Coty’s first quarter results were met with a positive market reaction, despite a year-on-year revenue decline and a miss on adjusted earnings per share. Management attributed the quarter’s performance to a combination of ongoing inventory destocking by European retailers, weakness in the Middle East due to geopolitical disruptions, and a highly promotional environment. Executive Chairman and Interim CEO Markus Strobel explained that Coty’s shift from a sell-in to a sellout-driven strategy—prioritizing actual consumer purchases over shipments to retailers—was a key factor in the quarter’s dynamics. The company also reported that, while overall sales declined, brands like CoverGirl and Sally Hansen outperformed in the U.S. in terms of unit volumes.
Is now the time to buy COTY? Find out in our full research report (it’s free for active Edge members).
Coty (COTY) Q1 CY2026 Highlights:
- Revenue: $1.28 billion vs analyst estimates of $1.27 billion (1.3% year-on-year decline, 0.6% beat)
- Adjusted EPS: -$0.03 vs analyst estimates of $0 ($0.03 miss)
- Adjusted EBITDA: $127 million vs analyst estimates of $106 million (9.9% margin, 19.8% beat)
- Operating Margin: -29%, down from -21.6% in the same quarter last year
- Organic Revenue fell 7% year on year (miss)
- Market Capitalization: $2.05 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Coty’s Q1 Earnings Call
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Filippo Falorni (Citi): Asked about the duration of the sell-in versus sellout gap in both Prestige and Consumer Beauty. Executive Chairman Markus Strobel described this as a transitional effect, expecting convergence as the new strategy takes hold and inventory normalization progresses.
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Olivia Tong Cheang (Raymond James): Inquired about the timeline for retail destocking and promotional normalization. Strobel stated that structural retailer destocking is mostly complete, but aligning sellout and sell-in will take additional quarters as they scale the new framework.
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Sydney Wagner (Jefferies): Sought clarity on replicating CoverGirl’s U.S. strategy internationally. Strobel explained that the Gen X-focused positioning would extend to other key brands like Rimmel in the U.K. and Max Factor in Europe.
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Charles-Louis Scotti (Kepler): Questioned whether the competitive environment could force price reductions. Strobel emphasized consumer resilience and denied plans to divest major licenses, while remaining open to opportunities that create shareholder value.
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Andrea Teixeira (JPMorgan): Asked about the stage and impact of SKU rationalization. Strobel and Mercier noted that fewer, more consumer-relevant innovations are beginning to improve market share, though it will take several iterations to fully realize operational and margin benefits.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) progress in closing the sell-in and sellout gap as Coty’s sellout-focused strategy matures, (2) the pace and effectiveness of SKU rationalization and innovation under the Coty.Curated framework, and (3) margin stabilization as operational efficiency initiatives take effect. Additional attention will be given to how well Coty navigates ongoing Middle East disruptions, oil price volatility, and heightened competitive pressures.
Coty currently trades at $2.34, down from $2.56 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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