Coty results expose fragile turnaround

What happened: Shareholder scrutiny deepens after earnings miss Coty, the U.S. beauty group behind Gucci, Burberry, and Hugo Boss fragrances, is under pressure after reporting weaker-than-expected full-year results, which sparked renewed investor scrutiny. On September 16, law firm Hagens Berman said it is reviewing Coty on behalf of shareholders following the company’s August disclosure of retailer destocking issues, which led to an earnings miss and a 21% share price drop. According to Marketwatch, Coty stock remains down around 34.8% year-to-date, lagging behind peers L’Oréal and Estée Lauder. Jing Daily reached out to Coty for comment but had not received a response as of publication. First full-year revenue decline in four years The financial backdrop is challenging. For the year ending June 30, 2025, Coty reported net revenue of $5.9 billion, down 4% on a reported basis and its first full-year contraction in four years. Prestige beauty, which generates nearly two-thirds of group sales, declined 1% despite steady fragrance growth. Mass beauty, meanwhile, slipped 8% as U.S. demand weakened and competition from affordable challengers intensified. By geography, U.S. sales fell 8% for the year and 12% in the fourth quarter, reflecting a combination of inventory management by retailers and softer makeup demand. In full-year terms, Asia-Pacific generated $708 million (5.09 billion RMB), or 12% of group sales, with both reported and like-for-like revenue down 7%. Fourth-quarter sales fell 8% on a reported basis and 9% on LFL. Mainland China, Australia, and travel retail remained under pressure, but other Asian markets delivered double-digit fragrance and skincare expansion, outpacing the wider market nearly fourfold. The Jing Take: Cost cuts, US production shift, and China leadership shakeup Coty has sought to counter these headwinds with cost measures. Its “All-In to Win” program delivered $140 million in savings last year, with a broader target of $500 million by 2027. The company is consolidating operations, shifting more production to the U.S., and expanding digital tools, including an AI-driven marketing and ecommerce push. A move that could also help offset U.S. tariff pressure. To sharpen execution, Coty named Scarlett Chan marketing director for Asia-Pacific, overseeing fragrances across 16 markets. Her remit spans core prestige assets including Chloé, Hugo Boss, Calvin Klein, and Marc Jacobs, signaling a push to localize operations and concentrate resources on Coty’s flagship fragrance brands. Divestment speculation grows as luxury groups in-source beauty At the same time, speculation continues over portfolio changes. Industry reports suggest Coty could consider divesting certain prestige fragrance licenses and legacy mass brands such as Covergirl and Max Factor. While such moves could streamline operations, they also raise risks as luxury groups increasingly reclaim their beauty businesses. Gucci, one of Coty’s most important fragrance licenses, comes up for renewal in 2028, and Kering has already established its own in-house beauty division. Despite uncertainties, fragrances remain Coty’s growth engine. “Burberry Goddess” was the top global women’s fragrance launch in 2023, and this year’s Hugo Boss “Bottled Beyond” is tracking ahead of expectations. Coty is also expanding into fragrance mists and sharpening its focus on Asia as a long-term opportunity. Coty’s latest results highlight both the progress and vulnerabilities of its turnaround. Cost savings, blockbuster fragrance launches, and digital expansion show momentum, yet structural headwinds remain across consumer beauty and key markets. Reliance on fragrance licenses poses both strength and risk The company’s heavy reliance on fragrances is both a strength and a risk: the category has delivered consistent growth, but future performance depends on maintaining licensing partnerships with fashion houses that are increasingly building their own beauty arms. With shares underperforming peers and investor scrutiny intensifying, Coty faces a balancing act. Whether portfolio reshaping and cost discipline can deliver stability — without eroding its strongest assets — will determine if the group can turn its current volatility into a sustainable growth path. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

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Coty results expose fragile turnaround