Coty misses by $0.04, beats on revs (3.15 -0.28)
- Reports Q2 (Dec) earnings of $0.14 per share, excluding non-recurring items, $0.04 worse than the FactSet Consensus of $0.18; revenues rose 0.5% year/year to $1.68 bln vs the $1.66 bln FactSet Consensus.
- Given the complex beauty market backdrop and Coty's leadership transition, the company is withdrawing its prior FY26 guidance for EBITDA and free cash flow, and is providing guidance solely for Q3.
- Coty expects LFL Q3 revenues to decline by a mid-single-digit percentage, primarily due to weakening in Consumer Beauty sales trends.
- In Prestige, Coty estimates the fragrance market will grow at a low-to-mid-single-digit rate, which is consistent with Q2 levels and in line with the broader beauty market. While the estimated headwinds from retailer destocking significantly reduced in Q2, the promotional environment intensified through the holiday period and remains elevated across the category, representing a headwind to Coty's net sales performance and by extension, gross margin.
- In Consumer Beauty, the Company estimates the mass beauty category will be flattish to up low-single-digits.
- Coty anticipates Q3 gross margins to decline by 200 to 300 basis points year-on-year, consistent with Q2 trends.