COTY Stock Tumbles 6% Overnight: Beauty Giant Flags ‘Transition Year’ Ahead

• Coty’s Q4 adjusted operating income fell 42%, margins declined, and full-year revenue dropped 2% to $5.81 billion.  
• The company sees Q1 EPS below Wall Street’s Expectations. 
• Interim CEO Markus Strobel said fiscal 2027 will focus on strengthening core brands.

Coty Inc. (COTY) stock reversed course and tumbled 6% overnight after the beauty company posted fourth-quarter (Q4) sales above expectations but reported a larger-than-anticipated loss and warned investors that next fiscal year will focus on restructuring rather than growth.

Coty’s Margins Come Under Pressure 

Coty’s mixed quarter and guarded outlook have renewed questions about the pace of its turnaround. Coty generated $1.27 billion in Q4 revenue, 1% higher than the same period last year, beating Wall Street’s $1.2 billion forecast, according to Fiscal Ai data. However, comparable sales slipped 1%, while adjusted earnings showed a loss of $0.02 per share, below analysts' estimate of a loss of $0.01.

Profit suffered as Q2 adjusted operating income sank 42% to $39.5 million, while gross margin contracted 140 basis points to 60.9%. Higher tariffs, weaker manufacturing-cost absorption and additional charges tied to excess inventory weighed on results.

For the full year, revenue declined 2% to $5.81 billion. Coty also moved from operating income of $241.1 million a year earlier to an $81.5 million loss, while its reported net loss expanded to $618 million. Coty stock traded 6.6% lower overnight, ahead of Thursday, after clocking its best day in a year in the regular session. 

Fiscal 2027 Brings More Uncertainty For Coty 

The company expects comparable revenue to fall by a low-to-mid-single-digit percentage in the first quarter. Adjusted EBITDA is projected to decline by a low-teens percentage, while adjusted EPS is expected between $0.11 and $0.13, compared to Street estimates of $0.14.

"In sum, our Q4 results provide early signs of stabilization, although the recovery will not be linear. FY27 will be a transition year as we strengthen our core business and continue shaping a simpler, more focused Coty, factoring in both the Gucci exit by FY28 and final portfolio decisions related to our strategic review of Consumer Beauty by the end of CY26,” said Interim CEO Markus Strobel. 

Strobel added that beauty demand remains strong, especially for fragrances and cosmetics, but shoppers are becoming more careful about what they buy.

“Consumers are increasingly selective in their purchase decisions, which is manifesting in several ways, in some cases benefiting more premium brands and products, and in other cases benefiting more accessible offerings.” 

COTY Stock: Retail View 

However, on Stocktwits, retail sentiment around the stock remained in ‘bullish’ territory. 

A user said, “if you ever hear “transition year” in a press release, just assume you will lose at a minimum 15%.”

Another user said, “Numbers gonna suffer a bit, partly or largly from getting out of Gucci deal. But they got $400 million out of that. Thats a big balance sheet plus.”

COTY stock has dropped nearly 2% year-to-date. 

Also See: NKE Stock In Focus: $10K Invested In Nike A Decade Ago Would Have Lost Money Despite Pandemic-Era Surge

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