Coty Inc. fell after forecasting steep sales declines will continue as retailers clear out existing inventory and consumer demand remains tepid in the face of an uncertain economic outlook.
Coty’s portfolio includes both high end and mass market perfume labels – Coty
Shares sank 12% in post-market trading. Coty dropped 30% this year through Wednesday’s close, compared with an 8.7% rise for the S&P 500 Index over that time.
In the current quarter, like-for-like sales, which measures revenue from existing business units, will fall between 6% and 8%, the perfume and cosmetic seller said in a statement, more than consensus expectations for a 2.6% drop.
The struggles come at the end of a five-year turnaround initiative aimed at reinvigorating growth and amid reports that the company is contemplating selling off its high-end brands to peer Interparfums Inc. The lower-end brands, which include Covergirl and Rimmel cosmetics alongside fragrances for Adidas and Nautica, could also be sold in a separate transaction, Women’s Wear Daily said in June.
The weakness is due to continue into its second fiscal quarter, which ends in December, with Coty forecasting further declines of as much as 5%, while analysts were expecting little change from a year earlier.
“Retailers are really more focused on their inventory,” Chief Financial Officer Laurent Mercier said in an interview. As consumers pull back on their discretionary outlays, sellers are increasing discounts in order to move their stocks in the quarter.
“We are seeing, indeed, some increased promotional activity of the last months,” Mercier continued. “We’re making sure we’re not playing that game or we’re playing in a very disciplined manner.” Coty has introduced new products, including smaller sizes, to help maintain value in its brands, Mercier added.
Last quarter, sales fell 9%, the most in more than four years, while its losses were steeper than analysts expected as demand for its mass-market products waned in the US. Across all three operating regions, the consumer beauty unit shrank 12%, the most since 2021.
Tariffs will also weigh on profitability before mitigation efforts, including shifting fragrance production to the US, take hold in the first half of calendar 2026.
Coty sees “gradual improvements” in sales trends for both high- and low-end divisions beginning in the January-to-June period, driven by “major” product launches and geographic expansion.
There is early evidence that demand for Coty’s high-end fragrances, which include Gucci and Burberry brands, is rebounding. In July, the company’s prestige sales grew 13% in the US, compared with an 8% expansion industrywide, according to data firm Circana. The recent launch of its Boss Bottled Beyond fragrance has been promising as well, with its sales trajectory currently outpacing its “blockbuster” Burberry Goddess product from fiscal 2024.
