Coty (COTY) Q1 2027 (Q&A) earnings summary

Executive summary

• Q1 net revenue was $1,555.2M, down 1% reported and 1.6% LFL; results beat expectations and guidance, with sell-in and sell-out broadly aligned.

• Top 6 core Prestige brands grew 5% LFL, with five of six brands growing; growth would have been ~3% excluding the Marc Jacobs Beauty pipeline fill.

• FY27 is a transition year, with a non-linear recovery expected; strategic review is targeted for completion by end-CY26.

Financial highlights

• Adjusted EBITDA was $274.2M, down 7%, with a 17.6% margin, down 120 bps YoY; adjusted gross margin was 63.3%, down 120 bps.

• Middle East freight and material costs contributed ~50 bps of gross-margin pressure; the balance reflected unfavorable mix and excess and obsolete inventory.

• Adjusted EPS excluding the equity swap was $0.15, flat YoY; adjusted diluted EPS was $0.16 versus $0.12, including a $0.01 equity-swap benefit.

• Free cash flow was $84.6M versus $11.2M YoY; operating cash flow was $130.4M versus $65.2M.

• Reported net income attributable to common shareholders rose 64% to $106.2M; adjusted net income increased 38% to $146.1M.

Outlook and guidance

• Q2 FY27 LFL revenue is expected to decline at a low-single-digit rate, while Top 6 core Prestige brands are expected to grow LFL.

• Q2 reported revenue is expected to decline at a high-single-digit rate YoY, including a low-single-digit FX headwind; adjusted EPS excluding the equity swap is guided to $0.16–$0.18.

• H1 FY27 free cash flow is expected to exceed $300M.

• Middle East costs are expected to weigh on gross margin through FY27; oil-related impact is forecast at $30M–$40M, toward the upper end if oil stays above $100 per barrel.

• Gucci contribution mitigation and savings plans are being finalized, with plans expected by January following the strategic review's targeted year-end completion.