Key Points
Coty missed on sales but beat on earnings last night.
Coty's GAAP loss was even worse than the headline numbers suggest.
Cosmetics company Coty (NYSE: COTY), which sells under such well-known brand names as CoverGirl, Jovan, Max Factor, and Nautica, tumbled 10% through 10:10 a.m. ET Thursday after missing on earnings last night.
Heading into its fiscal Q4 2026 report, analysts expected Coty to lose $0.01 per share on just under $1.2 billion in sales for the quarter. In fact, Coty lost $0.02 per share despite sales approaching $1.3 billion.
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Coty Q4 earnings
Coty observed that its results exceeded expectations despite sales growing only 1%. (Curiously, the beauty brand blamed "the Middle East conflict" for weak sales in the quarter.)
CEO Markus Strobel also pointed to "sales and profit ahead of our targets," and "growing free cash flow" as bright spots. And yet, the company's 1% sales growth rate and total lack of profits -- Coty actually lost $0.16 per share when earnings are calculated under generally accepted accounting principles (GAAP), twice as bad as last year's Q4 loss of $0.08 per share -- suggest the quarter was actually quite weak for Coty.
What's next for Coty
Coty is working to right the ship, however. It's trying to up "the visibility and recommendation of our brands across AI platforms," for example, leaning into the AI revolution. In an effort to work down its debt load -- $3.4 billion on a company with a market capitalization of only $2.7 billion -- Coty sold its stake in Wella for $750 million last year, and sold its Gucci Beauty license back to the owner for $400 million in July.
Heading into the "transition year" that fiscal 2027 will be, Coty aims to refocus on its core brands and continue paying down debt. With $300 million in positive free cash flow expected in the year's first half -- nearly as much as Coty made in all of fiscal 2026 -- it's on the right track to do that.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.