Coty Inc. — First Quarter Fiscal 2027 Earnings Summary

Financial Performance:

• Net revenues were $1,555.2 million, a 1% decrease on a reported basis and a 2% decrease on a like-for-like (LFL) basis compared to the prior year.
• Prestige net revenues were $1,058.4 million (68% of total sales), declining 1% on both reported and LFL bases.
• Consumer Beauty net revenues were $496.8 million (32% of total sales), declining 2% on a reported basis and 3% on an LFL basis.
• Reported operating income was $170.4 million, an 8% decrease year-over-year; adjusted operating income was $220.5 million, an 8% decrease.
• Reported net income attributable to common shareholders was $106.2 million, a 64% increase year-over-year; adjusted net income was $146.1 million, a 38% increase.
• Adjusted EBITDA was $274.2 million, a 7% decrease year-over-year; adjusted EBITDA margin was 17.6%.
• Reported gross margin was 63.3%, a 120 basis point decrease year-over-year.
• Cash flow from operations was $130.4 million, up $65.2 million year-over-year.
• Free cash flow was $84.6 million, up from $11.2 million in the prior year.
• Total debt was $2,787.0 million as of September 30, 2026, down from $3,088.2 million as of June 30, 2026.
• Financial net debt was $2,576.4 million as of September 30, 2026, down from $2,912.1 million as of June 30, 2026.
• Financial leverage ratio (net debt to adjusted EBITDA) was 3.1x.

Guidance and Future Outlook:

• Coty expects Q2 FY27 LFL revenue to decline by a low-single-digit percentage, consistent with the previous two quarters.
• Coty anticipates continued LFL sales growth in its Top 6 core Prestige brands in Q2.
• On a reported basis, Coty expects a low-single-digit percentage headwind to Q2 revenues from foreign exchange (FX).
• Coty anticipates Q2 adjusted EBITDA to decline by a high-single-digit percentage, consistent with Q1 trends.
• Adjusted EPS for Q2 is expected to be $0.16 to $0.18 per share, excluding the equity swap impact.
• Coty expects free cash flow for the first half of FY27 to be over $300 million.
• FY27 is expected to be a transition year; broader outlook will be provided following the completion of the strategic review by the end of calendar 2026.

Business Segments and Product Lines:

• Top 6 Core Prestige brands (Hugo Boss, Burberry, Calvin Klein, Marc Jacobs, Chloé, and Kylie Cosmetics) returned to growth with 5% LFL growth in Q1, up from a 6% decline in the first half of fiscal 2026.
• Five of the Top 6 Core Prestige brands grew, and combined sell-out returned to growth.
• Key Q1 launches contributing to growth included BOSS Bottled Beyond for Her, Burberry Goddess Amber Vanilla, Mood Stones by Kylie Jenner, and Marc Jacobs Beauty makeup.
• In Consumer Beauty, LFL decline narrowed to 3% from 8% in the first half of fiscal 2026.
• Sally Hansen regained the number-one position among U.S. mass nail brands in the overall nail category.
• CoverGirl and Rimmel narrowed their retail sales gap to their respective categories in the U.S. and U.K.
• Coty plans to launch Etro fragrances in the second half of FY27 and Swarovski fragrances in calendar year 2027.
• Consumer Beauty plans include focusing on fewer, higher-impact launches and scaling adidas fragrances globally.

Market and Competitive Landscape:

• Prestige and mass beauty markets continue to grow despite macroeconomic uncertainty.
• Coty's overall sell-out still trails the market in both the prestige and mass divisions.
• Americas reported net revenues increased 1% (LFL flat), driven by higher sales in Brazil.
• EMEA reported net revenues decreased 6% (LFL down 5%), driven by lower sales in the Middle East and Europe.
• Asia Pacific reported net revenues increased 11% (LFL up 8%), driven by higher sales in China, Southeast Asia, and the Asia Travel Retail channel.

Risks and Challenges:

• Gross margin pressure was driven by higher freight and material costs related to the Middle East conflict, alongside higher excess and obsolescence reflecting elevated demand forecasts.
• Consumer Beauty reported operating loss worsened to $(24.1) million from $(7.7) million, driven by lower gross margin and higher SG&A.
• The company faces challenges in translating investment into stronger sell-out and market share gains.
• Forward-looking statements highlight risks related to geopolitical conflicts (Ukraine, Middle East), inflationary pressures, supply chain disruptions, and the successful implementation of the Coty.Curated strategic framework.
• Risks include the ability to manage the strategic review of the consumer beauty business and the timing of the exit from the Gucci Beauty license.

Management Commentary and Tone:

• Markus Strobel, Executive Chairman and Interim CEO, stated results were ahead of expectations on sales, adjusted EBITDA, and EPS, with significant improvement in free cash flow.
• Strobel noted that while progress is encouraging, more work is needed to translate "green shoots into a broad-based recovery."
• Soraya Benchikh, CFO, highlighted that the first quarter showed encouraging early progress on quality growth, productivity, and cash generation, though sustainable improvement will take time.
• Management emphasized a focus on focused investment, better gross margins, and a more efficient cost base to support deleveraging and reinvestment.
• The tone reflects cautious optimism, acknowledging the transition year nature of FY27 and the need for consistent delivery to earn confidence.

Other Key Points:

• Coty extended the Marc Jacobs license with a 40-year duration, reaffirming its position as a partner of choice for luxury brands.
• Marc Jacobs fragrances rank among the Top 10 to 15 prestige female fragrances across the U.S., U.K., Canada, and Australia.
• The initial $250 million of Gucci Beauty proceeds, combined with free cash flow, reduced net debt by over $300 million since June.
• Coty released its Fiscal Year 2026 Sustainability Report under its "Beauty That Lasts" strategy, validating its Net Zero 2050 target and water withdrawal reduction goals.
• The company remains committed to completing its strategic review by the end of calendar 2026.
• Adjusted diluted EPS included a $0.01 benefit from the mark-to-market on the equity swap, compared to a $0.03 negative impact in the prior year.
• Reported net income included a $14.8 million benefit from the mark-to-market on the equity swap, compared with a $26.5 million negative impact in the prior-year quarter.