Coty (COTY) Q1 2027 Earnings Report

The call was cautiously positive. Q1 exceeded expectations, core Prestige brands grew 5% like-for-like, Asia increased 8%, innovation launches are tracking ahead of objectives, and several brands showed clear improvement. However, gross margin declined 120 basis points, excess inventory and Middle East cost pressures remain, Europe is underperforming, and the Gucci license exit creates a sizable impact. Management presented these issues as active workstreams during a transition year, with productivity, restructuring, and brand investment plans underway.

Coty said Fiscal '27 is a transition year and that the recovery will not be linear; it expects growth on its top 6 core Prestige brands in Q2 as well, with the top 6 having grown 5% like-for-like in Q1. Middle East headwinds are expected to persist for the rest of the year, with oil-related input costs currently forecast to have a $30 million to $40 million impact, toward the upper range if the barrel price stays above $100. Coty expects to complete its strategic review by the end of calendar 2026, will provide Gucci impact plans latest by January, and will come out with the overall savings package before Christmas; the Gucci agreement includes $250 million upfront and has a total value of $400 million, while Gucci was a low double-digit part of the portfolio at a gross margin of about 70%, A&CP of about 29%, and an impact of about [ 40% ] of the contribution of the net sales.