The Coty Curated is still a diagnostic
No signs of recovery in the short run
The release of Coty Inc.’s fiscal 2026 second quarter results on 5 February 2026 marked a definitive turning point in the company’s recent history, characterised by a profound shift in leadership and a fundamental reassessment of its operational priorities. While the company achieved a landmark victory in financial deleveraging, the operational data revealed significant friction within the core business, leading to an earnings miss that overshadowed a marginal revenue beat. The quarter, which concluded on 31 December 2025, marked the formal debut of Executive Chairman and Interim CEO Markus Strobel, who arrived from a storied career at Procter & Gamble to find a company with world-class assets but struggling with the weight of its internal complexity. The subsequent withdrawal of full-year guidance for EBITDA and free cash flow sent a shockwave through the investment community, signalling that the Coty Curated strategic framework would involve a period of painful but necessary transition.
Executive Summary of Financial and Operational Results
Coty’s performance in the second quarter of fiscal 2026 was a study in contrasts. On the top line, the company reported net revenue of $1,678.6 million, representing a 1% increase on a reported basis, which narrowly exceeded consensus estimates. However, this reported growth was heavily influenced by a 4% tailwind from foreign exchange fluctuations. On a like-for-like basis, which provides a more accurate reflection of underlying demand, revenue actually declined by 3%. This divergence highlights a cooling global beauty market where currency movements can often mask stagnant or retreating consumption volumes.
The bottom-line results were more concerning to market participants. Adjusted earnings per share came in at $0.14, a significant miss compared to the analyst consensus of $0.18. This 22.2% negative surprise was driven primarily by margin compression resulting from an intensified promotional environment and higher administrative costs. On a GAAP basis, the company reported a net loss of $126.9 million, a sharp reversal from the $20.4 million profit reported in the prior year period. This loss was exacerbated by non-recurring items, including realised losses from the final divestiture of the Wella business and a $38.6 million negative mark-to-market impact on equity swaps.
