Coty Inc.‘s sales slipped in the first three months of fiscal 2026, the beauty company reported Wednesday, just weeks after it was revealed that it will lose the Gucci license.
Net revenue tallied $1.58 billion, down 6 percent from a year earlier, but roughly in line with Wall Street estimates. On a like-for-like basis, revenues declined 8 percent.
Within that, prestige revenue was down 4 percent, just topping $1 billion. Consumer beauty revenue was $507.7 million, representing a decrease of 9 percent.
Adjusted earnings per share came in at 12 cents, below analysts’ estimates of 15 cents.
Nevertheless, Coty sees signs of improvement.
“We expect Q2 sales to be at the more favorable end of our previous guidance, with a return to sales and profit growth in the second half,” said CEO Sue Nabi.
This comes at a trying time for Coty, which is set to lose its jewel-in-the-crown Gucci license for fragrance and beauty, which expires in 2028. (According to Evercore IRI, that brand accounts for about 8 percent of Coty’s sales and approximately 11 percent of its profits.)
News that the license would change hands came last month as part of the Gucci-parent Kering’s deal to sell its beauty business to L’Oréal.
In its quarterly update, Coty said it continues to operate Gucci Beauty under its current agreement, “with a focus now on optimizing the brand during its remaining term.”
It also highlighted new partnerships in the works with other brands.
“We see tremendous potential to accelerate this momentum, driven by a pipeline of new brand launches and innovations, market-leading e-commerce and globally scaled brick-and-mortar presence,” said Nabi. “This includes fragrance launches under Swarovski, Etro and Marni planned within the next two years, and prestige cosmetics innovations such as makeup under Marc Jacobs Beauty on track to launch in 2026.”
Concurrently, Coty is carrying out a strategic review of its mass color cosmetics business, as well as its operations in Brazil, as it revealed in September. That will focus on Coty’s $1.2 billion revenue mass color cosmetics business, including brands such as CoverGirl, Rimmel, Sally Hansen and Max Factor, and its $400 million revenue Brazil business, composed of local Brazilian brands. The review, being carried out by Citi, will assess a full range of alternatives including partnerships, divestitures and spin-offs.
Meanwhile, speculation continues to swirl about the remainder of Coty’s luxury business, which includes fragrance licenses for Burberry, Jil Sander and Hugo Boss.
A spokesperson said: “Coty has categorically denied that is exploring the sale of its prestige division. The only business currently under strategic review is the consumer beauty division.”
Burberry Goddess, released in 2023, remains Coty’s biggest launch ever, while Hugo Boss became the number-two men’s fragrance franchise in Europe in the second half of last year.
Coty’s market cap currently stands at $3.33 billion.
