COTY INC. 10-K Summary: Fiscal Year Ended June 30, 2026
Business Context and Reporting Period
This Annual Report on Form 10-K covers the fiscal year ended June 30, 2026. Coty Inc. is a global beauty company operating in two primary segments: Prestige (fragrances, color cosmetics, skincare) and Consumer Beauty (mass market color cosmetics, fragrances, skin and body care). The company is currently undergoing a strategic review of its Consumer Beauty business and Brazil operations. In January 2026, Markus Strobel was appointed Executive Chairman and Interim CEO. The company operates in approximately 122 countries and relies heavily on licensed brands, with 66% of fiscal 2026 revenue attributable to the Prestige segment.
Key Financial Metrics
| Metric (in millions) | Fiscal 2026 | Fiscal 2025 | Change |
|---|---|---|---|
| Net Revenues | $5,806.6 | $5,892.9 | (2.0%) |
| Gross Profit | $3,652.0 | $3,820.9 | (4.4%) |
| Gross Margin | 62.9% | 64.8% | (190 bps) |
| Operating (Loss) Income | $(81.5) | $241.1 | Turned to Loss |
| Net (Loss) Income | $(590.2) | $(350.2) | (68.5%) |
| Net Loss Attributable to Coty Inc. | $(604.8) | $(367.9) | (64.4%) |
| Diluted EPS | $(0.70) | $(0.44) | (59.1%) |
| Adjusted EBITDA | $846.9 | $1,081.7 | (21.7%) |
| Operating Cash Flow | $537.8 | $492.6 | 9.2% |
| Total Debt | $3,088.2 | $4,008.4 | (23.0%) |
| Cash and Equivalents | $176.1 | $257.1 | (31.5%) |
Material Changes vs. Prior Period
- Revenue Decline: Net revenues decreased 2% year-over-year, driven by a 5% decrease in unit volume partially offset by a 4% positive foreign currency impact. Prestige revenues were flat (-0.4%), while Consumer Beauty revenues declined 3%.
- Significant Impairments: The company recorded $362.8 million in asset impairment charges, a significant increase from $212.8 million in 2025. This included $237.1 million in goodwill impairment within the Consumer Beauty segment and $125.7 million in indefinite-lived intangible asset impairments (CoverGirl, Sally Hansen, Max Factor, Bourjois).
- Operating Loss: The company reported an operating loss of $81.5 million compared to operating income of $241.1 million in the prior year. This was primarily driven by the impairment charges, increased cost of sales (due to tariffs and freight), and higher amortization expenses.
- Debt Reduction: Total debt decreased by approximately $920 million to $3.09 billion. This reduction was achieved through the sale of the remaining Wella equity interest (proceeds of $750 million) and the issuance of new senior notes ($900 million) used to redeem maturing debt.
- Segment Performance: The Prestige segment generated operating income of $444.5 million (down 23% from prior year). The Consumer Beauty segment reported an operating loss of $442.6 million, worsening significantly from a loss of $127.4 million in 2025.
Guidance, Outlook, and Risks
- Strategic Review: Management is conducting a comprehensive review of the Consumer Beauty business and Brazil operations to assess divestiture opportunities and cost optimization. A strategic review of the central organization and manufacturing footprint is also underway.
- Gucci License Exit: In July 2026, Coty agreed to transition the Gucci Beauty license back to Kering one year early. The company received $250 million in proceeds (with an additional $150 million expected by Sept 2027) and intends to use these funds for debt reduction. This exit will impact revenues and net income in fiscal 2028.
- Outlook for Q1 Fiscal 2027: Management expects reported net revenues to decline by a low- to mid-single-digit percentage compared to the prior year. Gross margins are expected to be pressured by lower sales and unfavorable cost absorption.
- Key Risks:
- Geopolitical & Tariffs: Ongoing conflicts in the Middle East and Ukraine, along with U.S. tariff policies, continue to impact supply chains and costs. The company incurred $29.3 million in tariff-related costs in fiscal 2026.
- Consumer Trends: Intense competition in mass color cosmetics and shifting consumer preferences pose risks to the Consumer Beauty segment.
- Debt Covenants: A rating downgrade in July 2026 reinstated certain covenants and collateral provisions for Senior Secured Notes, though management does not currently believe this will materially impact liquidity.
- Legal Contingencies: Significant exposure remains regarding talc-related litigation and Brazilian tax assessments.
Investor Verification Checklist
- Impairment Sustainability: Verify the assumptions used in the goodwill and trademark impairment tests (revenue growth rates, discount rates) to assess the risk of future impairments in the Consumer Beauty segment.
- Debt Maturity Profile: Review the maturity schedule of the remaining debt, specifically the €500 million 2027 Euro Senior Secured Notes, and the company's refinancing strategy given the recent rating downgrade.
- Consumer Beauty Strategy: Monitor the outcome of the strategic review of the Consumer Beauty and Brazil businesses for potential divestitures or restructuring charges.
- Tariff Impact: Track the actual impact of U.S. tariff policies and the success of supply chain diversification efforts on future cost of goods sold.
- Forward Repurchase Contracts: Assess the remaining notional amount ($104.5 million) of forward repurchase contracts and the potential for additional cash "true-up" payments if the stock price declines further.