Coty Inc

Latest Results (02.04.2026):

Coty Inc — second quarter of fiscal year 2026 (quarter ended December 31, 2025): reported Q2 results were broadly in line with the company’s outlook. Net revenue was $1,678.6 million ( +1% reported; -3% like‑for‑like), adjusted results showed resilience (adjusted operating income $274.3M; adjusted EBITDA $330.2M), and strong cash generation plus the $750M Wella proceeds materially reduced net debt and leverage to near nine‑year lows, while leadership changes and a new "Coty. Curated." strategy were announced.

Top‑line and mix

Q2 net revenues: $1,678.6M (+1% reported; -3% LFL). Prestige (68% of sales) was $1,133.6M (+2% reported; -2% LFL); Consumer Beauty was $545.0M (-2% reported; -6% LFL).

Margins and profitability

Reported gross margin 63.8% (down 290 bps); adjusted gross margin 64.2% (down 260 bps). Reported operating income was $148.2M (down 45%); adjusted operating income was $274.3M (down 18%). Reported net loss attributable to common shareholders was $(126.9)M; adjusted net income was $119.7M.

Earnings per share and adjusted metrics

Reported diluted EPS (common) was $(0.14); adjusted diluted EPS was $0.14. Adjusted EBITDA was $330.2M (down 15% year‑over‑year); adjusted EBITDA margin 19.7% (down 370 bps).

Cash flow and balance sheet

Operating cash flow was $559.7M and free cash flow $513.1M for Q2. Total debt fell to $3,038.1M with financial net debt $2,601.4M, yielding a financial leverage ratio of 2.7x (down from 3.7x the prior quarter), driven primarily by strong cash flow and $750M upfront from sale of Coty’s remaining 25.8% stake in Wella.

Notable one‑offs and adjustments

Q2 included a realized loss on the Wella investment and mark‑to‑market impacts from equity swaps (Total Return Swaps hurt adjusted EPS by $0.04 in Q2 and $0.07 YTD). Non‑GAAP adjustments materially bridge reported losses to positive adjusted results.

Segment performance

Prestige: $1,133.6M in Q2, modest reported growth but -2% LFL; adjusted operating margin 21.8%. Consumer Beauty: $545.0M, pressure in color cosmetics and fragrances (-6% LFL) with adjusted operating margin down to 5.0% and sizable EBITDA decline.

Regional trends

EMEA led reported growth (+3% reported; -4% LFL), Americas declined (~-2% reported; -3% LFL) with U.S. prestige fragrances uneven, and Asia Pacific slightly down (-1% reported; -2% LFL) but with pockets of strength in China and Japan.

Leadership, strategy and portfolio actions

Markus Strobel named Executive Chairman & Interim CEO effective Jan 1, 2026; company launched the "Coty. Curated." strategic framework to sharpen priorities, focus investments and improve execution. Coty is continuing a strategic review of its Consumer Beauty portfolio.

Outlook (Q3 guidance)

Company withdrew prior FY26 EBITDA and FCF guidance and provided only Q3 guidance: expects LFL Q3 revenue to decline mid‑single‑digits (Consumer Beauty weakness), Q3 gross margins to be down 200–300 bps, adjusted EBITDA of $100–110M, roughly breakeven adjusted EPS (ex‑equity swap), and anticipates free cash flow outflow in Q3 (including ~ $30M cash taxes related to the Wella sale).

Investor takeaways

Results show operational pressure in a promotional market and Consumer Beauty sell‑out challenges, but materially improved leverage and strong cash generation provide financial flexibility. Management change and the "Coty. Curated." program signal an increased focus on portfolio prioritization and margin recovery going forward.