Key Takeaways:
Coty Inc. (NYSE: COTY) reported a 1% decline in third-quarter revenue to $1.28 billion, as disruptions in the Middle East and weakening demand for its consumer beauty products weighed on results.
"While the Q3 results were below our potential on an absolute basis, we were pleased to deliver profitability ahead of our guidance despite the disruption in our Middle East business late in the quarter," Markus Strobel, Executive Chairman and Interim Chief Executive Officer, said in a statement.
The company now expects the conflict in the Middle East to impact fourth-quarter sales by 2% to 3%. Coty's consumer brands division and its Brazil operations are currently under strategic review, with findings to be shared soon.
The New York-based beauty giant saw its like-for-like sales fall 7% in the quarter ended March 31, which included an estimated 1.4% negative impact from the conflict in the Middle East. The region, which accounts for a mid-single-digit percentage of total sales, has a greater impact on Coty's prestige business due to the dominance of fragrances in that market.
Prestige net revenue was flat at $830.9 million, while consumer beauty net revenue was 4% lower at $450.7 million. For the first nine months of the fiscal year, total net revenue decreased 2% to $4.54 billion.
Strobel is implementing a new "Coty Curated" strategy focused on sharper priorities and improved execution. This includes reducing smaller launches, using AI to lower marketing production costs, and simplifying the operational model.
The company reported a net loss of $473.7 million for the quarter, wider than the $309 million loss in the same period last year. For fiscal year 2026, Coty expects an adjusted earnings per share of 33 cents to 35 cents.
The results signal ongoing challenges for Coty as it navigates geopolitical instability and shifts in consumer demand. Investors will be watching for the outcome of the strategic review and further details on the "Coty Curated" plan in the coming quarters.
This article is for informational purposes only and does not constitute investment advice.
