deals & partnerships

Kering Early transition of Gucci license $400 million cash plus inventory proceeds early transition by June 30, 2027

Agreement reached for the early transition of the Gucci license, a year ahead of schedule. Gucci Beauty was already set to exit the portfolio. Coty will continue to operate the Gucci Beauty brand through at least June 30, 2027.

Capital programs

All-in-to-Win program completed more than $250 million

Benefit:total productivity and fixed cost savings

Continued to deliver strong results in fiscal year '26, ahead of target. Generated across procurement, supply chain, overhead, and organizational efficiencies.

Significant fixed cost savings plan (Gucci exit related) underway several hundred million

Benefit:additional savings over the next 3 years

Being developed to address substantial central and divisional costs expected to remain following the Gucci exit. Expected to begin implementation in H2 FY27. Key components include global go-to-market setup, manufacturing and distribution footprint, organizational layering, and rightsizing central organization.

Risks & headwinds

Macro environment volatility ongoing

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Mitigation:Focus on controllable areas: strengthening sell-out, improving execution, resource allocation.

Middle East conflict impact on sales Q4 FY26, potential volatility in FY27

impacted Q4 total sales by a little over 1% (anticipated 2% to 3%)

Mitigation:Anticipated impact to COGS in FY27 limited to $20M-$30M if oil prices remain at or below $100 per barrel.

Elevated excess and obsolescence Q4 FY26

impacted gross margin in Q4

Mitigation:Expected to be sequentially lower in Q1 FY27; focus on simplification and operational discipline.

Tariff impact Q4 FY26

impacted gross margin in Q4

Mitigation:FY27 refund submission in process, could represent upside of up to $30 million (not embedded in assumptions).

Lower shipment volumes Q4 FY26

impacted gross margin in Q4

Mitigation:Focus on improving sell-out and execution.

Variable compensation normalization FY27

null

Mitigation:Expected to be a year-over-year headwind to cost base, partially offset by accelerating fixed cost reduction efforts.

Mechanical profit impact from Gucci exit FY28

sizable adjusted EBITDA decline

Mitigation:Developing a significant fixed cost savings plan (implementing H2 FY27) and amplifying innovation/expansion pipeline for core brands to moderate impact and fuel growth in FY29 and beyond.

Leverage increase due to Gucci exit FY28

mechanically increase

Mitigation:Goal remains to drive leverage towards 2x over time, by steadily lowering net debt in FY27 and FY28.

What to watch in Q1 FY27

Q1 FY27 Like-for-like Revenue

Q1 FY27
Current down 1% in Q4 FY26
Target low to mid-single-digit decline

Why it matters

This is a key indicator of sales trend improvement and execution consistency in a transition year.

We expect first quarter fiscal '27 like-for-like revenue to decline by a low to mid-single-digit percentage.

3 min read 7 chapters

Detailed narrative

Q4 Performance & Market Context

Coty's Q4 like-for-like sales declined 1%, outperforming guidance for a mid-single-digit decline, driven by stronger-than-expected customer orders in the U.S. and a milder impact from the Middle East conflict (1% vs. anticipated 2-3%). The beauty market remains resilient, with Prestige growing approximately 6% and Mass Beauty 5% in H2 FY26. However, Coty's sell-out performance lagged the market in both divisions, with Prestige sell-out down 1% and Consumer Beauty down 2% in H2 FY26.

Strategic Transition in FY27

Fiscal 2027 is designated as a transition year, focusing on strengthening core franchises, simplifying the portfolio, and optimizing the organization. This includes factoring in the early exit of the Gucci license by FY28 and final decisions from the Consumer Beauty strategic review by calendar-end 2026. Due to these ongoing changes and expected uneven quarterly performance, full-year FY27 guidance is being withheld.

Gucci License Exit & Financial Impact

The early transition of the Gucci license to Kering by FY28 will result in $400 million in cash proceeds ($250M received in July, $150M by Sep 2027) plus inventory proceeds. Gucci Beauty contributes a low-double-digit percentage of total revenues and has profitability consistent with the overall Prestige division. A significant fixed cost savings plan is being developed for H2 FY27 to moderate the mechanical profit impact in FY28 and fuel growth in FY29 and beyond.

Cost Savings & Productivity Initiatives

The 'All-in-to-Win' program delivered over $250 million in productivity and fixed cost savings in FY26, leading to a 4% decline in the underlying fixed cost structure despite inflation. The company plans to accelerate savings initiatives in FY27 and beyond, targeting several hundred million of additional savings over the next three years, particularly in COGS, to rightsize the cost structure post-Gucci exit.

Coty.Curated Framework & Innovation Strategy

The Coty.Curated strategy emphasizes focused investment, fewer but bigger and more scalable innovations, and disciplined resource allocation. In FY27, this translates to key launches like BOSS Bottled Beyond for Her and Marc Jacobs makeup in Prestige, and targeted innovations for CoverGirl, Rimmel, and Sally Hansen in Consumer Beauty. The goal is to drive greater incrementality, strengthen core franchises, and create a broader halo effect across each brand.

Consumer Beauty Turnaround (Color the Future)

The 'Color the Future' program is actively reducing complexity (16% fewer SKUs in FY27 innovation bundles, approximately 20% total SKU reduction), rightsizing the organization, and sharpening brand equity. Early progress is evident in Sally Hansen, where the sales gap to the category narrowed to 1 point in the last 4 weeks, and CoverGirl, which returned to mid-single-digit sales growth in Q4. Rimmel in the U.K. also showed improved retail trends.

Generative Engine Optimization (GEO) Adoption

Coty is actively deploying Generative Engine Optimization (GEO) action plans to improve brand visibility and rankings on AI platforms. Rimmel in the U.K. achieved a 13.8 visibility score, moving its brand ranking in large language models from #7 to #4. Marc Jacobs (8.7) and Hugo Boss (6.3) also demonstrate strong AI positioning in the U.K., with a playbook being cascaded across the full portfolio.

AI-generated summary of the company's earnings call. Not investment advice.