Coty Inc. shares fell nearly 20% in premarket trading on Thursday after the beauty company reported better-than-expected fourth-quarter revenue but provided a cautious outlook that overshadowed the results.
The New York-listed company posted net revenue of $1.27 billion for the quarter, a 1% increase year-over-year, including a 3% benefit from foreign exchange. Like-for-like sales declined 1%, with an estimated 1% headwind from the conflict in the Middle East. Adjusted EBITDA dropped 26% to $93.6 million, while adjusted loss per share narrowed to $0.02 from $0.05.
Management provided limited guidance for the current quarter, projecting a low- to mid-single-digit like-for-like revenue decline and a 50 to 100 basis-point contraction in adjusted gross margin. Adjusted earnings, excluding an equity swap, were forecast at $0.11 to $0.13 per share. The company declined to issue full-year guidance, describing fiscal 2027 as a transition year.
RBC Capital Markets downgraded Coty to Sector Perform from Outperform and cut its price target to $3 from $8. Analyst Nik Modi cited uncertainty over future growth, stating in a note that while fourth-quarter results exceeded expectations, the path to sustained top- and bottom-line improvement remains unclear. Concerns included the early termination of the Gucci license, the need for additional cost-saving measures to offset dilution, and the ongoing strategic review of the Consumer Beauty segment.
Coty also announced a leadership transition, with Soraya Benchikh set to succeed Laurent Mercier as Chief Financial Officer effective September 1.
