Coty (COTY) Q2 2026 Prepared Remarks earnings summary

Executive summary

• Markus Strobel was appointed Executive Chairman and Interim CEO, launching the Coty Curated strategy to sharpen priorities, drive operational discipline, and focus on core brands and markets.

• The company acknowledged underperformance over the past 18 months, with missed expectations and a need for sharper investment and execution.

• Sequential improvement in like-for-like sales in Q2 FY26, though both Prestige and Consumer Beauty segments remained negative year-over-year.

• CEO transition occurred at year-end, with Sue Nabi departing and a separation agreement in place.

• Strategic review of Consumer Beauty is ongoing, with a focus on core brands and discontinuation of smaller fragrance projects.

Financial highlights

• Q2 adjusted EBITDA was $330.2 million, down 15% year-over-year, at the lower end of guidance; 1H26 adjusted EBITDA was $626.3 million, down 17–18%.

• Q2 net revenue was $1,678.6 million, up 1% reported but down 3% like-for-like; six months net revenue was $3,255.8 million, down 3% reported and 6% like-for-like.

• Q2 adjusted gross margin declined 260–290 basis points to 64.2–63.8% due to increased promotions, tariffs, and mix headwinds.

• Free cash flow for the first half was $524 million, exceeding guidance and last year’s $411 million.

• Net debt ended at $2.6 billion with leverage at 2.7x, the lowest in over nine years.

Outlook and guidance

• Withdrew full-year FY26 EBITDA and free cash flow guidance due to leadership transition and market complexity; only Q3 guidance provided.

• Q3 like-for-like sales expected to decline mid-single digits, mainly from Consumer Beauty weakness; adjusted EBITDA forecasted at $100–$110 million, down from $204 million last year.

• Gross margin expected to decline 200–300 basis points year-over-year in Q3.

• Free cash flow expected to be seasonally negative in Q3, including tax payments and Wella sale-related taxes.

• Cost reduction efforts re-accelerated, targeting $80 million in savings for fiscal 2026.