Coty expects to complete its consumer beauty strategic review by the end of 2026 as it continues to work through a plan aimed at strengthening its brand and financials.
The beauty company's latest quarterly results, which included a steeper loss and a slight uptick in revenue, provide "early signs of stabilization, although the recovery will not be linear," Interim Chief Executive Markus Strobel said Wednesday.
Coty expects the current fiscal year, which ends next June, to be a transition period, and it expects performance to improve progressively throughout the year. The company said it plans to provide a broader outlook after it completes a strategic review of its consumer business, and as it gets a better view of its trajectory.
Still, the company guided for revenue to decline by a low- to mid-single-digit percentage on a like-for-like basis in the current first quarter as consumers become increasingly selective with their purchases, despite resilient demand for beauty overall. The company said it wasn't content with its performance with consumers, which remains below market levels in both its divisions.
Coty shares dropped 6.1% in extended trading.
"Steadily closing that gap remains a clear priority across the organization," Strobel said.
Under its turnaround plan, Coty has been working to focus more on its core prestige fragrance and beauty offerings-including products it sells under brand names like Burberry, Hugo Boss and Calvin Klein-while simplifying the rest of its portfolio.
Strobel also warned results will come under pressure in the next fiscal year as Coty transfers its license to sell Gucci-branded beauty products back to Kering. Under an agreement disclosed last month, Coty plans to transfer the license about a year ahead of its original term for $400 million. The move is part of the company's broad turnaround efforts, but will result in lower sales and profit in fiscal 2028, Strobel said, noting the company is working to cut costs.
Coty's fiscal fourth-quarter loss widened to $141 million, or 16 cents a share, from a loss of $68.8 million, or 8 cents a share, a year earlier. On an adjusted basis, the loss was 2 cents a share.
The earnings figures were hurt by a mark-to-market on an equity swap.
Revenue ticked up 1% to $1.27 billion, compared with analyst estimates of $1.19 billion. On a like-for-like basis, sales edged down 1%, better than the company's forecast.
Revenue in Coty's prestige business rose 1% to $771.8 million, but inched down 0.5% on a like-for-like basis.
In its consumer beauty segment, which includes drugstore brands like CoverGirl, Sally Hansen and Rimmel, revenue increased 1% to $497.4 million, but fell 3% on a like-for-like basis.
