Coty reported first-quarter sales of $1.58 billion for fiscal 2026, a 6% decline that matched analyst forecasts. The quarter ended on September 30, 2025. Adjusted EBITDA fell 18% compared to the previous year, and gross margin dropped from 65.5% to 64.5%, reflecting lower sales and challenges from tariffs. However, CEO Sue Nabi told Vogue Business that the company’s U.S. factories and price increases in prestige fragrances have helped lessen some of these effects. Coty anticipates a gradual recovery in sales as the fiscal year progresses, with second-quarter sales expected to be near the top of the projected -3% to -5% range.

In October, Kering revealed its intention to sell its beauty division to L’Oréal, which will involve transferring the Gucci Beauty license from Coty to L’Oréal when it expires in 2028. Since Coty reintroduced Gucci Beauty in 2019, the brand has grown by nearly 60%, according to Nabi.

Nabi stated that with the Gucci license set to leave their portfolio after 2028, Coty will concentrate on brands with the strongest long-term growth prospects, which make up most of their lineup. She highlighted upcoming additions like Marc Jacobs Beauty makeup, scheduled to launch in 2026, and a Swarovski fragrance set for 2027. Nabi expressed confidence in the durability of Coty’s portfolio, noting that about 80% of their business is either owned outright or under long-term licenses.

Regionally, sales in the Americas fell 6% due to planned inventory adjustments, which reduced revenue in the prestige segment. EMEA sales dropped 4%, attributed to lower consumer interest in color cosmetics. Asia-Pacific revenues declined 9% because of continued weak demand, though the company saw some improvement in China.

The prestige category, accounting for 68% of total sales, saw a 4% decrease, mainly due to underperformance in makeup and skincare. However, prestige fragrances grew in the mid-single digits. Nabi pointed to trends like Arabian scents and gourmand fragrances—featuring edible notes such as vanilla or caramel—as key drivers. She noted, “Gourmand is becoming the new floral; it’s our fastest-growing category, with vanilla as the star ingredient. I believe there’s a connection to the GLP-1 economy—people are indulging in gourmand scents while cutting back on sugar.”

Consumer beauty sales, which represent 32% of total revenue, fell 9% due to ongoing weakness in European cosmetics, lower-than-average sellout rates, and reduced stock of mass fragrances by some partners.

In September, Coty announced strategic review plans. One key initiative is to merge its prestige and mass fragrance businesses, including body mists and lifestyle scents, which were previously separate. This move aims to enhance R&D synergies and achieve economies of scale. Nabi explained, “We’re seeing ‘stacking’—where your mist is like your lingerie and your main fragrance is your outfit—so we have a great opportunity to leverage our portfolio from $5 to $500. It’s a global trend of consumers buying at both high and entry points, not just trading down.”

Additionally, Coty is evaluating its mass color cosmetics business, which includes brands like CoverGirl, Rimmel, Sally Hansen, and Max Factor. The review also involves separating its $400 million Brazil operation, which has its own manufacturing and R&D units and focuses on local brands. Nabi emphasized, “Our goal is to boost profitability and accelerate innovation. We’re committed to making this strategic review as swift and effective as possible.”Why Coty is turning to its archives for new fragrance ideas

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Frequently Asked Questions
Of course Here is a list of FAQs about Cotys firstquarter sales drop designed with clear questions and direct answers

BeginnerLevel Questions

1 What exactly happened with Cotys sales
Cotys overall revenue for the first quarter decreased by 6 compared to the same period last year

2 Why did their sales go down
The drop was primarily due to strategic decisions to reduce sales in their massmarket beauty segment and challenges in the travel retail sector which outweighed the growth in their prestige and luxury divisions

3 Is this a sign that Coty is in trouble
Not necessarily A sales drop can be a shortterm result of a longterm strategy In this case Coty is intentionally shifting its focus away from lowerprofit mass products to higherprofit prestige brands which is a common business strategy for growth

4 What are prestige and massmarket brands
Prestige Higherend often more expensive brands sold in department stores or specialty retailers
MassMarket More affordable widely available brands sold in drugstores and supermarkets

5 How does this affect me as a customer
You might see less promotional activity or fewer new products from Cotys massmarket brands like CoverGirl while you may see more innovation and marketing for their luxury fragrances

Advanced InvestorFocused Questions

6 If sales are down why is the companys leadership still confident
Management is confident because their core highmargin Prestige and Consumer Beauty divisions actually saw likeforlike sales growth when the strategic reductions are excluded This indicates the health of their core business is strong

7 What is likeforlike growth and why is it important
Likeforlike growth compares sales from the same stores or product lines excluding the impact of new openings closings or strategic reductions Its a crucial metric because it shows the underlying performance of the ongoing business separate from onetime strategic decisions

8 What was the impact of the travel retail sector
Sales in travel retail