COTY earnings analysis
What we found in COTY's 10-K: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Coty’s fiscal 2026 results show continued revenue deterioration and a sharp profitability reset, with revenue down 2%, reported operating margin at (1.4%), and adjusted EBITDA down 22% to $846.9 million. Prestige remains the core profit engine, but Consumer Beauty posted a $442.6 million operating loss and absorbed $362.8 million of asset impairment charges. Deleveraging improved through the Wella divestiture and debt repayments, but the early Gucci exit, tariff costs, weak Consumer Beauty performance and a cautious fiscal 2027 transition outlook leave the trajectory bearish.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Focused fragrance-led portfolio strategy
- Coty is narrowing its strategy around its global fragrance capabilities, structurally profitable beauty categories, e-commerce and Travel Retail. The Coty.Curated framework emphasizes fewer, bigger and better initiatives, while the company is targeting a return to market-share growth and greater use of AI-powered data operations.
- Revenue decline continued
- Fiscal 2026 net revenue declined 2% to $5,806.6 million, following a 4% decline in fiscal 2025. Unit volume fell 5% in fiscal 2026, partly offset by a 4% positive foreign-exchange translation impact.
- Prestige carries profitability
- Prestige remained the earnings anchor: its $3,805.8 million revenue represented approximately 66% of consolidated sales, and its $444.5 million operating income more than offset Consumer Beauty’s $442.6 million operating loss. Prestige cosmetics revenue increased $18.1 million, primarily from Burberry makeup growth in Asia.
- Margins and EBITDA contracted
- Profitability deteriorated materially: gross margin fell approximately 190 basis points to 62.9%, reported operating margin declined from 4.1% to (1.4%), adjusted operating margin fell from 14.5% to 10.8%, and adjusted EBITDA declined from $1,081.7 million to $846.9 million.
- Deleveraging advanced
- Cash generation improved operationally, with operating cash flow rising to $537.8 million from $492.6 million, while capital expenditures declined to $189.6 million from $215.0 million. The company also reduced total debt to $3,088.2 million from $4,008.4 million, helped by the $750.0 million Wella sale proceeds and debt redemptions.
- Portfolio monetization supports deleveraging
- Coty completed the sale of its remaining 25.8% Wella interest for $750.0 million in cash and retained Wella Distribution Rights initially valued at $58.0 million. Subsequent to year-end, it received $250.0 million from the Gucci license termination and expects aggregate Gucci consideration of approximately $400.0 million.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Gucci exit creates transition risk
- The Gucci Beauty license was terminated approximately one year early, with Coty operating the brand through at least June 30, 2027; the company expects the exit to reduce revenue and net income in fiscal 2028. The company expects to begin a savings plan in the second half of fiscal 2027 to address stranded central and divisional costs.
- Tariffs pressure costs and margins
- Tariff exposure became quantifiable: Coty incurred $29.3 million of tariff-related costs after mitigation in fiscal 2026 and expects another $3.4 million in the first quarter of fiscal 2027. The filing identifies prestige fragrances shipped from Barcelona to the U.S. and components and marketing materials sourced from China as the largest exposure areas.
- Consumer Beauty impairment risk
- Consumer Beauty deteriorated sharply and triggered significant impairment risk. Fiscal 2026 included $237.1 million of goodwill impairment and $125.7 million of trademark impairments in the segment; management states that a 25-basis-point decline in annual revenue or a 25-basis-point increase in the discount rate could cause an additional $35.0 million or $43.0 million impairment, respectively.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $-0.7
- Gross margin
- 62.9%
- Operating margin
- -1.4%
- Segment
- Prestige: $3,805.8 million revenue in fiscal 2026, down less than 1% year over year; reported operating income $444.5 million and 11.7% margin.
- Segment
- Consumer Beauty: $2,000.8 million revenue, down 3%; reported operating loss $442.6 million and (22.1)% margin.
What they said about what is next.
The 10-K provides Q1 fiscal 2027 outlook but no comparable prior outlook or full-year numeric guidance. Q1 reported revenue is expected to decline low- to mid-single digits with neutral foreign exchange, and gross margin is expected to be pressured by lower sales and unfavorable cost absorption. Fiscal 2027 is described as a transition year; Gucci-related revenue and net income are expected to decline in fiscal 2028.
The filing reads worse than the one before it.
What came before.
- 10-Q · May 5, 2026
- Coty Inc. reported Q3 FY2026 results showing a slight revenue decline to $1.2816B, missing estimates and down 1% year-over-year. The company experienced significant operating losses, particularly in the Consumer Beauty…
- 10-Q · February 5, 2026
- Revenue was essentially flat year-over-year at $1,678.6 million (vs $1,669.9 million a year ago), but gross profit declined to $1,070.6 million and operating income fell to $148.2 million, driving a GAAP loss per…
- 10-Q · November 5, 2025
- Coty reported net revenues of $1,577.2 million for the three months ended September 30, 2025, down from $1,671.5 million a year ago. Gross profit fell to $1,016.8 million and diluted EPS declined to $0.07 from $0.09;…
- 10-K · August 21, 2025
- Coty positions itself as a fragrance-led beauty company executing a multi-year Transformation Plan focused on leveraging its leadership in global fragrances, expanding into select profitable categories and channels…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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