Coty’s Q1 2027 results weaken months after exit of Algerian entrepreneur Sue Nabi

Coty, the American beauty giant behind brands including Hugo Boss, Burberry, Calvin Klein and CoverGirl, continued to face pressure on revenue and profitability 10 months after the departure of Algerian-born French entrepreneur Youcef Sue Nabi, reporting a 1.39% decline in revenue to $1.56 billion in the first quarter of fiscal 2027.

The performance marked a slower pace of contraction compared with the same period a year earlier, when revenue fell 6% to $1.58 billion, while underlying like-for-like sales declined 2%, improving from an 8% contraction in the first quarter of fiscal 2026.

Revenue, operating income, adjusted EBITDA continue to fall
The company reported net revenue of $1.56 billion for the three months ended September 30, 2026, down 1% from $1.58 billion in the same period of 2025, when Youcef Sue Nabi was still chief executive. 

Like-for-like revenue declined 2%, compared with an 8% contraction a year earlier.

The results mark the first full comparative quarter under Markus Strobel, who assumed the roles of executive chairman and interim chief executive on January 1, 2026, following Sue Nabi’s departure after five years at the helm.

Despite a slower pace of sales contraction, Coty’s profitability weakened. Reported operating income fell 8% to $170.4 million from $185 million, while adjusted operating income declined 8% to $220.5 million from $240.5 million.

Adjusted EBITDA, a measure of underlying operating performance, dropped 7% to $274.2 million from $296.1 million, with its margin contracting 120 basis points to 17.6%.

Prestige beauty remains under pressure

Coty’s Prestige division, which accounted for 68% of group revenue, generated $1.06 billion in sales, down 1% from $1.07 billion a year earlier. However, its like-for-like revenue decline narrowed to 1% from 6% in Q1 FY2026.

Reported operating income improved slightly to $211 million from $208.9 million, supported by lower advertising and consumer promotional costs, although lower gross margins offset part of the improvement.

The performance reflects diverging trends across the portfolio. Coty’s six core Prestige brands, including Burberry, Hugo Boss, Calvin Klein, Marc Jacobs, Chloé and Kylie Cosmetics, returned to 5% like-for-like growth, compared with a 6% decline in the first half of FY2026.

Nevertheless, weakness in Prestige fragrance and skincare continued to weigh on the division, partially offset by growth in cosmetics.

Consumer Beauty losses deepen

Consumer Beauty recorded a weaker performance, with revenue declining 2% to $496.8 million from $507.7 million in Q1 FY2026. Its like-for-like sales decline narrowed to 3% from 11%, indicating an improvement in underlying demand.

However, profitability deteriorated considerably. The division’s reported operating loss widened to $24.1 million from $7.7 million, reflecting lower gross margins and higher selling, general and administrative expenses.

The deterioration highlights the continuing challenges facing Coty’s mass-market brands, despite improvements at CoverGirl, Sally Hansen and Rimmel.

Regional performance delivers mixed results

Geographically, Coty’s Americas business improved, with revenue increasing $3.4 million year-over-year, reversing a 6% decline in Q1 FY2026, largely supported by stronger sales in Brazil.

Asia Pacific also recovered, with revenue rising $19.4 million, reversing a 9% decline a year earlier, supported by China, Southeast Asia and Asia travel retail.

However, EMEA remained a major weakness. Revenue declined $44.8 million, driven by lower sales in Europe and the Middle East, partly offset by growth in Africa.

Profitability remains the bigger challenge

Although Coty’s reported net income increased 64% to $106.2 million from $64.6 million, the improvement was partly influenced by a reversal in equity-swap valuation effects, which contributed a $14.8 million benefit against a $26.5 million loss a year earlier.

Total assets declined from $12.06 billion to $10.35 billion; however, free cash flow improved to $84.6 million from $11.2 million, while operating cash flow nearly doubled to $130.4 million.

Coty expects its second quarter to remain challenging, forecasting a low-single-digit like-for-like revenue decline and a high-single-digit adjusted EBITDA contraction.

The company has described FY2027 as a transition year and expects to complete its strategic review by the end of calendar 2026, as it seeks to restore profitable growth under Strobel’s leadership.