Coty Inc.

Coty sells fragrances, cosmetics and skin-and-body products through its Prestige and Consumer Beauty divisions. Its portfolio combines licensed fashion names with mass-market beauty brands including CoverGirl, Rimmel and Sally Hansen. Its Class A shares trade as COTY on the New York Stock Exchange.

Coty's fiscal year ends June 30. Fiscal 2026 revenue was $5.81 billion, with $348.2 million of free cash flow. The September 2026 results below are the first quarter of fiscal 2027.

Quarterly results on a comparable basis

Adjusted operating income removes amortization, stock compensation, restructuring and business-realignment expenses and specified brand-exit costs. Adjusted net income also reflects tax and other specified adjustments, but retains the share-linked contract valuation effects.

Those contracts contributed an after-tax gain of $14.8 million, versus a $26.5 million loss a year earlier. Net interest expense also fell to $31.2 million from $46.6 million. These movements help explain why net profit grew while operating profit declined.

Where the sales recovery stands

Prestige revenue was $1,058.4 million, down 1% on both a reported and like-for-like basis. Its six core brands, Hugo Boss, Burberry, Calvin Klein, Marc Jacobs, Chloé and Kylie Cosmetics, grew like-for-like sales 5% and represented 73% of Prestige sales. This measures Coty's sales to customers, rather than consumers' purchases from retailers.

Consumer Beauty revenue was $496.8 million, down 2% as reported and 3% like for like. Adjusted operating income moved from a $1.5 million profit to a $15.0 million loss. The broader Consumer Beauty strategic review remains in progress, with completion expected by the end of calendar 2026.

Earlier expectations and the next quarter

In August, Coty expected a low-to-mid-single-digit like-for-like sales decline, a low-teens adjusted EBITDA decline and EPS excluding the swap of $0.11 to $0.13 for fiscal Q1. Actual EBITDA fell 7%, and EPS on that same basis reached $0.15.

Gross margin moved in the other direction: the 1.2-percentage-point decline was larger than the original 0.5-to-1-point forecast. Freight costs and excess or obsolete inventory contributed to the pressure.

For fiscal Q2, ending December 31, Coty expects a low-single-digit like-for-like sales decline, a high-single-digit adjusted EBITDA decline and EPS excluding the swap of $0.16 to $0.18. First-half free cash flow is still expected to exceed $300 million. Management plans to provide a broader outlook after completing its strategic review.

Portfolio and license changes

Coty sold its remaining 25.8% equity stake in Wella in December 2025. Retained contractual distribution rights are separate from ownership of that business.

The Gucci Beauty transition agreement was signed July 7, 2026. Coty received $250 million at signing and is due a further $150 million by September 30, 2027, subject to a possible holdback of up to $30 million. It continues operating the license through at least June 30, 2027, with inventory to be sold separately for the transition.

The initial Gucci payment is recorded as deferred income and an investing cash inflow. It contributes to debt reduction outside the free-cash-flow calculation.

On November 3, Coty extended the Marc Jacobs license initially through 2046. An additional twenty-year option depends on minimum royalty thresholds. The $40 million extension fee is split between $20 million payable at execution and $20 million in July 2027.

Cash, debt and share-linked obligations

Operating cash flow improved through payables and receivables movements, partly offset by higher inventory. Free cash flow deducts capital spending from operating cash.

September debt principal was $2.787 billion, compared with $3.088 billion in June. Carrying debt after financing costs was $2.751 billion. Cash and cash equivalents were $210.6 million, with $12.8 million of restricted cash held separately. Company-defined financial net debt fell from $2.912 billion to $2.576 billion.

The debt includes €500 million of notes due May 2027, equivalent to $566.5 million at September exchange rates, and $65.7 million drawn on the revolver due July 2028. The May 2027 notes are classified as long-term because Coty says it can and intends to refinance them through the revolving facility. The company was in compliance with its credit covenants at September 30.

Forward buyback contracts reference $196 million and $294 million, with December 2026 settlement if net cash is elected or January 2027 for physical settlement. Falling share prices can require interim cash adjustments; none were triggered during fiscal Q1. No common shares were repurchased during the quarter, and no common dividend was declared.

Talc-related settlement and accrual expense, excluding defense fees, was $26.5 million, versus $6.7 million a year earlier.