Consumer beauty group Coty said it is putting its annual profitability goal back on the table after stepping up cost-cutting measures, but warned that ongoing conflict in the Middle East has hurt sales. The company also outlined plans to pare back smaller product launches and reduce marketing spend as it nears the end of a broader portfolio review.
In February Coty had withdrawn its full-year forecast. The company’s interim chief executive, Markus Strobel, has called for tighter discipline and better execution to arrest what he described as languid financial performance. On Tuesday Coty provided a fresh outlook for 2026, forecasting adjusted earnings per share of 33 cents to 35 cents.
The projected 2026 adjusted EPS range sits above the consensus estimate of 27 cents compiled by LSEG. Management said the reinstated target reflects the impact of cost-saving measures and other actions intended to improve operating results.
Strategic review and marketing cuts
Last September Coty launched a strategic review of its consumer beauty division, a process that could result in divestitures of some brands, including household names such as CoverGirl and Rimmel. As part of its plan to strengthen profitability, the company said it will scale back smaller product launches and trim promotional and marketing expenditures.
Coty said it is approaching the conclusion of its "portfolio assessment," a step that management framed as critical to reshaping the company’s brand mix and cost base.
Quarterly results and regional impact
For the third quarter ended March 31, Coty reported a net loss of $411.4 million, compared with a net loss of $409 million a year earlier. On an adjusted basis the company recorded a loss per share of 3 cents. Revenue for the quarter was $1.28 billion, a slight beat of the $1.27 billion estimate, with performance aided by premium labels including Marc Jacobs, Chloé and Kylie Cosmetics.
Management said disruptions related to the conflict in the Middle East reduced top-line performance by 1.4% in the quarter. Coty also expects the geopolitical situation to depress fourth-quarter sales by approximately 2% to 3%.
"The conflict in the Middle East continues to weigh on sales trends in the region, consumer demand in developed markets has remained broadly consistent with recent periods," the company said.
The company noted the Middle East accounts for a mid-single-digit percentage of its annual sales. For the coming fourth quarter management anticipates like-for-like revenue to fall by mid-single digits, an improvement from the 8% comparable decline recorded a year earlier.
Outlook and positioning
Coty is combining portfolio moves, reduced marketing and fewer small-scale product introductions with cost reductions to restore its profit guidance. The company pointed to its premium brand portfolio as a driver of recent revenue outperformance, while warning that the regional geopolitical environment will continue to be an earnings headwind in the near term.
Investors and market observers will be watching the outcome of the portfolio assessment and the company’s ability to translate cost actions into sustainable profit improvement against lingering sales pressure from the Middle East.