On August 19, 2026, Coty Inc. (NYSE:COTY)’s fiscal fourth-quarter net revenue rose 1.3% to $1.27 billion in the quarter ended June 30, beating the average analyst estimate for a 4.6% decline, Reuters reported. Bloomberg said the total included a 3% currency tailwind, and like-for-like revenue actually fell 1%, the seventh straight decline but the smallest in 18 months. Adjusted loss per share narrowed to 2 cents from 5 cents but still missed the 1-cent loss expected. Coty withheld full-year guidance and called fiscal 2027 a “transition year” amid the Gucci exit. Shares fell 7% in extended trading.
Coty actually beat the revenue estimate that mattered most this quarter, yet withholding full-year guidance while rivals like Estée Lauder issue confident forecasts sent a clear signal to investors.
Bull Case
Coty’s beat points to real demand, not an easy comparison. It topped Bloomberg’s $1.19 billion consensus and beat Reuters’ 4.6% decline estimate, even before currency helped. Like-for-like revenue’s 1% decline was also the smallest in 18 months, a “significant sequential improvement,” Coty said.
Coty Inc. (NYSE:COTY) also sits in the strongest-growing part of the beauty industry. Rival Estee Lauder’s fragrance business posted double-digit organic growth in the same fiscal year, helping drive its full-year net sales up 5% to about $15 billion, the company reported. Prestige fragrance outgrowing the rest of beauty favors Coty’s fragrance-heavy portfolio.
Coty’s cost program is delivering real, structural savings, not just cuts to survive one bad year. The “All-in to Win” initiative generated more than $250 million in productivity and fixed-cost savings in fiscal 2026, ahead of target, and underlying fixed costs fell 4% even as inflation rose, Coty said. That kind of structural discipline supports margin recovery even if revenue growth stays slow.
Coty’s balance sheet is strengthening too since free cash flow rose to $348.2 million in fiscal 2026 from $277.6 million, and total debt fell to $3.09 billion from $3.22 billion. That growing cushion funds restructuring internally rather than needing fresh capital.
The Gucci exit itself brings in cash: $250 million at signing and $150 million more by September 2027. Coty will use this cash to pay down debt and fund internal restructuring while management pursues a strategic review of slower brands like CoverGirl and Rimmel.
Bear Case
The headline beat shrinks once currency comes out. Reported revenue rose 1.3%, but that included a 3% currency benefit, Bloomberg said, and like-for-like revenue actually fell 1%, the seventh straight quarterly decline. The weakness was concentrated in the Middle East, Germany, and Central and Eastern Europe, where revenue fell $45.3 million year over year, Coty said.
The Gucci exit could create a lasting earnings gap as Coty gives up a recovering brand and its future growth potential. Kering bought back the license early for $400 million and signed a 50-year master deal with L’Oréal to run global operations after Coty’s transition period ends.
Profitability moved the wrong way even as revenue stabilized since adjusted loss per share came in at 2 cents, wider than the 1-cent loss expected. Adjusted gross margin fell 140 basis points to 60.9%, and adjusted EBITDA dropped 26% to $93.6 million. Full-year net loss widened to $618.0 million from $381.1 million.
Coty Inc. (NYSE:COTY) is also losing ground in a market that is otherwise growing. It is underperforming a growing beauty market. Prestige beauty grew about 6% and mass beauty about 5% in the second half of fiscal 2026, yet Coty’s own sellout fell 1% in Prestige and 2% in Consumer Beauty over that period. That gap hit profitability directly: Consumer Beauty adjusted EBITDA fell 67% year over year in the fourth quarter, though it improved $32 million sequentially from the third quarter.
Guidance disappointed more than the quarter itself. Coty withheld full-year forecasts and guided to just 11 to 13 cents in adjusted earnings, below the 14-cent estimate, while peers Estee Lauder and Elf Beauty gave confident outlooks. Investors typically read a withheld number as management’s own uncertainty, which likely explains the 7% drop despite the beat.
Insider Monkey’s Hedge Fund Data
Coty Inc. (NYSE:COTY) was held by 32 hedge funds as of Q1 2026, down from 35. For comparison, larger rival Estée Lauder was held by 47.
Conclusion
Coty Inc. (NYSE:COTY)’s fourth quarter shows improvement, but not enough yet. The revenue beat is real, though the basic business is still shrinking once currency and regional weakness are stripped out. Coty is losing share even in a growing category, with its weakest division’s profitability collapsing. The 7% stock drop shows investors weighing execution risk, a stronger rival inheriting Gucci, and an unresolved portfolio review over one good quarter.
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Disclosure: None. This article is originally published at Insider Monkey.
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