Coty Inc.’s sales slipped in the first three months of fiscal 2026, the beauty company reported Wednesday, just weeks after it was revealed that it will lose the Gucci license. Net revenue tallied $1.58 billion, down 6 percent from a year earlier, but roughly in line with Wall Street estimates. On a like-for-like basis, revenues declined 8 percent. More from WWD Within that, prestige revenue was down 4 percent, just topping $1 billion. Consumer beauty revenue was $507.7 million, representing a decrease o ...

Core Insights - Coty Inc. stock has seen a significant decline, dropping over 50% from its peak price of around $10 to approximately $4, reflecting broader pressures on the beauty industry [2][3] - The company reported revenues of $1.25 billion for the latest quarter, an 8% decrease year-over-year, and an adjusted loss of five cents per share, missing expectations for a two-cent profit [3] - A $212.8 million non-cash impairment was recorded due to sluggish demand for cosmetics in the U.S. and Europe, highlighting structural challenges [3] - U.S. tariffs on European imports are projected to reduce Coty's fiscal 2026 profits by about $70 million, prompting the company to relocate some production to the U.S. [3] - Coty faces challenges with Gen-Z consumers favoring alternative beauty trends and underperformance in the Asia-Pacific region, particularly China [3] - The company has over $4 billion in debt and only $257 million in cash, raising concerns about its financial stability [3] Future Outlook - Management anticipates a challenging first half of fiscal 2026 with a projected 6-8% decline in sales, but expects recovery in the latter half through new product launches and premium fragrance price increases [4] - Significant investments are being made in digital and social commerce, including platforms like TikTok Shop, to attract younger consumers [4] - The "All-In to Win" initiative aims to optimize operations and enhance margins, with estimated adjusted earnings per share of 33 to 36 cents in early fiscal 2026 [4] Market Position - Despite the decline, Coty maintains a strong position in the fragrance sector and is focused on cost efficiencies and digital sales to drive potential recovery [5] - Investing in a single company like Coty carries risks, while diversified portfolios like the Trefis High Quality Portfolio have shown superior returns with less risk compared to the S&P 500 [6]