SECOND QUARTER FY 2026 RESULTS FEBRUARY 5, 2026 INTRODUCTION Markus Strobel, Executive Chairman & Interim Chief Executive Officer Laurent Mercier, Chief Financial Officer 2 OVERVIEW JOINING COTY AT A PIVOTAL MOMENT Markus Strobel, Executive Chairman & Interim Chief Executive Officer ABOUT MARKUS STROBEL 4 ➢ 33-year career at Procter & Gamble with strong discipline and operational expertise ➢ 25 years at P&G Beauty, where he most recently served as President of P&G's Global Skin & Personal Care business whic ...

Financial Data and Key Metrics Changes - The company reported a decline in adjusted EBITDA of 15% year-over-year, totaling $330 million, which was at the lower end of the guidance range [39] - Adjusted gross margin was 64.2%, reflecting a 260 basis point decline from the prior year, primarily due to an intensified promotional environment during the holiday period [37] - Free cash flow in the first half was $524 million, exceeding guidance and last year's first half free cash flow of $411 million [40] Business Line Data and Key Metrics Changes - In the Prestige segment, like-for-like sales declined by 2%, an improvement from a 6% decline in the previous quarter, driven by reduced retailer destocking and stronger innovation contributions [31][32] - Consumer beauty saw like-for-like sales decline of 6%, improving from an 11% decline in Q1, with a focus on reallocating investments towards core brands [33][34] - The company plans to streamline the innovation pipeline to focus on high-potential launches, particularly in color cosmetics [35] Market Data and Key Metrics Changes - The prestige beauty market grew approximately 5% in Q2, showing a slowdown from 6% growth in Q1, with the prestige fragrance market moderating from 5% to 3% growth [29][30] - Emerging regions like Asia Pacific, Middle East, and Latin America showed strong sell-out performance, balancing weaker sales in key markets like the U.S., Germany, and the U.K. [30] - The U.S. market experienced significant pressure, with the prestige fragrance market slowing and aggressive promotional activity impacting overall growth [16][28] Company Strategy and Development Direction - The company is implementing a new strategic framework called "Coty Curated," focusing on making big brands bigger, scaling successful initiatives, and stopping projects that dilute resources [8][9] - A performance improvement plan named "Color the Future" is being activated to return the consumer cosmetics business to growth and profit expansion [26][33] - The company is committed to operational discipline and prioritizing investments in core brands to drive sustainable growth [10][51] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that financial results over the past 18 months have been disappointing, with a need for improved operational discipline and focus [7][8] - The leadership transition is seen as an opportunity to refine strategic priorities and align with the board for future growth [41][50] - The company expects mid-single-digit declines in like-for-like revenue trends for Q3, primarily driven by consumer beauty [42][45] Other Important Information - The company ended its license with the Aveda skincare brand to focus on scale and profitability [27] - The divestiture of Wella generated $750 million in upfront proceeds, aligning with the company's commitment to divest its financial stake [41] - The company is leveraging AI to enhance operational efficiency and reduce costs in content creation [24] Q&A Session Summary Question: What are the expectations for the upcoming quarters? - The company expects like-for-like sales to decline mid-single digits in Q3, driven by consumer beauty challenges and a highly promotional environment [42][45] Question: How is the company addressing underperformance in the U.S. market? - Management is focusing on reallocating investments towards core brands and improving execution in key markets to close market share gaps [18][33] Question: What is the outlook for gross margins? - The company anticipates gross margins to decline by 200-300 basis points in Q3, influenced by lower sales and a highly promotional environment [46][47]

Financial Data and Key Metrics Changes - The company reported a decline in adjusted EBITDA of 15% year-over-year, totaling $330 million, which was at the lower end of guidance for a low- to mid-teens decline [37] - Adjusted gross margin was 64.2%, reflecting a 260 basis point decline from the prior year, with expectations for continued margin pressures in the second half of fiscal year 2026 [36][44] - Free cash flow in the first half was $524 million, exceeding guidance and last year's performance, driven by better receivables performance [38] Business Line Data and Key Metrics Changes - In the Prestige segment, like-for-like sales declined by 2%, an improvement from a 6% decline in the previous quarter, with innovation contributing positively [31][32] - Consumer beauty saw like-for-like sales decline of 6%, improving from an 11% decline in Q1, with a focus on reallocating investments to core brands [33][36] - The company plans to streamline its innovation pipeline to focus on high-potential launches, particularly in the color cosmetics segment [34] Market Data and Key Metrics Changes - The prestige beauty market grew approximately 5% in Q2, indicating a slowdown from 6% growth in Q1, with the prestige fragrance market moderating from 5% to 3% growth [28][29] - The company experienced a gap between sell-out and market performance, particularly in key markets like the U.S., U.K., and Germany, while emerging markets showed strong sell-out performance [30][31] Company Strategy and Development Direction - The company is implementing a new strategic framework called "Coty Curated," focusing on making big brands bigger, scaling successful initiatives, and stopping those that dilute resources [9][10] - A performance improvement plan named "Color the Future" is being activated to return the consumer cosmetics business to growth and profit expansion [26][33] - The company is prioritizing operational discipline and focused investment to enhance market share and profitability [18][49] Management's Comments on Operating Environment and Future Outlook - Management acknowledged disappointing financial results over the past 18 months and emphasized the need for operational discipline and focused execution to leverage the company's strengths [8][9] - The outlook for Q3 includes expectations for mid-single-digit declines in like-for-like revenue trends, particularly in consumer beauty, while the prestige fragrance market is expected to grow low to mid-single digits [40][41] - Management is committed to protecting marketing investments behind core brands and expects to see improvements in sell-out trends in focus brands [46][44] Other Important Information - The company ended the quarter with net debt of $2.6 billion and leverage of 2.7x, the lowest levels in over nine years, with a commitment to reduce leverage closer to 2x over time [39] - The divestiture of Wella generated $750 million in upfront proceeds, aligning with the company's strategy to streamline its portfolio [38] Q&A Session Summary Question: What are the expectations for the upcoming quarters? - The company expects like-for-like sales to decline mid-single digits in Q3, driven primarily by declines in consumer beauty, while the prestige fragrance market is anticipated to grow low to mid-single digits [40][41] Question: How is the company addressing the underperformance in the U.S. market? - The company is focusing on reallocating investments to core brands and improving execution in key markets, with a specific plan to narrow the sell-out gap with the market over time [33][41]

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]

Core Viewpoint - Coty Inc. reported a significant decline in its stock price by over 15.4% following the release of its Q4 FY2025 earnings, which showed a year-over-year revenue drop of 8% to $1.25 billion, despite exceeding analyst expectations of $1.21 billion [1] Financial Performance - Revenue for Q4 FY2025 decreased by 8% to $1.25 billion, surpassing analyst expectations of $1.21 billion [1] - The consumer beauty segment experienced a 12% decline in sales, while the luxury segment, which includes brands like Kylie Cosmetics and Gucci, saw a 5% decrease [1] - Net loss narrowed from $96.9 million in the same period last year to $68.8 million, with an adjusted loss per share of $0.05, contrasting with analyst expectations of a $0.01 profit per share [1] Challenges Faced - The company faced multiple challenges during the fiscal year, including a weak U.S. market, retailer inventory destocking, and consumers seeking value [1] Future Outlook - For FY2026, Coty anticipates a same-store sales decline of 6% to 8% in Q1, followed by a 3% to 5% decline in Q2, before expecting a return to growth [1] - The company estimates facing approximately $70 million in tariff headwinds in the upcoming fiscal year due to current trade policies [1]

Core Insights - The celebrity entrepreneurship boom is cooling down, but top female stars in the film, television, and music industries continue to generate significant income despite economic downturns [2] - The threshold for inclusion in Forbes' list of America's richest self-made women has increased, with the minimum net worth rising from $300 million last year to $350 million this year [3] Group 1: Wealth Trends - Sixteen celebrities made it to the Forbes list, with a total wealth of $14.1 billion, up from $13.3 billion last year, largely due to Selena Gomez's new entry with a net worth of approximately $700 million [3] - The beauty market is experiencing a downturn, impacting the wealth of several female celebrities, including Rihanna, whose net worth decreased by nearly 30% due to poor sales performance of her beauty brand [5][10] Group 2: Business Ventures - Selena Gomez launched her beauty brand Rare Beauty in September 2020, which reported revenues of $367 million by 2023 [4] - Rihanna's lingerie brand Savage x Fenty was valued at $1 billion in early 2021, but has faced challenges, including the departure of its CEO [4][10] - Reese Witherspoon's production company Hello Sunshine was sold for an estimated $900 million, but its current valuation is projected to be less than one-third of that amount by 2025 [5][26] Group 3: Individual Celebrity Performance - Taylor Swift's wealth increased by $300 million to $1.6 billion, driven by her record-breaking Eras Tour, which grossed over $2 billion [6][13] - Kim Kardashian's net worth remains stable at $1.7 billion, with her shapewear brand Skims launching a collaboration with Nike [10] - Judy Sheindlin's wealth grew by 4% to $580 million, thanks to her ongoing successful television program [20]