Coty Exceeds Expectations with Strong Q4 Performance Amid Volatile Market Conditions
Coty, the global beauty company, has reported a strong fourth quarter fiscal 2026 performance, exceeding expectations despite a volatile market backdrop. The company's like-for-like sales declined by just 1%, a significant improvement from the mid-single-digit decline anticipated.
According to Markus Strobel, Executive Chairman of the Board and Interim Chief Executive Officer, Coty's Q4 results were ahead of expectations, reflecting sequential trend improvement. The strong cash discipline across the company also fueled higher free cash flow in fiscal 2026, even in the face of profitability headwinds.
Strobel noted that while the macro environment remains volatile, Coty's focus continues to be on areas they can control, strengthening sell-out, improving execution, and allocating resources behind brands, markets, and initiatives with the greatest potential to create value. The company ended fiscal year 2026 with a 5% like-for-like decline in sales, driven by quarterly variability and prior-year comparisons.
Laurent Mercier, Chief Financial Officer, highlighted that despite continued macroeconomic and geopolitical uncertainty, consumer demand for beauty remains resilient. In prestige, the market grew approximately 6% in the second half of fiscal 2026, while the mass beauty market grew around 5% over the same period.
However, Coty's sell-out performance remained below the market in both divisions. In prestige, the company's sell-out declined 1% in the second half and was slightly negative for the full fiscal year. Mercier attributed this to several factors, including the timing of key consumer and retail events differing from previous years.
Strobel emphasized that Coty is not yet where they want the business to be, but they are committed to improving execution consistency. Fiscal 2027 will be a transition year as the company strengthens core franchises, simplifies the portfolio and organization, and positions itself for more consistent growth and sustainable value creation.
Coty's major prestige fragrance launches have been performing well, but they have not yet generated the halo across the core portfolio that the company is targeting. Smaller flankers are also lacking in differentiation. To address these issues, Coty plans to drive incrementality of innovation and create a halo effect for its portfolio in fiscal year 2027.
The company's focus on disciplined execution and improving sell-out across the portfolio will continue throughout fiscal year 2027. Despite quarterly fluctuations, Coty remains committed to delivering value to its customers and stakeholders.
