Coty's Consumer Beauty Weakness Persists: Is Turnaround Near?

Coty Inc.’s COTY Consumer Beauty division has been facing structural challenges related to weaker positioning in key mass cosmetics categories, particularly across the United States and Europe. The segment continues to lag broader market trends, reflecting an ongoing gap between its performance and category growth, which has weighed on both sales momentum and profitability.

This underlying weakness remained evident in the second quarter of fiscal 2026. Consumer Beauty net revenues declined 2% on a reported basis to $545 million and fell 6% on a like-for-like basis. For the first half, revenues dropped 5% on a reported basis and 8% LFL to $1.05 billion, highlighting sustained pressure across major markets and categories. Earnings performance within the segment also deteriorated significantly during the second quarter. Adjusted operating income fell sharply from $73.7 million to $27.4 million, while the adjusted operating margin contracted from 13.3% to 5%, reflecting weaker gross margins and increased spending levels.

While the pace of decline showed some moderation compared with the previous quarter, the segment continues to face broad-based challenges. The persistent gap between Coty’s Consumer Beauty performance and overall market trends remains a key factor weighing on results, particularly in core regions.

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At the same time, the company has initiated a set of measures aimed at improving execution within the division, including refining brand positioning, streamlining product initiatives and reallocating spending priorities. Early indications suggest some stabilization in select product lines, though the overall performance gap remains evident.

All said, Coty’s Consumer Beauty business appears to be troubled, with both revenue and margin pressures persisting. While recent trends point to a slower rate of decline and early signs of stabilization, the segment’s recovery appears gradual, with structural challenges still firmly in place.

Coty, which currently holds a Zacks Rank #4 (Sell), has seen its shares slump 60.8% in the past year against the industry’s growth of 11.2%.

Stocks Worth Considering

Columbia Sportswear Company COLM, which designs, develops, markets and distributes outdoor, active and lifestyle products, sports a Zacks Rank #1 (Strong Buy) at present. COLM delivered a trailing four-quarter earnings surprise of 25.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Columbia Sportswear’s current fiscal-year sales calls for growth of nearly 2%, while estimates for earnings suggest a 6.2% decline from the year-ago figure.

Ralph Lauren Corporation RL, which designs, markets and distributes lifestyle products, currently carries a Zacks Rank #2 (Buy). RL delivered a trailing four-quarter earnings surprise of 9.7%, on average.

The Zacks Consensus Estimate for Ralph Lauren’s current fiscal-year sales and earnings suggests growth of 12.4% and 31.8%, respectively, from the year-ago figures.

Kontoor Brands KTB, a lifestyle apparel company, currently carries a Zacks Rank of 2. KTB delivered a trailing four-quarter earnings surprise of 13.9%, on average.

The consensus estimate for Kontoor Brands’ current fiscal-year sales and earnings suggests growth of 9.2% and 15.6%, respectively, from the year-ago figures.

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