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- **Revenue Recovery**: Sequential improvement in Q1 (-8% LFL) with fragrances driving low-single-digit volume growth. U.S. prestige sell-out aligned with market (+7%).
- **Cost Efficiency**: $50 million tariff savings vs. prior guidance, $40M+ productivity savings, and $200M+ FY26 fixed cost reductions.
- **Profitability**: Q1 EBITDA $190M (-18% YoY), targeting $1B FY26 (vs. FY25 $1.1B). Q2 EPS $0.18-$0.21, with H2 EBITDA growth off low base.
- **Strategic Focus**: Doubling down on fragrances (ultra-premium +17%, mists 1%-2% contribution) and e-commerce (Marc Jacobs Amazon launch +11% U.S. sellout).
- **Balance Sheet**: Leverage 3.7x, $350M H1 free cash flow to support deleveraging to investment-grade.

**【CEO Summary Section】**
- **Revenue Performance**: Q1 net revenues declined 8% like-for-like, but sequential improvements were seen in both prestige and consumer beauty divisions. Fragrance volumes grew in low single digits, driven by affordable luxury trends.
- **U.S. Market Recovery**: The gap between U.S. prestige fragrance sell-out and market growth narrowed from 5% in Q4 to alignment in Q1, with targeted leadership changes and inventory management.
- **AI and Operational Efficiency**: $40 million in productivity savings and $10 million in fixed cost reductions achieved in Q1, with AI initiatives (e.g., contract automation, virtual try-ons) expected to scale over the next three years.
- **Tariff Mitigation**: Gross tariff impact reduced to $50 million for the year, with production transfers to U.S. plants to offset European peers' cost disadvantages.
- **E-commerce Growth**: E-com sell-out grew mid-single digits in both prestige and consumer beauty, with Marc Jacobs Amazon launch driving 11% U.S. sell-out growth.
- **Strategic Portfolio Focus**: Emphasis on fragrance and scenting adjacencies (ultra-premium, mists) with 17% Q1 ultra-premium fragrance growth and 1%-2% mist contribution to total fragrance sales.
- **Skincare and Makeup Momentum**: Lancaster skincare sellout nearly doubled in China, and Kylie Cosmetics grew double digits globally.

**【CFO Financial Commentary】**
- **Q1 Financials**: Adjusted gross margin 64.5%, down 100bps YoY due to lower sales and tariffs. ANCP investment at 26% of net revenues, up 110bps YoY. Adjusted EBITDA declined 18% to $190 million, with $10 million fixed cost savings offsetting top-line pressures.
- **Cost Savings**: $40 million productivity savings and $10 million fixed cost reductions in Q1, with cumulative $200 million savings expected for FY26. Total savings since FY21: $900 million.
- **Leverage and Cash Flow**: Q1 free cash flow $11 million, ending leverage 3.7x. Q2 expected to generate $300 million free cash flow, supporting deleveraging to investment-grade status.
- **Q2 Guidance**: Like-for-like sales -3% to -5%, with sequential improvement. Gross margin pressure from lower sales and tariffs, but fixed cost savings to offset variable compensation resumption. Adjusted EBITDA decline low to mid-teens, with Q2 EPS $0.18-$0.21.
- **FY26 Outlook**: Second-half sales growth expected with sell-in/sell-out alignment, targeting $1 billion adjusted EBITDA (off low prior-year comparisons).

Coty Inc. (COTY) Q1 2026 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

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Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

COTY

COTY fundamentals

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