Coty Sees Sales Slip in Q1 as Gucci License Loss Looms

Core Insights - Coty Inc. reported a 6 percent decline in net revenue to $1.58 billion for the first three months of fiscal 2026, aligning with Wall Street estimates, while like-for-like revenues fell by 8 percent [1][2] - The company is set to lose its Gucci license for fragrance and beauty, which accounts for approximately 8 percent of its sales and 11 percent of its profits, as part of Kering's deal to sell its beauty business to L'Oréal [3][4] Financial Performance - Prestige revenue decreased by 4 percent, just exceeding $1 billion, while consumer beauty revenue fell by 9 percent to $507.7 million [2] - Adjusted earnings per share were reported at 12 cents, below analysts' expectations of 15 cents [2] Strategic Initiatives - Coty is focusing on optimizing the Gucci brand during the remaining term of its license and is exploring new partnerships with other brands [4] - The company plans to launch new fragrances under brands such as Swarovski, Etro, and Marni within the next two years, alongside innovations in prestige cosmetics like Marc Jacobs Beauty set for 2026 [5] Business Review - A strategic review is underway for Coty's $1.2 billion mass color cosmetics business and its $400 million operations in Brazil, assessing options including partnerships, divestitures, and spin-offs [5] - The consumer beauty division is the only segment currently under strategic review, with Coty denying any plans to sell its prestige division [6] Market Position - Coty's market capitalization is currently valued at $3.33 billion [7]