Coty leans on prestige pipeline to fuel future growth

Coty has reported a 6% decline in first quarter net revenue to $1.58 billion (£1.19 billion) but remains "confident" in achieving a return to profitable growth in the second half of FY26 and beyond.

Prestige beauty sales reached $1.07 billion (£812 million) in the quarter ending 30 September, accounting for 68% of total revenue and declining 4% reported (6% LFL) due to retailer inventory adjustments and softer makeup and skincare demand.

Meanwhile, consumer beauty revenue totalled $507.7 million (£385 million), or 32% of total sales, down 9% reported (11% LFL), weighed down by softness in Europe and mass fragrance trade destocking.

Regionally, EMEA sales fell 4% reported, the Americas declined 6%, and Asia Pacific decreased 9%, though Coty noted gradual improvement in China’s beauty market, led by fragrances.

Looking ahead, the company expects second-quarter like-for-like sales to be at the upper end of its prior guidance of a 3–5% decline, with foreign exchange contributing a low- to mid-single-digit benefit.

It also anticipates a return to sales and profit growth in the second half, supported by aligned sell-in and sell-out trends and key prestige product launches.

Coty’s prestige pipeline includes launches such as BOSS Bottled Beyond, expansion into the fragrance mist category under brands like Calvin Klein and Kylie Cosmetics, and future launches under Etro and Marc Jacobs Beauty in 2026 and Swarovski in 2027.

In consumer beauty, Coty will introduce new mass fragrance lines under Adidas, Nautica, Vera Wang, and Bruno Banani, and expand its in-house Jawhara collection across Europe and Amazon in the US.

It comes after Coty confirmed plans to more closely integrate its prestige and mass fragrance businesses as part of a broader effort to realign the company with its core strengths and drive sustainable growth.

The goal is to leverage synergies across research and development, consumer insights, manufacturing, and distribution, strengthening overall revenue and profit.

It is expected to improve coordination and operational efficiency across the company's fragrance portfolio, which accounts for 69% of its total sales.

In parallel, the firm also initiated a strategic review of its consumer beauty business, including mass-market brands such as CoverGirl, Rimmel, Sally Hansen, and Max Factor, as well as a separate Brazilian portfolio.

Sue Nabi, CEO of Coty, said: "Our strategic progress is accelerating as we elevate Coty as a prestige beauty company with an emphasis on fragrances and scenting across price points, complemented by capabilities in prestige cosmetics and skincare.

"In line with our recent strategic announcements, over the coming years we will concentrate investment behind our portfolio brands with the greatest long-term potential, while also building and elevating our newly added licenses and brands."

She added: "Following recent changes, Coty’s underlying business trends are already improving, in line to slightly ahead of our expectations, particularly in prestige.

"We see tremendous potential to accelerate this momentum, driven by a pipeline of new brand launches and innovations, market-leading e-commerce, and globally scaled brick & mortar presence."