Coty Inc. is anticipating headwinds in the Middle East business to impact fourth-quarter sales by an estimated 2 to 3 percent, after weighing on sales in the third quarter.
Net revenue for the third quarter ended March 31 came in at $1.28 billion, a decrease of 1 percent compared with a year ago. Coty’s like-for-like sales declined 7 percent in the quarter, including an estimated 1.4 percent negative impact from the Middle East, driven by the escalation of the conflict in the region.
“The region represents a midsingle-digit percentage of total sales, including local travel and retail and given fragrances are a dominant category in the Middle East, we are seeing a more sizable impact on our prestige business. The disruption to the Middle East region had a larger effect on our near-term trends, because we had anticipated stronger Middle East growth this quarter as the conflict in the Middle East continues,” said Markus Strobel, executive chairman and interim chief executive officer, during an earnings call.
Within the overall revenue number, prestige net revenue was flat at $830.9 million, while consumer beauty net revenue was 4 percent lower at $450.7 million.
Coty reported a net loss of $473.7 million compared to a net loss of $309 million in the prior year.
Strobel took over the top job at Coty from Sue Nabi at the end of last year and in February presented his new strategy, Coty Curated, detailing a plan for sharper priorities, more focused investments, improved execution, and increased support behind its core businesses.
“We are methodically implementing the Coty Curated strategic framework announced last quarter, centered on sharper priorities, more focused investments, improved execution, and increased support behind our core businesses. We are embedding this framework into our [fiscal-year 2027] action plans for both divisions, including significantly reducing the number of smaller launches, lowering marketing asset production costs in part through broad-based AI deployment for our owned brands, while increasing consumer engagement spending, and working to simplify our operational model,” he said.
The company has also said it is reviewing its portfolio, to be concluded and shared soon.
Its consumer brands division is the subject of its strategic review for its mass color cosmetics business, in addition to its operations in Brazil.
For fiscal year 2026, Coty expects an adjusted earnings per share of 33 cents to 35 cents.