Coty has reported steady progress in its first quarter of fiscal 2026, including stronger performance in prestige fragrances, manufacturing moves that support cost efficiency, and early signs of a turnaround in its consumer beauty business. The company confirmed it is on track with its full-year goals despite a soft quarter for overall sales.
Coty catches up in US prestige fragrances
After trailing the broader prestige fragrance market earlier this year, Coty says it has now caught up. “We closed the gap between Coty’s US prestige fragrance sell-out and the overall market, from an ~5-point gap in Q4 FY25 to full alignment in Q1 FY26,” the company said during its earnings call.
This shift is significant for fragrance suppliers and manufacturers who are closely watching demand trends. Coty also expects to see growth in the category next quarter, adding that “positive sales growth [is] expected in Q2.”
Even with prestige fragrance revenues down 6% this quarter, the company showed improvement from the previous quarter’s 11% drop.
Stateside manufacturing to boost flexibility and cut costs
Coty confirmed it is ramping up local production to increase agility and reduce supply chain costs. It has already moved production of key US mass-market fragrances to its domestic facility and will soon add more products. “By Q3 we will transfer additional entry-prestige fragrances and adjacencies to our US plant,” Coty said.
The company emphasized that this shift is designed to make it more competitive. “It reinforces Coty’s resiliency and relative cost advantage vs. industry peers,” the company added.
Cost savings and digital tools help stabilize margins
Coty is working to offset slower sales by reducing costs and improving its operations. The company said it delivered “>$40M of productivity savings and >$10M of fixed cost reductions in 1Q26,” and is targeting roughly $200 million in savings for the full year.
A big part of that effort includes digital upgrades. Coty said it is “accelerating AI implementation” with tools that improve decision-making and speed up procurement. This includes “AI-driven content, automation, predictive analytics and visualization,” which Coty said is already improving its operations.
Consumer beauty division gets leadership overhaul
Coty’s mass-market brands, including CoverGirl, Rimmel, and Sally Hansen, have seen declining revenues, though some signs point to a recovery. While LFL sales were down 11% in Q1, consumer sell-out improved to just a 6% drop.
The company has launched a performance improvement plan and brought in a new leadership team to reset the strategy. “Our newly appointed Consumer Beauty EVP Global Brands & New Product Development [will] enable fewer, more impactful innovations and a more agile approach,” the company said.
FY26: On track for gradual improvement
Looking ahead, Coty expects performance to improve throughout the year. The company said first-quarter results were “in line with expectations,” and it remains on track to meet its full-year goals. Coty projected continued sales and profit growth in the second half of FY26, supported by new launches and further cost savings.
“Revenue LFL [is] at the better end of prior guidance for a LFL decline of 3% to 5%,” the company said, adding that its debt levels and profit margins are expected to stay stable.
