first quarter fiscal year 2027
Filed Nov 4, 2026Q1 Profit and EPS Ahead of Guidance; Modest Sales Decline of 1%, with LFL Sales Down 2%; Operating Cash Flow Up $65 Million YoY to $130 Million, with Free Cash Flow of $85 Million
Coty delivered improved cash generation and higher reported and adjusted EPS, but revenue declined, gross margin contracted, adjusted EBITDA fell, and Consumer Beauty remained loss-making.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net revenuesGAAP | $1.56B | – | (1) % |
| Net revenues, like-for-likeother | (2) % | – | (2) % |
| Gross profitGAAP | $984.8M | – | – |
| Gross marginGAAP | 63.3 % | – | decreased 120 basis points year-over-year |
| Adjusted gross marginnon-GAAP | 63.3 % | – | decreased 120 basis points year-over-year |
| Selling, general and administrative expensesGAAP | $779.6M | – | – |
| Operating incomeGAAP | $170.4M | – | (8) % |
| Operating marginGAAP | 11.0 % | – | – |
| Adjusted operating incomenon-GAAP | $220.5M | – | (8) % |
| Adjusted operating marginnon-GAAP | 14.2 % | – | contracted by 100 basis points year-over-year |
| Net incomeGAAP | $112.4M | – | 52 % |
| Net income marginGAAP | 7.2 % | – | – |
| Net income attributable to common stockholdersGAAP | $106.2M | – | 64 % |
| Adjusted net income attributable to Coty Inc.non-GAAP | $146.1M | – | 38 % |
| Adjusted net income marginnon-GAAP | 9.4 % | – | – |
| EPS attributable to common shareholders (diluted)GAAP | $0.12 | – | 71 % |
| Adjusted EPS attributable to common shareholders (diluted)non-GAAP | $0.16 | – | 33 % |
| Adjusted EBITDAnon-GAAP | $274.2M | – | (7) % |
| Adjusted EBITDA marginnon-GAAP | 17.6 % | – | decreased by 120 basis points |
| Provision for income taxesGAAP | $45M | – | 36 % |
| Effective tax rateGAAP | 28.6 % | – | – |
| Adjusted effective tax ratenon-GAAP | 25.8 % | – | – |
| Cash flow from operating activitiesGAAP | $130.4M | – | – |
| Capital expendituresGAAP | −$45.8M | – | – |
| Free cash flownon-GAAP | $84.6M | – | – |
| Total debtother | $2.79B | – | – |
| Cash and cash equivalentsGAAP | $210.6M | – | – |
| Financial net debtnon-GAAP | $2.58B | – | – |
| Financial leverage ratio (net debt to adjusted EBITDA)non-GAAP | 3.1x | – | – |
| Americas net revenuesGAAP | $653M | – | 1 % |
| EMEA net revenuesGAAP | $710M | – | (6) % |
| Asia Pacific net revenuesGAAP | $192.2M | – | 11 % |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| PrestigeModerate decline in Prestige fragrance and skin care, partially offset by growth in Prestige cosmetics. | $1.06B | – | (1) % |
| Consumer BeautyDecrease in color cosmetics and mass fragrance sales, partially offset by growth in mass body care. | $496.8M | – | (2) % |
2Q27 and first half of FY27 outlook
- Revenue2Q27 LFL revenue to decline by a low-single-digit percentage; low-single-digit percentage headwind to Q2 revenues from foreign exchange (FX)
- NoteCoty anticipates Q2 adjusted EBITDA to decline by a high-single-digit percentage.
- NoteAdjusted EPS, excluding the equity swap, of $0.16 to $0.18 per share.
- NoteFree cash flow for the first half of FY27 of over $300 million.
- NoteContinued LFL sales growth in its Top 6 core Prestige brands.
Capital returns
- Dividend payment on Class A Common Stock and Series B Preferred Stock: $(3.3) million.
What drove it
- The Top 6 core Prestige brands returned to 5% like-for-like growth, with five of the six growing.
- BOSS Bottled Beyond for Her, Mood Stones by Kylie Jenner, and Marc Jacobs makeup contributed approximately 2% of Top 6 core Prestige brand growth.
- Americas revenue increased primarily because of higher sales in Brazil.
- Asia Pacific revenue increased primarily because of higher sales in China, Southeast Asia, and the Asia Travel Retail channel.
- Operating cash flow improved with better payables and receivables performance.
- Coty extended the Marc Jacobs license, securing a 40-year license duration.
Concerns
- Reported revenue declined 1% and LFL revenue declined 2%.
- Reported and adjusted gross margin decreased 120 basis points, reflecting higher freight and material costs related to the Middle East conflict and higher excess and obsolescence.
- Adjusted EBITDA declined 7% and adjusted EBITDA margin decreased by 120 basis points.
- Consumer Beauty reported an operating loss of $(24.1) million and adjusted operating loss of $(15.0) million.
- EMEA revenue declined 6%, primarily due to lower sales in the Middle East and Europe.
- Coty expects 2Q27 LFL revenue to decline by a low-single-digit percentage and adjusted EBITDA to decline by a high-single-digit percentage.
What to watch
- Whether the Top 6 core Prestige brands sustain LFL sales growth in 2Q27.
- The pace of recovery in Consumer Beauty, where LFL revenue declined 3% and adjusted EBITDA fell 59%.
- The impact of foreign exchange, expected to be a low-single-digit percentage headwind to Q2 revenues.
- Gross-margin effects from freight and material costs related to the Middle East conflict and elevated excess and obsolescence.
- Completion of the strategic review by the end of calendar 2026 and the broader outlook Coty expects to provide thereafter.
- Delivery of over $300 million of free cash flow for the first half of FY27.
Balance sheet and cash flow
- Cash and cash equivalents were $210.6 million as of September 30, 2026, compared with $176.1 million as of June 30, 2026.
- Total debt was $2,787.0 million as of September 30, 2026, compared with $3,088.2 million as of June 30, 2026.
- Financial net debt was $2,576.4 million as of September 30, 2026, compared with $2,912.1 million as of June 30, 2026.
- Trade receivables were $703.7 million as of September 30, 2026, compared with $525.8 million as of June 30, 2026.
- Inventories were $874.5 million as of September 30, 2026, compared with $838.7 million as of June 30, 2026.
- Proceeds from brand exit and sale of other long-lived assets were $250.0 million.
Analysis
Coty reported a modestly weaker top line in the first quarter of fiscal 2027. Net revenues were $1,555.2 million, down 1% on a reported basis and down 2% on a like-for-like basis. Prestige revenue declined 1%, while Consumer Beauty revenue declined 2% reported and 3% LFL. The regional outcome was uneven: Americas rose 1% and Asia Pacific rose 11%, while EMEA declined 6% because of lower sales in the Middle East and Europe.
The Prestige portfolio showed signs of improving mix within a still-declining division. The Top 6 core Prestige brands returned to 5% LFL growth, and launches including BOSS Bottled Beyond for Her, Mood Stones by Kylie Jenner, and Marc Jacobs makeup contributed approximately 2% of that growth. Prestige adjusted EBITDA declined 2% to $262.5 million, substantially more resilient than Consumer Beauty, where adjusted EBITDA fell 59% to $11.7 million and the segment reported an adjusted operating loss of $(15.0) million.
Profitability remained under pressure at the gross-margin level. Reported and adjusted gross margin were both 63.3%, down 120 basis points year-over-year, as higher freight and material costs related to the Middle East conflict and higher excess and obsolescence offset cost control. Reported operating income declined 8% to $170.4 million and adjusted operating income also declined 8% to $220.5 million. However, reported net income attributable to common stockholders rose 64% to $106.2 million and adjusted net income rose 38% to $146.1 million, with the current quarter including a $14.8 million benefit from the mark-to-market on the equity swap compared with a $26.5 million negative impact in the prior-year quarter.
Cash generation was the strongest financial feature of the quarter. Operating cash flow was $130.4 million versus $65.2 million in the prior-year period, and free cash flow was $84.6 million versus $11.2 million. Total debt declined to $2,787.0 million from $3,088.2 million at June 30, 2026, while financial net debt declined to $2,576.4 million from $2,912.1 million. The period also included $250.0 million of proceeds from brand exit and sale of other long-lived assets.
The Q2 outlook still points to a transition period rather than a broad recovery. Coty expects LFL revenue to decline by a low-single-digit percentage, a low-single-digit percentage FX headwind to reported Q2 revenue, and a high-single-digit percentage adjusted EBITDA decline. It guided adjusted EPS excluding the equity swap to $0.16 to $0.18 per share and expects first-half FY27 free cash flow of over $300 million. Management plans to complete its strategic review by the end of calendar 2026 and provide a broader outlook after gaining greater visibility into growth and profitability.
Management, verbatim
Our first quarter results were ahead of expectations on sales, adjusted EBITDA, and EPS, alongside a significant improvement in free cash flow, supported by the focus of Coty.Curated.
Markus Strobel, Executive Chairman and Interim Chief Executive Officer
The prestige and mass beauty markets continue to grow despite macroeconomic uncertainty, while our overall sell-out still trails the market in both divisions.
Markus Strobel, Executive Chairman and Interim Chief Executive Officer
We delivered adjusted EBITDA ahead of our guidance, supported by better-than-expected sales and cost control, while continuing to invest in our brands.
Soraya Benchikh, Chief Financial Officer
Not in the filing
stated, not guessed- Prior-quarter revenue, gross margin, operating income, net income, EPS, adjusted EBITDA, and free cash flow were not reported.
- Share repurchases were not reported.
- Common-stock dividend amount was not separately reported.
- Q2 gross margin, operating expenses, and tax-rate guidance were not reported.
- FY27 full-year revenue, profitability, EPS, and free-cash-flow guidance were not reported.
- Previous-release outlook was not provided, so comparison of actual results with prior guidance was not available.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.