Coty said sales declined 6% to $1.58 billion in the first quarter of fiscal 2026, ended September 30 2025, in line with analyst expectations.
Adjusted EBITDA declined 18% year-on-year, with gross margin decreasing from 65.5% to 64.5% to reflect lower sales and tariff headwinds — though CEO Sue Nabi tells Vogue Business that the company’s US-based factories and price increases across prestige fragrances have allowed it to mitigate some of the impacts. Coty expects gradual improvement in sales trends throughout the fiscal year, with Q2 like-for-like sales expected to be at the better end of the -3% to -5% outlook.
In October, Kering announced its plans to sell its beauty division to L’Oréal, which includes a transfer of the Gucci Beauty license from Coty to L’Oréal when it ends in 2028. Since it relaunched under Coty in 2019, Gucci Beauty has grown almost 60%, Nabi says.
“With the confirmation that the Gucci license will no longer be part of our portfolio after its expiry, our focus for the next several years will be on the brands with the biggest long-term growth potential — this is the majority of our portfolio,” Nabi says, highlighting new additions such as makeup under Marc Jacobs Beauty, which is expected to debut in the 2026 calendar year, and Swarovski’s fragrance launch, penned for 2027. Nabi believes Coty’s portfolio is “very durable”, given that around 80% of its business is either directly owned or under a long-term license.
For the group, sales in the Americas decreased 6% in the quarter, impacted by planned inventory rightsizing, which led to lower net revenue in the prestige category. EMEA (Europe, the Middle East and Africa) sales decreased 4%, due to fewer conversions in the consumer color cosmetics business. Asia-Pacific revenues decreased 9%, due to an ongoing softness in demand, though the company noted improvements in China.
Sales in the prestige category, which represents 68% of total sales, decreased 4%, impacted by weaker performance in prestige makeup and skincare. The prestige fragrance category outperformed, growing mid-single digits. Nabi notes trends in fragrance such as Arabian scents and gourmand (a fragrance category composed of edible notes, such as vanilla or caramel). “Gourmand is almost the new floral, it’s our fastest-growing category, and vanilla is the star ingredient. I think there is a link with the GLP-1 economy — people are overconsuming gourmand fragrances while lowering their intake of sugar.”
Consumer beauty sales, which make up 32% of total sales, decreased 9% due to an ongoing weakness in the European cosmetics category, the company’s sellout rate underperforming compared to the market average, and some partners are carrying fewer mass fragrances.
In September, Coty announced its strategic review plans. Firstly, it aims to integrate its prestige and mass fragrance businesses (which includes body mists and lifestyle scents), which have previously operated separately. The strategic shift is designed to improve synergies across research and development (R&D) and economies of scale. “We see a phenomenon called ‘stacking’ — your mist becomes almost your lingerie, and your main fragrance becomes your main outfit — so we see a fantastic opportunity to play to our strengths with a portfolio that goes from $5 to $500,” says Nabi. “We see a high-low phenomenon consistently across the world. It’s not people trading down, but consuming at the highest and entry parts of the market.”
In tandem, Coty is also reviewing its mass color cosmetics business (which includes brands such as CoverGirl, Rimmel, Sally Hansen and Max Factor). The review also includes separating its $400 million Brazil business, which comprises local brands and already operates with its own manufacturing and R&D divisions. “Our whole focus is on increasing and optimizing the profitability of this business while turbocharging the innovation plan. We are all working to make sure the strategic review is as fast and quick and productive as possible,” says Nabi.
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