Coty Faces Slump Amid Countdown to Gucci License Conclusion

Coty starts fiscal 2026 on the downside. The U.S. beauty company closed the first quarter with sales of $1.58 billion, down 6% from the same period last year. On a like-for-like basis, the decline was 8%, a result that was in line with Wall Street forecasts.

The luxury business was the best performer, with sales reaching $1 billion and a 4% drop, while consumer cosmetics suffered a decline in turnover, with a 9% drop to $507.7 million.

Despite the slowdown in figures, Coty said it identified signs of improvement. CEO Sue Nabi said the group expects second-quarter sales to be at the high end of guidance and anticipated a return to growth in both sales and profits in the second half of the year.

The quarter was also marked by the future exit of Gucci from its licensing portfolio, a move that will follow the sale of the luxury group Kering’s beauty catalog to the giant L’Oréal. The alliance with the Italian brand will expire in 2028 and represents about 8% of Coty’s sales and about 11% of profit, according to Evercore IRI. The U.S. company has reiterated, in response to various market analyses, that it will continue to manage Gucci Beauty with a focus on optimizing the brand as long as the agreement remains in place.

Coty will terminate its licensing agreement with Gucci Beauty in 2028

In parallel, the company has highlighted new partnerships and planned launches. These include fragrances for Swarovski, Etro and Marni over the next two years, as well as innovations in prestige cosmetics and the launch of makeup under Marc Jacobs Beauty planned for 2026.

The company is moving ahead with the strategic review of its $1.2 billion color cosmetics business and its Brazilian division, with $400 million in sales. The process, conducted by Citi, contemplates alternatives such as alliances, divestitures or spin-offs.

In addition, Coty has denied that it is exploring the sale of its luxury business. Burberry Goddess remains the largest launch in the company’s recent history, while Hugo Boss was the second largest men’s fragrance franchise in Europe in the second half of last year. Coty currently has a market capitalization of $3.33 billion.