COTY INC. (COTY): Results of Operations and Financial Condition
COTY INC. (COTY) filed an SEC Form 8-K — Results of Operations and Financial Condition. COTY ANNOUNCES FOURTH QUARTER FISCAL YEAR 2026 RESULTS Q4 Results Ahead of Expectations, Including Sales Growth of 1% Growth in FY26 Operating Cash Flow to $538 million and Free Cash Flow to $348 million, Despite Lower Profit Coty.Curated Sets Clear Strategic Framework to Strengt
How this was made
The 30-second read
Why it matters
The earnings release provides fresh data on revenue, profitability, cash generation, and strategic divestitures, offering traders actionable insight.
Market read
Coty's earnings and strategic moves could influence the consumer beauty sector and related stocks.
What to watch
The $400 M Gucci license sale may improve long‑term profitability once the transition is complete.
Q4 Results Ahead of Expectations, Including Sales Growth of 1% Growth in FY26 Operating Cash Flow to $538 million and Free Cash Flow to $348 million, Despite Lower Profit
Q4 reported sales returned to 1% growth and operating and free cash flow increased, but LFL sales declined 1%, gross margin contracted 140 basis points, adjusted EBITDA fell 26%, and both business divisions posted reported operating losses.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q4 net revenuesGAAP | $1,269.2 million | – | increased 1% on a reported basis |
| Q4 net revenues LFLother | declined 1% | – | declined 1% |
| Q4 foreign exchange benefit to net revenuesother | 3% | – | – |
| Q4 reported gross marginGAAP | 60.9% | – | decreased 140 basis points year-over-year |
| Q4 adjusted gross marginnon-GAAP | 60.9% | – | decreased 140 basis points year-over-year |
| Q4 reported operating lossGAAP | $42.7 million | – | deteriorated from reported operating income |
| Q4 adjusted operating incomenon-GAAP | $39.5 million | – | decreased 42% |
| Q4 reported net loss attributable to common shareholdersGAAP | $144.3 million | – | reported net loss increased from $72.1 million |
| Q4 adjusted net loss attributable to common shareholdersnon-GAAP | $13.4 million | – | improved from adjusted net loss of $44.9 million |
| Q4 adjusted EBITDAnon-GAAP | $93.6 million | – | decreased 26% |
| Q4 diluted loss per share attributable to common shareholdersGAAP | $0.16 | – | reported loss per share increased from $0.08 |
| Q4 adjusted diluted loss per share attributable to common shareholdersnon-GAAP | $0.02 | – | improved from adjusted loss per share of $0.05 |
| Q4 cash flow from operating activitiesGAAP | $116.0 million | – | compared to $83.2 million in the prior year period |
| Q4 free cash flownon-GAAP | $72.6 million | – | compared to $34.9 million in the prior year period |
| FY26 net revenuesGAAP | $5,806.6 million | – | decreased 2% |
| FY26 net revenues LFLother | decreased 5% | – | decreased 5% |
| FY26 reported gross marginGAAP | 62.9% | – | decreased 190 basis points year-over-year |
| FY26 adjusted gross marginnon-GAAP | 63.0% | – | decreased 190 basis points year-over-year |
| FY26 reported operating lossGAAP | $81.5 million | – | declined from reported operating income of $241.1 million |
| FY26 adjusted operating incomenon-GAAP | $626.7 million | – | declined 27% |
| FY26 reported net loss attributable to common shareholdersGAAP | $618.0 million | – | reported net loss increased from $381.1 million |
| FY26 adjusted net income attributable to common shareholdersnon-GAAP | $185.1 million | – | decreased slightly |
| FY26 adjusted EBITDAnon-GAAP | $846.9 million | – | decreased 22% year-over-year |
| FY26 diluted loss per share attributable to common shareholdersGAAP | $0.70 | – | reported loss per share increased from $0.44 |
| FY26 adjusted diluted earnings per share attributable to common shareholdersnon-GAAP | $0.21 | – | decreased from $0.22 |
| FY26 cash flow from operating activitiesGAAP | $537.8 million | – | compared to $492.6 million in the prior year period |
| FY26 free cash flownon-GAAP | $348.2 million | – | compared to $277.6 million in the prior year period |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Prestige Q4 FY26Higher Prestige cosmetics and fragrance sales were partially offset by lower skincare sales. The Middle East conflict represented an estimated 1.5% headwind to LFL revenue. | $771.8 million | – | increased 1% on a reported basis; declined 0.5% on a LFL basis |
| Consumer Beauty Q4 FY26Higher mass body and skincare sales were partially offset by lower mass color cosmetics sales. The Middle East conflict represented an estimated 1% headwind to LFL revenue. | $497.4 million | – | increased 1% on a reported basis; declined 3% on a LFL basis |
| Prestige FY26Prestige represented 66% of the Company's total sales for FY26. | $3,805.8 million | – | decreased slightly on a reported basis; decreased 4% on a LFL basis |
| Consumer Beauty FY26Consumer Beauty represented 34% of the Company's total sales for FY26. | $2,000.8 million | – | decreased 3% on a reported basis; decreased 7% on a LFL basis |
| Americas Q4 FY26Higher sales in the U.S., Brazil, and the regional Travel Retail channel were partially offset by lower sales in Canada. | $554.7 million | – | increased 9% on a reported basis; increased 6% on a LFL basis |
| EMEA Q4 FY26Lower sales in the Middle East, Germany, and Central and Eastern Europe drove the decline. | $528.9 million | – | decreased 8% on a reported basis; decreased 10% on a LFL basis |
| Asia Pacific Q4 FY26Higher sales in China, Southeast Asia, Australia and New Zealand, and the regional Travel Retail channel drove growth. | $185.6 million | – | increased 11% on a reported basis; increased 7% on a LFL basis |
1Q27 and first half of FY27 outlook
- Revenue1Q27 LFL revenue is expected to decline by a low- to mid-single-digit percentage; FX is expected to have a neutral impact on revenue in the quarter.
- Gross margin1Q27 adjusted gross margin is expected to decline by approximately 50 to 100 basis points year-over-year.
- Note1Q27 adjusted EBITDA is expected to decline by a low-teens percentage.
- Note1Q27 adjusted EPS, excluding the equity swap, is expected to be $0.11 to $0.13 per share.
- NoteFree cash flow for the first half of FY27 is expected to be over $300 million.
- NoteFY27 is expected to be a transition year.
- NoteYear-over-year EBITDA trends are expected to improve over the course of FY27.
What drove it
- Q4 reported revenue growth included a 3% benefit from foreign exchange, while LFL revenue declined 1%.
- Coty estimated that the Middle East conflict reduced Q4 sales by 1%.
- Prestige revenue benefited from higher cosmetics and fragrance sales, partly offset by lower skincare sales.
- Consumer Beauty revenue benefited from mass body and skincare sales, partly offset by lower mass color cosmetics sales.
- Americas and Asia Pacific grew on both a reported and LFL basis, while EMEA declined due to lower sales in the Middle East, Germany, and Central and Eastern Europe.
- Major FY26 launches cited as performing well included BOSS Bottled Beyond, Cosmic by Kylie Jenner Intense, and Calvin Klein Euphoria Elixirs.
- Marc Jacobs Beauty makeup's online launch had an exceptional consumer response and online sell-out at Sephora ahead of targets.
- U.S. sell-out improved for CoverGirl and Sally Hansen; Sally Hansen outperformed the category in units and CoverGirl narrowed its gap versus the category in value and units.
Concerns
- Q4 sell-out performance remained below market levels in both divisions, according to management.
- Q4 reported and adjusted gross margin each declined 140 basis points because of lower cost absorption, elevated excess and obsolescence charges, and tariffs.
- FY26 reported and adjusted gross margin each declined 190 basis points, reflecting supply-chain cost under-absorption, tariffs, a more promotional first half, and elevated excess and obsolescence charges.
- Q4 adjusted EBITDA declined 26% to $93.6 million, primarily reflecting lower gross profit.
- Consumer Beauty reported an operating loss of $29.9 million and adjusted operating loss of $20.7 million in Q4.
- Coty expects 1Q27 LFL revenue to decline by a low- to mid-single-digit percentage and adjusted EBITDA to decline by a low-teens percentage.
- The early Gucci Beauty license exit will result in a step-down in sales and profit in FY28.
- Coty expects to complete its strategic review of Consumer Beauty by the end of CY26.
What to watch
- Whether Q4's significant sequential improvement in LFL trends to down 1% translates into the expected 1Q27 low- to mid-single-digit LFL revenue decline and subsequent strengthening through FY27.
- The pace of gross-margin recovery following the expected 1Q27 decline of approximately 50 to 100 basis points year-over-year.
- Execution of Coty.Curated, including rightsizing of the commercial organization, Consumer Beauty R&D, and global brand marketing functions.
- The rollout of Marc Jacobs Beauty makeup to hundreds of Sephora stores in the U.S. and Travel Retail beginning in September.
- Performance of FY27 launches including BOSS Bottled Beyond for Her, Burberry Goddess innovation, Kylie Cosmetics Mood Stones fragrance collection, and Consumer Beauty color-cosmetics launches.
- The timing and outcome of the Consumer Beauty strategic review by the end of CY26 and broader outlook expected after its completion.
- Progress in deploying Wella and Gucci Beauty proceeds toward debt reduction, reinvestment in core brands, and organizational optimization.
- Plans to mitigate the FY28 Gucci Beauty sales and profit step-down through core brands, new portfolio additions, and a significant fixed-cost reduction program.
Balance sheet and cash flow
- Q4 cash flow from operating activities was $116.0 million, compared to $83.2 million in the prior year period.
- Q4 free cash flow was $72.6 million, compared to $34.9 million in the prior year period.
- FY26 cash flow from operating activities was $537.8 million, compared to $492.6 million in the prior year period.
- FY26 free cash flow was $348.2 million, compared to $277.6 million in the prior year period.
- Total debt was $3,088.2 million as of June 30, 2026, compared with $3,216.2 million as of March 31, 2026.
- Financial net debt was $2,912.1 million as of June 30, 2026, compared with $2,959.1 million as of March 31, 2026.
- The financial leverage ratio, net debt to adjusted EBITDA, was 3.4x as of June 30, 2026.
- Coty monetized its remaining stake in Wella for $750 million in December 2025.
- Coty received $250 million in cash at signing of the Gucci Beauty license-transition agreement and will receive an additional $150 million no later than September 30, 2027, of which up to $30 million is contingent on certain criteria.
Analysis
Coty returned to reported Q4 revenue growth, with net revenues of $1,269.2 million, up 1%, but underlying demand remained softer. LFL revenue declined 1%, despite a significant sequential improvement in LFL trends, and foreign exchange added a 3% benefit. The company estimated that the Middle East conflict created a 1% sales headwind. Prestige declined 0.5% on an LFL basis and Consumer Beauty declined 3%, while EMEA was the principal regional drag with a 10% LFL decline. Americas and Asia Pacific recorded LFL growth of 6% and 7%, respectively.
Profitability weakened materially in the quarter. Reported and adjusted gross margin both fell 140 basis points to 60.9%, reflecting reduced-volume cost absorption, excess and obsolescence charges, and tariffs. Adjusted operating income fell 42% to $39.5 million and adjusted EBITDA fell 26% to $93.6 million. Prestige adjusted operating income declined 19% to $60.2 million, while Consumer Beauty recorded adjusted operating loss of $20.7 million. The reported operating result was a $42.7 million loss, compared with $15.5 million of reported operating income a year earlier.
Cash generation was the principal positive offset to lower profit. Q4 operating cash flow increased to $116.0 million from $83.2 million and free cash flow increased to $72.6 million from $34.9 million. For FY26, operating cash flow rose to $537.8 million and free cash flow rose to $348.2 million despite net revenues declining 2%, adjusted operating income declining 27%, and adjusted EBITDA declining 22%. Total debt declined to $3,088.2 million and financial net debt declined to $2,912.1 million as of June 30, 2026.
Management is simplifying the portfolio and organization through Coty.Curated while shifting support toward identified FY27 big bets and hero products. The company highlighted improving U.S. sell-out for CoverGirl and Sally Hansen, strong online response to Marc Jacobs Beauty makeup, and planned launches across BOSS, Burberry, Kylie Cosmetics, Calvin Klein, Etro, Swarovski, and Consumer Beauty brands. At the same time, management explicitly said sell-out remains below market levels in both divisions, leaving market-share recovery and execution on the streamlined innovation calendar central to the FY27 setup.
The near-term guide confirms that FY27 starts as a transition period. Coty expects 1Q27 LFL revenue to decline by a low- to mid-single-digit percentage, adjusted gross margin to decline by approximately 50 to 100 basis points, and adjusted EBITDA to decline by a low-teens percentage. It expects adjusted EPS excluding the equity swap of $0.11 to $0.13 per share and first-half FY27 free cash flow of over $300 million. The agreed early Gucci Beauty license transition provides $250 million at signing and an additional $150 million by September 30, 2027, but management expects a FY28 step-down in sales and profit and is developing brand, portfolio, and fixed-cost actions to moderate that impact.
Management, verbatim
We closed FY26 on a stronger note, delivering sales and profit ahead of our targets, growing free cash flow even in the face of business headwinds, all while establishing a clear strategic framework and taking decisive action to steadily strengthen our core business in FY27 and beyond.
Markus Strobel, Executive Chairman and Interim Chief Executive Officer
It's encouraging to see closer alignment between our sell-in and sell-out. However, we are not content with our sell-out performance, which remains below market levels in both divisions, and steadily closing that gap remains a clear priority across the organization.
Markus Strobel, Executive Chairman and Interim Chief Executive Officer
FY27 will be a transition year as we strengthen our core business and continue shaping a simpler, more focused Coty, factoring in both the Gucci exit by FY28 and final portfolio decisions related to our strategic review of Consumer Beauty by the end of CY26.
Markus Strobel, Executive Chairman and Interim Chief Executive Officer
Not in the filing
stated, not guessed- Prior-quarter income-statement and cash-flow comparisons, other than total debt and financial net debt as of March 31, 2026
- Cash and cash-equivalents balance
- Capital expenditures
- Share repurchases
- Common-stock dividends
- Preferred-stock dividends
- Tax rate
- Operating-expense guidance
- Prior-quarter outlook or prior guidance for comparison
- Specific FY27 full-year revenue, gross-margin, EBITDA, EPS, operating-income, or tax-rate guidance
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Coty Inc. (NYSE:COTY) released its FY2026 Q4 earnings via an SEC Form 8‑K, detailing financial performance and strategic actions.
Ticker impact
Coty Inc. filed an 8‑K reporting its Q4 FY2026 results, showing 1% revenue growth, a $144.3 M net loss and cash flow improvements, plus a $400 M sale of the Gucci Beauty license.
Potential short‑term downside of 3‑5% as investors digest the loss and license sale impact.
The loss and lower operating income signal weakness, but improved cash flow and debt reduction could limit the decline.
Market effects
Highlights ongoing challenges in the consumer beauty sector, especially around licensing deals and margin pressure.
U.S. consumer discretionary may see slight pressure; European markets could be affected by the Gucci license exit.
Signals broader industry trend of portfolio simplification and debt reduction among beauty companies.
Counterpoint
The cash flow strength and debt reduction could make Coty a value play despite the loss.
Key entities
- CompanyCoty Inc.
Global beauty company reporting FY2026 Q4 results.
- LicenseGucci Beauty
Brand license sold back to Kering for $400 M.
