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Coty reported Q4 net revenues of $1.25B, down 8% year over year, with a 9% decline on a LFL basis.
Prestige revenues fell 7% on a LFL basis, while Consumer Beauty declined 12% amid weaker demand.
Adjusted EBITDA dropped 23% to $126.7M, with margins pressured by softer top-line trends.
Coty Inc. (COTY - Free Report) posted fourth-quarter fiscal 2025 results, wherein the top line beat the Zacks Consensus Estimate and the bottom line missed the same. Both metrics experienced year-over-year declines. As a result, shares of this company declined 17.7% in the after-hours trading session yesterday.
The company’s soft fourth-quarter performance was impacted by category headwinds, cautious retailer ordering and tariff-related pressures. However, Coty remains well-positioned as it enters fiscal 2026, underpinned by a robust pipeline of innovation, geographic and channel expansion, and disciplined cost savings. Despite near-term revenue declines, the company is executing a multi-pronged strategy centered on fragrance leadership, expanded distribution, organizational efficiency and ongoing deleveraging.
In the fiscal fourth quarter, Coty delivered an adjusted loss of 5 cents per share in contrast to the Zacks Consensus Estimate of adjusted earnings of 1 cent. Also, the bottom line declined from an adjusted loss of 3 cents reported in the year-ago quarter. Results included a 7-cent negative impact from the equity swap mark-to-market due to the stock price decline, compared with a 10-cent negative impact in the prior year.
Coty’s net revenues were $1,252.4 million, down 8% year over year. The metric reflected a 1% benefit from foreign currency exchange. Quarterly net revenues beat the Zacks Consensus Estimate of $1,203 million.
On a like-for-like (“LFL”) basis, net revenues declined 9%, reflecting a decrease in Prestige and Consumer Beauty. We expected LFL revenues to decrease 9.3% year over year in the fiscal fourth quarter.
The adjusted and reported gross margin was 62.3%, down 190 basis points. This reflected a normalization from the unusually elevated gross margin levels seen last year. We expected adjusted gross margin to decrease 170 basis points year over year to 62.5%.
Coty reported an adjusted operating income of $67.7 million, a 37% decline from the prior year’s level. The company's adjusted operating margin was 5.4%, reflecting a 250 basis-point decrease year over year. We anticipated the adjusted operating margin to decrease 180 basis points year over year to 6.1%.
Adjusted EBITDA of $126.7 million declined 23% year over year. The adjusted EBITDA margin was 10.1%, down 200 basis points year over year. We anticipated the adjusted EBITDA margin to decrease 160 basis points year over year to 10.5%.
Q4 Insights of COTY’s Segments
Prestige: Net revenues in the segment were $760.6 million, accounting for 61% of total company sales. This represented a 5% decline on a reported basis, including a 2% benefit from foreign exchange. On a LFL basis, revenues declined 7%. The decline was mainly caused by underperformance in the U.S. market, proactive inventory rightsizing by retailers to align with current demand and lower prestige makeup and skincare sales.
The segment’s reported operating income was $38.1 million compared with $49.7 million in the year-ago quarter. Adjusted operating income was $74.7 million, down from $87.8 million in the prior-year quarter. The adjusted operating margin was 9.8%, down 110 basis points year over year. Prestige’s adjusted EBITDA was $102.9 million compared with $112.8 million in the year-ago quarter, with margins pressured by softer top-line performance.
Looking ahead, the Prestige segment is poised to benefit from a strong pipeline of blockbuster launches, including the global rollout of Boss Bottled Beyond and additional major product launches slated for both halves of fiscal 2026. The company is also extending key brands into new channels, such as Marc Jacobs on Amazon Premium Beauty, and preparing for new category entries in fragrance mists, ultra-premium fragrances and complementary scent formats like body mists and sprays, reinforcing its focus on diversification and premiumization.
Consumer Beauty: Net revenues amounted to $491.8 million, accounting for 39% of total sales. This represented a 12% decline on both reported and LFL basis, primarily caused by weakness in color cosmetics and body care categories.
The segment reported a loss, with an operating loss of $16 million compared with an operating income of $10.3 million in the prior-year quarter. Adjusted operating loss was $7 million compared with adjusted operating income of $20.2 million in the year-ago quarter. The adjusted loss margin was 1.4% compared with a 3.6% adjusted operating margin in the prior year. Adjusted EBITDA declined to $23.8 million from $51.7 million, with margins contracting 430 basis points to 4.8%.
For fiscal 2026 and beyond, the Consumer Beauty segment is focused on reigniting growth through innovation and expanded channel reach. Building on the momentum of adidas Vibes, the company is set to launch new innovations under key mass fragrance brands, introduce exclusive in-house collections such as Origen at Walmart and roll out fragrance mist extensions under brands like adidas and Nautica. In cosmetics, Coty is preparing to launch trend-led products in lip, mascara and nail care, supported by advanced technologies and consumer engagement. The expansion will be amplified through high-impact digital channels, including Amazon and TikTok Shop, positioning Consumer Beauty for long-term recovery and profitability.
COTY’s Regional Revenue Results
Coty’s Americas segment reported net revenues of $511.2 million, accounting for 40.8% of total sales. This reflected a 12% decline on a reported basis, including a 2% negative impact from foreign exchange and a 10% decline on a LFL basis. The decline was primarily caused by lower Prestige revenues in the United States, largely due to tough comparisons against elevated innovation levels in the prior year and proactive retailer inventory rightsizing. Additionally, Consumer Beauty sales in the United States were negatively impacted by softness in color cosmetics.
Coty’s EMEA segment generated net revenues of $574.2 million, accounting for 45.8% of total sales. This marked a 4% decline on a reported basis, including a 5% positive impact from foreign exchange. On a LFL basis, EMEA net revenues decreased 9% in the fiscal fourth quarter. Both reported and LFL sales were impacted by lower Prestige net revenues — primarily reflecting proactive inventory rightsizing to align with current demand trends — as well as softer Consumer Beauty net revenues.
Coty’s Asia Pacific segment reported net revenues of $167 million, representing 13.3% of total sales. This reflected an 8% decline on a reported basis, including a 1% negative impact from foreign exchange. The decline indicated softness across most markets. On a LFL basis, net revenues decreased 9%. Notably, Coty’s sell-out in nearly all Asia markets, excluding China, grew almost four times faster than the market, led by strong double-digit growth in fragrance and skincare.
COTY Stock Past Three-Month Performance
Image Source: Zacks Investment Research
COTY’s Financial Health Snapshot
The company ended the fiscal fourth quarter with cash and cash equivalents of $257.1 million, total debt of $4,008.4 million and financial net debt of $3,751.3 million, implying a leverage ratio of 3.5x. In the fiscal fourth quarter, cash provided by operating activities amounted to $83.2 million, while free cash flow was $34.9 million.
What to Expect From Coty in FY26
Entering fiscal 2026, Coty operates in a complex backdrop. Beauty demand remains solid, especially fragrances across price points and formats. Macro uncertainty, tariffs and a more promotional market are keeping retailer orders cautious. Coty is rolling out major innovations, a multi-brand push into fragrance mists and broader fragrance distribution, while rightsizing retailer inventories and rebalancing Consumer Beauty toward profit engines like mass fragrances.
Management expects sales trends to improve gradually through fiscal 2026 from the fiscal fourth quarter baseline reset. LFL sales are forecasted to decline 6-8% in the fiscal first quarter and 3-5% in the fiscal second quarter, with a return to LFL growth in the second half. Drivers include multiple launches in both Prestige and Consumer Beauty, geographic and channel expansion, and easier comparisons. Organizational changes are expected to start yielding results, with benefits building over the coming quarters.
On reported revenues, Coty estimates a low single-digit FX benefit in the first half. Gross margin pressure is expected in the first half from lower sales and net tariff impact, with tariff-mitigation efforts contributing more meaningfully in the second half. Step-ups in fixed-cost savings under the All-In To Win program should broadly balance the resumption of variable compensation. Some quarterly phasing fluctuations in net fixed costs are anticipated through the year.
Profit trends are expected to improve sequentially from fiscal fourth-quarter levels. Adjusted EBITDA is predicted to decline a mid-to-high-teens percentage in the fiscal first quarter and a low-to-mid-teens percentage in the fiscal second quarter, followed by a return to adjusted EBITDA growth in the second half. The cadence reflects the timing of launches, tariff mitigation, cost actions and progressively easier comparisons.
Earnings should follow a similar shape. Lower interest expense and a reduced tax rate support a high single-digit to mid-teen decline in first-half adjusted EPS to 33-36 cents. Adjusted EPS growth is expected in the second half. Free cash flow in the first half is expected to exceed $350 million, positioning leverage approximately in line with or below 3.5x, despite lower EBITDA and FX headwinds from Euro-denominated debt.
Shares of this Zacks Rank #3 (Hold) company have lost 3% in the past month against the industry’s 0.9% growth.
The Zacks Consensus Estimate for Post Holdings’ current sales and earnings indicates growth of 3.1% and 10.9%, respectively, from the year-ago period’s reported figures. POST delivered a trailing four-quarter earnings surprise of 21.4%, on average.
Ingredion Incorporated (INGR - Free Report) serves diverse sectors in food, beverage, brewing, pharmaceuticals and other industries. It currently carries a Zacks Rank of 2 (Buy). INGR delivered a trailing four-quarter average earnings surprise of 11.1%.
The consensus estimate for INGR’s current financial-year sales and earnings indicates decline of 1% and growth of 6.8%, respectively, from the prior-year reported levels.
Grocery Outlet (GO - Free Report) , an extreme value retailer of quality, name-brand consumables and fresh products, carries a Zacks Rank #2 at present. GO delivered a trailing four-quarter earnings surprise of 28.2%, on average.
The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales indicates growth of around 8.2% from the year-ago reported numbers.
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Coty Reports Q4 Loss, LFL Revenues Decline Y/Y, Stock Down 18%
Key Takeaways
Coty Inc. (COTY - Free Report) posted fourth-quarter fiscal 2025 results, wherein the top line beat the Zacks Consensus Estimate and the bottom line missed the same. Both metrics experienced year-over-year declines. As a result, shares of this company declined 17.7% in the after-hours trading session yesterday.
The company’s soft fourth-quarter performance was impacted by category headwinds, cautious retailer ordering and tariff-related pressures. However, Coty remains well-positioned as it enters fiscal 2026, underpinned by a robust pipeline of innovation, geographic and channel expansion, and disciplined cost savings. Despite near-term revenue declines, the company is executing a multi-pronged strategy centered on fragrance leadership, expanded distribution, organizational efficiency and ongoing deleveraging.
In the fiscal fourth quarter, Coty delivered an adjusted loss of 5 cents per share in contrast to the Zacks Consensus Estimate of adjusted earnings of 1 cent. Also, the bottom line declined from an adjusted loss of 3 cents reported in the year-ago quarter. Results included a 7-cent negative impact from the equity swap mark-to-market due to the stock price decline, compared with a 10-cent negative impact in the prior year.
Coty’s net revenues were $1,252.4 million, down 8% year over year. The metric reflected a 1% benefit from foreign currency exchange. Quarterly net revenues beat the Zacks Consensus Estimate of $1,203 million.
On a like-for-like (“LFL”) basis, net revenues declined 9%, reflecting a decrease in Prestige and Consumer Beauty. We expected LFL revenues to decrease 9.3% year over year in the fiscal fourth quarter.
Coty Price, Consensus and EPS Surprise
Coty price-consensus-eps-surprise-chart | Coty Quote
Taking a Closer Look at COTY’s Q4 Results
The adjusted and reported gross margin was 62.3%, down 190 basis points. This reflected a normalization from the unusually elevated gross margin levels seen last year. We expected adjusted gross margin to decrease 170 basis points year over year to 62.5%.
Coty reported an adjusted operating income of $67.7 million, a 37% decline from the prior year’s level. The company's adjusted operating margin was 5.4%, reflecting a 250 basis-point decrease year over year. We anticipated the adjusted operating margin to decrease 180 basis points year over year to 6.1%.
Adjusted EBITDA of $126.7 million declined 23% year over year. The adjusted EBITDA margin was 10.1%, down 200 basis points year over year. We anticipated the adjusted EBITDA margin to decrease 160 basis points year over year to 10.5%.
Q4 Insights of COTY’s Segments
Prestige: Net revenues in the segment were $760.6 million, accounting for 61% of total company sales. This represented a 5% decline on a reported basis, including a 2% benefit from foreign exchange. On a LFL basis, revenues declined 7%. The decline was mainly caused by underperformance in the U.S. market, proactive inventory rightsizing by retailers to align with current demand and lower prestige makeup and skincare sales.
The segment’s reported operating income was $38.1 million compared with $49.7 million in the year-ago quarter. Adjusted operating income was $74.7 million, down from $87.8 million in the prior-year quarter. The adjusted operating margin was 9.8%, down 110 basis points year over year. Prestige’s adjusted EBITDA was $102.9 million compared with $112.8 million in the year-ago quarter, with margins pressured by softer top-line performance.
Looking ahead, the Prestige segment is poised to benefit from a strong pipeline of blockbuster launches, including the global rollout of Boss Bottled Beyond and additional major product launches slated for both halves of fiscal 2026. The company is also extending key brands into new channels, such as Marc Jacobs on Amazon Premium Beauty, and preparing for new category entries in fragrance mists, ultra-premium fragrances and complementary scent formats like body mists and sprays, reinforcing its focus on diversification and premiumization.
Consumer Beauty: Net revenues amounted to $491.8 million, accounting for 39% of total sales. This represented a 12% decline on both reported and LFL basis, primarily caused by weakness in color cosmetics and body care categories.
The segment reported a loss, with an operating loss of $16 million compared with an operating income of $10.3 million in the prior-year quarter. Adjusted operating loss was $7 million compared with adjusted operating income of $20.2 million in the year-ago quarter. The adjusted loss margin was 1.4% compared with a 3.6% adjusted operating margin in the prior year. Adjusted EBITDA declined to $23.8 million from $51.7 million, with margins contracting 430 basis points to 4.8%.
For fiscal 2026 and beyond, the Consumer Beauty segment is focused on reigniting growth through innovation and expanded channel reach. Building on the momentum of adidas Vibes, the company is set to launch new innovations under key mass fragrance brands, introduce exclusive in-house collections such as Origen at Walmart and roll out fragrance mist extensions under brands like adidas and Nautica. In cosmetics, Coty is preparing to launch trend-led products in lip, mascara and nail care, supported by advanced technologies and consumer engagement. The expansion will be amplified through high-impact digital channels, including Amazon and TikTok Shop, positioning Consumer Beauty for long-term recovery and profitability.
COTY’s Regional Revenue Results
Coty’s Americas segment reported net revenues of $511.2 million, accounting for 40.8% of total sales. This reflected a 12% decline on a reported basis, including a 2% negative impact from foreign exchange and a 10% decline on a LFL basis. The decline was primarily caused by lower Prestige revenues in the United States, largely due to tough comparisons against elevated innovation levels in the prior year and proactive retailer inventory rightsizing. Additionally, Consumer Beauty sales in the United States were negatively impacted by softness in color cosmetics.
Coty’s EMEA segment generated net revenues of $574.2 million, accounting for 45.8% of total sales. This marked a 4% decline on a reported basis, including a 5% positive impact from foreign exchange. On a LFL basis, EMEA net revenues decreased 9% in the fiscal fourth quarter. Both reported and LFL sales were impacted by lower Prestige net revenues — primarily reflecting proactive inventory rightsizing to align with current demand trends — as well as softer Consumer Beauty net revenues.
Coty’s Asia Pacific segment reported net revenues of $167 million, representing 13.3% of total sales. This reflected an 8% decline on a reported basis, including a 1% negative impact from foreign exchange. The decline indicated softness across most markets. On a LFL basis, net revenues decreased 9%. Notably, Coty’s sell-out in nearly all Asia markets, excluding China, grew almost four times faster than the market, led by strong double-digit growth in fragrance and skincare.
COTY Stock Past Three-Month Performance
Image Source: Zacks Investment Research
COTY’s Financial Health Snapshot
The company ended the fiscal fourth quarter with cash and cash equivalents of $257.1 million, total debt of $4,008.4 million and financial net debt of $3,751.3 million, implying a leverage ratio of 3.5x. In the fiscal fourth quarter, cash provided by operating activities amounted to $83.2 million, while free cash flow was $34.9 million.
What to Expect From Coty in FY26
Entering fiscal 2026, Coty operates in a complex backdrop. Beauty demand remains solid, especially fragrances across price points and formats. Macro uncertainty, tariffs and a more promotional market are keeping retailer orders cautious. Coty is rolling out major innovations, a multi-brand push into fragrance mists and broader fragrance distribution, while rightsizing retailer inventories and rebalancing Consumer Beauty toward profit engines like mass fragrances.
Management expects sales trends to improve gradually through fiscal 2026 from the fiscal fourth quarter baseline reset. LFL sales are forecasted to decline 6-8% in the fiscal first quarter and 3-5% in the fiscal second quarter, with a return to LFL growth in the second half. Drivers include multiple launches in both Prestige and Consumer Beauty, geographic and channel expansion, and easier comparisons. Organizational changes are expected to start yielding results, with benefits building over the coming quarters.
On reported revenues, Coty estimates a low single-digit FX benefit in the first half. Gross margin pressure is expected in the first half from lower sales and net tariff impact, with tariff-mitigation efforts contributing more meaningfully in the second half. Step-ups in fixed-cost savings under the All-In To Win program should broadly balance the resumption of variable compensation. Some quarterly phasing fluctuations in net fixed costs are anticipated through the year.
Profit trends are expected to improve sequentially from fiscal fourth-quarter levels. Adjusted EBITDA is predicted to decline a mid-to-high-teens percentage in the fiscal first quarter and a low-to-mid-teens percentage in the fiscal second quarter, followed by a return to adjusted EBITDA growth in the second half. The cadence reflects the timing of launches, tariff mitigation, cost actions and progressively easier comparisons.
Earnings should follow a similar shape. Lower interest expense and a reduced tax rate support a high single-digit to mid-teen decline in first-half adjusted EPS to 33-36 cents. Adjusted EPS growth is expected in the second half. Free cash flow in the first half is expected to exceed $350 million, positioning leverage approximately in line with or below 3.5x, despite lower EBITDA and FX headwinds from Euro-denominated debt.
Shares of this Zacks Rank #3 (Hold) company have lost 3% in the past month against the industry’s 0.9% growth.
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Ingredion Incorporated (INGR - Free Report) serves diverse sectors in food, beverage, brewing, pharmaceuticals and other industries. It currently carries a Zacks Rank of 2 (Buy). INGR delivered a trailing four-quarter average earnings surprise of 11.1%.
The consensus estimate for INGR’s current financial-year sales and earnings indicates decline of 1% and growth of 6.8%, respectively, from the prior-year reported levels.
Grocery Outlet (GO - Free Report) , an extreme value retailer of quality, name-brand consumables and fresh products, carries a Zacks Rank #2 at present. GO delivered a trailing four-quarter earnings surprise of 28.2%, on average.
The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales indicates growth of around 8.2% from the year-ago reported numbers.