On February 5, international fragrance and beauty group Coty announced its results for the second quarter of fiscal year 2026, ended December 31, 2025: net revenues reached USD 1.678 billion, up 1% year-on-year. The company reported a net loss of USD 126.9 million, compared with net income of USD 20.4 million in the same period last year. Adjusted earnings per share were USD 0.14, up from USD 0.11 in the prior-year period.
In the announcement, the Group stated that it is shifting its strategic focus toward core brands. Markus Strobel, Coty’s Executive Chairman and Interim Chief Executive Officer, called for greater discipline and execution to reverse the company’s weak financial performance, emphasising that significant efforts will still be required to turn the business around.
Regarding the Chinese Mainland market, Markus Strobel commented, “We are continuing to see beauty market trends in China gradually improve with fragrances outperforming other beauty categories as penetration increases.”
As of the close on February 5, Coty’s shares traded at USD 3.15 on the New York Stock Exchange, down 8.16% from the previous trading day. The stock has declined 53.6% over the past year, with a current market capitalisation of USD 2.755 billion.
Key financial data for Coty in the second quarter of fiscal year 2025/26 are as follows:
At present, Coty faces significant challenges in revitalising its performance. Markus Strobel stated candidly:
“In my first month in the role, having visited our largest markets and key sites, it’s very clear to me that Coty has many top-notch assets and competitive advantages: highly attractive brands, best-in-class fragrance innovation capabilities, a vertically integrated business model, and a creative, entrepreneurial organisation.
At the same time, our financial performance over the past year and a half has been disappointing, and our current share price reflects that reality. Both things are true: Coty has outstanding assets and capabilities, yet we have not been delivering at the level we should. To step-change our performance and channel our strengths, we are initiating our “Coty. Curated.” strategic framework, encompassing sharper priorities, more focused investments, improved execution, and increased support behind our core businesses. These actions are anchored in consumer demand and a relentless focus on sell-out and market share.
In parallel, we are continuing our portfolio review to identify opportunities to unlock shareholder value in both the near and long term, complemented by other value-driving opportunities, such as our recent divestiture of our remaining stake in Wella at the end of CY25, delivering on our commitment.”
By division:
By market:
In the second quarter of fiscal 2026, net revenues in the Asia Pacific region, which includes the Chinese Mainland, totalled USD 189.9 million, down 1% on a reported basis. The decline was primarily driven by contraction in Southeast Asia, partially offset by growth in the Chinese Mainland (including Hainan) and Japan. Beauty market trends in the Chinese Mainland have shown gradual improvement, and as penetration increases, fragrances are outperforming other beauty categories.
Fiscal 2026 and Future Plans:
Prestige Beauty Business Strategy
- Continue the global rollout of the major Autumn 2025 launch, BOSS Bottled Beyond, which has already become the second best-selling launch in its category, while advancing the brand’s relaunch and channel expansion in the United States.
- Build on the strong momentum of the recently launched Cosmic Kylie Jenner Intense fragrance in the United States, which has significantly exceeded expectations, with sales reaching twice that of comparable launches last year.
- Launch a major women’s fragrance project under Calvin Klein in the coming weeks.
- Marc Jacobs Beauty colour cosmetics are expected to debut in 2026.
- Swarovski fragrances are planned for launch in 2027.
Consumer Beauty Business Strategy
- Focus investment on core colour cosmetics brands and product lines under CoverGirl and Rimmel, achieving early incremental sales growth.
- Continue global expansion of the adidas fragrance business, driven by the adidas Vibes fragrance line.
Fiscal 2026 Outlook:
In light of the complex beauty market environment and recent management changes at Coty, the company has withdrawn its previously issued fiscal 2026 guidance for EBITDA and free cash flow. It has provided only third-quarter expectations:
- Like-for-like sales are expected to decline by a mid-single-digit percentage, primarily due to continued softness in Consumer Beauty sales trends.
- Gross margin is expected to decline by 200 to 300 basis points year-on-year, consistent with the second-quarter trend.
- Adjusted EBITDA is expected to range between USD 100 million and USD 110 million, broadly in line with the second quarter.
In Prestige Beauty, Coty expects the fragrance market to grow in the low to mid-single digits, consistent with second-quarter levels and aligned with overall beauty market trends. Although retailer destocking headwinds eased significantly in the second quarter, promotional intensity during the holiday period increased, with heightened discounting across categories, putting pressure on Coty’s net revenues and weighing on gross margin. The company is optimising investment allocation across its core businesses and strengthening execution, aiming to gradually increase market share in key markets such as the United States, the United Kingdom, and Germany, while maintaining strong share performance in Asia Pacific, the Middle East, and Latin America.
In Consumer Beauty, the company expects the mass beauty category to remain flat or grow in the low single digits. It is implementing a performance improvement plan for its colour cosmetics business to progressively narrow the sales gap with the market. However, in the near term, this underperformance relative to the category is expected to continue to weigh on results.
| Source: Official press release
| Image Credit: Coty Group official website
| Editor: LeZhi
