Coty Shares Plunge as Beauty Giant Swings to Loss and Pulls Guidance

The New York-based company reported a net loss of $126.9 million, or 14 cents per share, a stark reversal from the $20.4 million profit recorded during the same period last year. On an adjusted basis, Coty posted earnings of 14 cents per share, failing to meet the 18-cent consensus estimate provided by FactSet. Management attributed a 4-cent portion of that miss to an equity swap mark-to-market adjustment.

Weakening Demand and Structural Shifts

Despite the bottom-line pressure, quarterly revenue reached $1.68 million, slightly exceeding analyst expectations of $1.66 million. However, when adjusted for foreign exchange fluctuations, revenue actually declined by 3%. Interim CEO Markus Strobel acknowledged the underperformance during a Thursday call, stating that the firm has not met its expected delivery levels amid a difficult industry backdrop.

The company’s decision to scrap its fiscal-year guidance highlights the volatility currently facing the beauty sector. Several factors contributed to the downward revision:

• A mid-single-digit percentage decline in revenue expected for the third quarter.
• Persistently weakening consumer beauty trends globally.
• Disruptions stemming from the company's ongoing leadership transition.

Following the announcement, Coty stock hit $2.71 per share, extending a 12-month decline that has seen the company’s valuation drop by more than 50%. The retreat reflects investor anxiety over the company's ability to navigate a cooling retail environment while searching for permanent leadership.