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Coty said on Tuesday that its third-quarter net revenue sales declined 3 per cent to $1.299 billion on a like-for-like basis, just falling short of analysts’ $1.3 billion estimates. Shares were down 7 per cent on Wednesday afternoon. The company — citing a challenging global environment — lowered its share price outlook for the full year to forecast a 2 per cent sales decline in the fourth quarter.
“Fiscal 2025 has been a pivotal and transitional year for Coty, as the consumer and retail environment of the past few quarters became even more challenging in the third quarter, and we took more proactive measures to clean up the baseline of our business to prepare for a healthier 2026,” said Coty CEO Sue Nabi in a statement. In April, the company cut 700 jobs globally as part of its strategic overhaul to save costs.
Alongside internal structural changes, Coty also faces headwinds characterised by tariffs, a slower-than-expected response to newness in the market, category pressures and recession concerns among consumers. On a call with investors on Wednesday, Nabi said that the “triple headwind” of the slowing fragrance market, difficult comps in 2024 and low retail inventory levels, particularly in the US, presented challenges. In 2024, the group saw market success from launches including Kylie Cosmetics’s Cosmic perfume, Burberry Goddess and Marc Jacobs Daisy. But this year, follow-up launches — including Burberry Goddess Intense, Marc Jacobs Wild Intense and Cosmic 2.0 from Kylie Cosmetics — saw a soft market response. Nabi also said that retailers’ ongoing needs to reduce and tighten inventory levels as they push to compete with fast-growing social commerce channels like Amazon and TikTok Shop have impacted retail and category performance. “We are in control of our destiny and are already making the changes needed to address many of these challenges, with new leadership in the US as the market has slowed in recent months,” she said.
By category, sales across its prestige portfolio in the third quarter (including brands such as Infiniment Coty Paris, Burberry, Lancaster, Orveda and Jil Sander and making up 64 per cent of the group’s total sales), declined 2.5 per cent to $829 million. Performance was impacted by declines in prestige makeup sales and a moderate prestige fragrance category, further influenced by a “lapping of prior year blockbuster launches”, said Nabi.
Consumer beauty (made up of brands like CoverGirl, Max Factor and Adidas fragrances and accounting for 36 per cent of sales) has remained a consistent challenge for Coty in 2025. In Q3, net revenue slipped 5 per cent to $470 million. Quarterly decline was driven by lower revenue in colour cosmetics and bodycare, partially offset by mass fragrance and skincare — a trend also taking shape during Coty’s nine-month sales period. “These declines are driven by the continued worsening of the mass colour cosmetics category, which declined by a mid-single-digit per cent in Q3, with the US market under the most pressure and somewhat better trends in the rest of the world,” Nabi said.
Mass makeup (within consumer beauty) is a pain point as dupes become a mainstay. Nabi says the group plans to scale product innovation for CoverGirl, Max Factor and Bourjois to capitalise on trending consumer needs moving forward. Rimmel’s Thrill Seeker Ink Pens launched in January at UK-based drugstore Superdrug and got off to a strong start, but sales gained additional momentum through a social media halo effect, first via TikTok Shop, then Amazon. “It was a strong playbook,” the executive added.
For prestige and consumer categories, growth plans will prioritise leaning into the faster-growing social commerce channels to keep pace (CoverGirl will launch on TikTok Shop next month). The company said it will introduce fresh fragrance formats across a broader range of price points. Nabi also confirmed that Coty is constantly looking at brands that it can divest from its portfolio, especially within consumer beauty, to gain growth, highlighting its recent divestiture of Kim Kardashian’s Skkn beauty brand.
By region, sales in the Americas fell 1 per cent in the third quarter on a like-for-like basis. Europe, the Middle East and Africa (EMEA) slipped 1 per cent to $610 million, dragged down by consumer beauty. However, the group highlights some green shoots in sales performance in most European markets and Africa, with sales up 3 per cent to $2.2 billion (48 per cent of Coty sales).
Asia-Pacific declined 4 per cent to $159 million in the quarter, thanks to challenging market dynamics in China and the travel retail sector.
Coty’s take on tariffs
Nabi also addressed ongoing tariff concerns, noting their effect on broadening uncertainty and a decline in consumer sentiment. “Coty is relatively better positioned than many consumer companies and as a reminder, as approximately 30 per cent of our sales are in North America,” she says, “for consumer beauty, our products are primarily manufactured locally in the US, but our prestige fragrances are manufactured primarily in Europe, where we have the world’s largest fragrance manufacturing facility. Our finished goods sourced from China are negligible aside from local sales.”
Coty’s competitors have also faced headwinds given the tariff tensions. L’Oréal said it was bracing for turbulence, while Puig and Estée Lauder Companies warned against profit growth.
Under the current tariff framework, Coty has already built up its prestige fragrance inventory to carry it through to the end of fiscal 2025. However, the company also said it is on track for a mid-single-digit price increase on prestige in the US starting this summer. The group will consider a longer term strategy where it will transfer some production to the US to mitigate the impacts of tariffs on imports from Europe. Coty will also resource suppliers in other countries (components and marketing materials are sourced in China) to broaden the supplier base.
Despite the complex and challenging backdrop, Nabi is confident the group will deliver a gradual improvement in its sales trends for 2026. She said the group is focused on more innovation across fragrance, makeup and skincare, introducing more of its brands to social commerce channels and bringing Marc Jacobs makeup to market. “In fiscal 2026, we have exciting launch and distribution initiatives planned, which we anticipate will improve sales,” concluded Nabi.
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