Coty offers asymmetric upside from deleveraging and prestige recovery, but the Gucci exit, weak sell-out, leverage, and execution risk make it a speculative turnaround.
Overview
Coty is a global beauty company split between Prestige, contributing 66% of FY26 revenue, and Consumer Beauty, contributing 34%. Its core strength is a licensed portfolio of designer fragrances and cosmetics, supported by global scale, long-term retail relationships, and licenses whose top six account for more than 80% of Prestige fragrance revenue. **The business is in a transition year:** FY26 revenue declined 2% reported and 5% like-for-like to $5,806.6 million, while adjusted EBITDA fell to $846.9 million, or a 14.6% margin. Q4 revenue of $1,269.2 million beat consensus by $79.2 million, and FY26 operating cash flow and free cash flow were $537.8 million and $348.2 million, respectively, but GAAP net loss widened to $618.0 million after a $362.8 million Consumer Beauty impairment. The Gucci Beauty license exits June 30, 2027, with $400 million of consideration earmarked to support deleveraging. At $3.02, Coty trades at 8.21x forward P/E, versus a personal-care sector average above 20x. Near-term guidance remains weak, with Q1 FY27 like-for-like revenue expected to decline low-to-mid single digits, but catalysts include debt reduction, Marc Jacobs and Kylie growth, mass-business strategic alternatives, and margin recovery.