COTY INC 2026 Q4 Earnings Call
Review the key takeaways and the transcript of this earnings call.
- Coty reported improvements in the fourth quarter of fiscal 2026 but remains unsatisfied with current performance levels.
- The company has strong brands and leading positions in attractive categories with a clear framework to strengthen execution.
- Coty is targeting to deliver fiscal year 2027 EBITDA and free cash flow close to fiscal 2022 levels.
- The company has started a consumer business improvement program in the US focusing on fewer SKUs, stronger innovation, and more disciplined spending, showing positive early results with brands like CoverGirl and Sally Hansen.
- Brazilian skincare business is back to growth and gaining market share.
- European consumer brands like Max Factor and Bourgeois have not yet undergone the improvement interventions but are expected to see benefits once implemented.
- Coty has entered a deal to exit Gucci, which was a low double-digit percentage of sales with healthy profit, and is planning a serious restructuring program to address overhead and cost savings.
- Travel retail is growing and important for brand image and launch visibility.
- The company is focusing on big global brands such as Burberry and Hugo Boss, aiming to create incremental innovation that drives halo effects across franchises.
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Transcript
Preview the first fifteen paragraphs, organized by speaker.
Good morning and good afternoon, everyone. My name is Chelsea and I will be your conference operator today. At this time, I would like to welcome everyone to Coty's fourth quarter fiscal 2026 question and answer conference call. As a reminder, this conference call is being recorded today, August 20, 2026, at 8:00 A.M. Eastern Time or 2:00 P.M. Central European Time. Please note that on August 19, at approximately 4:30 P.M. Eastern Time or 10:30 P.M. Central European Time, Coty issued a press release and prepared remarks webcast, which can be found on its investor relations website. On today's call are Markus Strobel, Executive Chairman of the Board and Interim Chief Executive Officer, and Laurent Mercier, Chief Financial Officer. I would like to remind you that many of the comments today may contain forward-looking statements.
Please refer to Coty's earnings release and the reports filed with the SEC where the company lists factors that could cause actual results to differ materially from those forward-looking statements. In addition, except where noted, the discussion of Coty's financial results and Coty's expectations reflect certain adjustments as specified in the non-GAAP financial measures section of the company's release. With that, we will now open the line for questions. If you would like to ask a question at this time, please press star one on your telephone keypad. To remove yourself from the queue, you may press star two. Once again, that is star one to ask a question. Our first question will come from Filippo Falorni with Citi.
Please go ahead. Hi, good morning, everyone.
Good afternoon. Hi, Filippo. Hi.
I wanted to ask a bit about fiscal 2027. Obviously, you characterize the transition here, and the framework you provided in the prepared remarks was helpful. I would love to hear a bit more of your KPI internally that you are looking to achieve throughout this transition year. Maybe talk a little bit more about the potential sources of upside, both from a top line and profit standpoint, and any risks that you see as you think about this transition year.
Thank you. Okay. Yeah, Filippo, you probably know that in the last couple of quarters, our sell-out has been trailing below the category.
Okay? Obviously, that has led to lower sell-in and has led to all some of the problems that we had. Our objective is to drive sell-out and to drive market share. This is new thinking for the organization. The organization was traditionally sell-in focused, and it takes some time to make this adaptation. We believe as we outlined in the first quarter, we probably see a similar trend that we have seen in the last two quarters, but then we want to sequentially improve that. We have some strong incremental innovation coming up. We have a more disciplined approach to spending. We are focusing fewer bets. We believe that this will, over time, decrease the sell-out gap versus the market.
Now, the question is how long this will take. I cannot answer you that today. If this catches on faster, that will be upside. If this takes longer, then we have got to manage. So far, we have tried to give a 50/50 balanced picture on that. It all depends on how fast can we drive sell-out, how fast can we drive market share. That is an important KPI for us. We have even changed all our bonus systems for fiscal 2027, where market share sellout is now a very important KPI, and that has not been the case before. We believe the whole organization will be focused on this, and we hopefully see some upside here. This is about sales. When we talk about EBITDA, obviously, reducing the decline rate we have seen in the last two quarters. Is there upside? Yeah, that depends on how the Middle East is going to shape up, how oil prices are going to shape up.
We have built in $20 million-$30 million of cost for an oil price between $90 and $100. This is getting better, might be getting a little bit better. Also, we are still waiting for a potential tariff refund, which is about $30 million that comes or comes not, depending when it comes. There is some upside. Of course, we keep working on future productivity and the cost savings effort on which we have delivered quite a good result in the last couple of years. That is my balanced view on this.
Great. Thank you very much.
Thank you. Our next question will come from Javier Escalante with Evercore ISI.
Please go ahead. Good morning, everyone, and Laurent, thank you very much for all the help.
You are going to be missed. I have two questions on the presentation. One is if you can talk about what has happened in EMEA, excluding the Middle East. I believe that most of it is consumer brands in Europe, but if you can talk about why there is no improvement there, that would be helpful. Particularly on the consumer side, if you can walk us through what is the portfolio there beyond the core brands that you always talk about, more like the smaller brands, what is happening there. Moving into the U.S. is the second question. You made some comments about SKU reduction, and also there is some comments about capital spending related to marketing equipment.
If you can talk about whether that pertains to the U.S., what does it mean for COVERGIRL, and if you can give us an update in terms of shelf reset heading into the fall.
Thank you. Okay, let me just unpack this.
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