Coty’s financial woes have continued in its third quarter of trading, with the beauty giant’s revenues impacted by the ongoing conflict in the Middle East.
The Kylie Cosmetics-owner reported a net revenue decrease of 1% to US$1.28bn on a reported basis, while on a like-for-like (LFL) basis net revenue declined 7%.
This included an estimated 1.4% headwind from the war in Iran.
“Q3 marked an important step toward restoring consistent performance commensurate with Coty's outstanding assets and capabilities,” said Markus Strobel, Executive Chair and Interim CEO, whose salary was recently revealed in a report by Cosmetics Business.
“While the Q3 results were below our potential on an absolute basis, we were pleased to deliver profitability ahead of our guidance despite the disruption in our Middle East business late in the quarter.
“This was a welcome first step, as we begin to gradually strengthen our operational control and execution.”
Coty’s prestige net revenues, which represent 65% of the company's total sales, came in flat at $830.9m and declined 5% on a LFL basis – with 2% headwinds from the conflict in the Middle East.
Its consumer beauty division, meanwhile, decreased 4% on a reported basis to reach net revenue of $450.7m.
Adjusted EBITDA also took a significant hit during the quarter, decreasing 38% to $127m, reflecting lower sales and gross profit
The ‘Coty.Curated’ strategy was set in motion
Markus Strobel, Executive Chair and Interim CEO at Coty
Coty’s Q3 update reflected the first quarter of its newly implemented ‘Coty. Curated’ turnaround strategy, which aims to sharpen the business’ priorities and boost sales.
It is similar in its mission to the Estée Lauder Companies ‘Beauty Reimagined’ transformation plan, which aims to get the beauty giant back to profitability after several rocky quarters.
This has followed several lacklustre quarters of trading, as Coty aims to course correct itself.
“We are methodically implementing the ‘Coty.Curated’ strategic framework announced last quarter, centred on sharper priorities, more focused investments, improved execution and increased support behind our core businesses,” said Strobel.
“We are embedding this framework into our FY27 action plans for both divisions, including significantly reducing the number of smaller launches, lowering marketing asset production costs in part through broad-based artificial intelligence (AI) deployment for our owned brands.
“[This is] while increasing consumer engagement spending, and working to simplify our operational model, all with the ultimate objective to grow our sell out and market share over time.”
Coty also made progress on its ‘Color the Future’ roadmap during the quarter, aimed at improving its consumer beauty cosmetics performance, supported by more consistent media investment behind key franchises.
Plus, a more focused innovation pipeline, ongoing value chain optimisation and actions to stabilise gross margins over time.
What to expect from the remainder of 2026
Although the conflict in the Middle East continues to weigh on sales trends in the region, Coty stated that consumer demand in developed markets has remained broadly consistent with recent periods.
Against this backdrop, and the implementation of the ‘Coty.Curated’ strategic framework, Coty expects fourth quarter FY26 LFL revenue to decline by a mid‑single‑digit percentage.
Headwinds in the Middle East business are expected to impact Q4 sales by an estimated 2% to 3%.
Coty anticipates FY26 adjusted EBITDA of approximately $838m to $848m, and Q4 adjusted EBITDA of $85m to $95m.
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