Coty Inc. (COTY) Q4 2026: Sales Growth Returns, Profitability Declines — Cautiously Optimistic

Coty Inc. (NYSE: COTY) reported its fourth quarter results for fiscal year 2026, revealing a modest sales growth of 1% year-over-year, with net revenues reaching $1,269.2 million. This marks an increase of $11.2 million compared to the same quarter last year. However, the company faced significant challenges, including a reported operating loss of $42.7 million, a stark contrast to the operating income of $15.5 million recorded in the prior year.

Key Metrics:

• Net Revenues: $1,269.2 million, up $11.2 million or +1% YoY.
• Reported Operating Loss: $42.7 million, compared to an operating income of $15.5 million in Q4 2025.
• Net Loss: $144.3 million, compared to a net loss of $72.1 million in the prior year.
• Adjusted EBITDA: $93.6 million, down 26% from $126.7 million in Q4 2025.
• Free Cash Flow: $72.6 million, compared to $34.9 million in Q4 2025.
• Reported Loss Per Share: $0.16, compared to a loss of $0.08 in Q4 2025.
• Adjusted Loss Per Share: $0.02, improved from a loss of $0.05 in the prior year.

Analyst View:

This quarter presents a mixed bag for shareholders. While the return to sales growth is a positive sign, the substantial operating loss and net loss raise concerns about profitability and operational efficiency. The reported gross margin decreased to 60.9%, down 140 basis points year-over-year, indicating challenges in cost absorption and increased charges related to excess inventory and tariffs. The company’s strategic framework, Coty.Curated, aims to address these issues, but the execution will be critical in the upcoming quarters.

Strategic Developments:

Coty has made significant moves to streamline its operations, including:

• The early termination of the Gucci Beauty license, which will result in a step-down in sales and profit in FY28 but is expected to free up resources for core brand investments.
• A focus on reducing debt, with total debt decreasing to $3,088.2 million from $3,216.2 million as of March 31, 2026.
• The implementation of a fixed cost reduction program to enhance profitability.

Forward Guidance:

Looking ahead, Coty expects a low- to mid-single-digit decline in like-for-like (LFL) revenue for Q1 FY27, with adjusted EBITDA anticipated to decline by a low-teens percentage. However, the company is optimistic about free cash flow generation, projecting over $300 million for the first half of FY27. Investors should closely monitor the execution of Coty.Curated and the impact of new product launches, particularly in the prestige segment, as these will be crucial for stabilizing performance and driving future growth.

Conclusion:

Coty's Q4 results reflect a company in transition, grappling with profitability challenges while attempting to stabilize sales growth. The strategic initiatives in place are promising, but their success will depend on effective execution and market conditions. Investors should remain vigilant as Coty navigates these changes in the upcoming quarters.

Note: All amounts are in millions.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions)	Three Months Ended June 30, 2026	Three Months Ended June 30, 2025	Year Ended June 30, 2026	Year Ended June 30, 2025
Net revenues	$ 1,269.2	$ 1,252.4	$ 5,806.6	$ 5,892.9
Cost of sales	496.5	472.9	2,151.4	2,004.6
Gross profit	772.7	779.5	3,655.2	3,888.3
Gross margin %	60.9 %	62.3 %	62.9 %	64.8 %

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