What’s Next For Coty Stock After a 50% Drop?
Just a year ago, Coty Inc. stock (NYSE: COTY) stock traded around $10, but today it sits near $4, down more than 50% from its peak. This dramatic collapse reflects more than just market volatility—it underscores the pressures weighing heavily on one of the world’s largest beauty companies. Coty Inc. is a global beauty company best known for its wide portfolio of fragrance, cosmetics, and skincare brands, including CoverGirl, Gucci Beauty, and Kylie Cosmetics.
The decline has been fueled by a string of disappointing results. In its most recent quarter, Coty reported revenue of $1.25 billion, down 8% year-over-year, and posted an adjusted loss of five cents per share, missing expectations of a two-cent profit. While revenue occasionally came in above forecasts, the company’s repeated failure to translate sales into earnings has rattled investors. Matters were made worse by a $212.8 million non-cash impairment tied to weak cosmetics demand in the U.S. and Europe, reminding markets of the structural challenges the brand faces. That said, if you’re looking for an upside with less volatility than a single stock, consider the High Quality Portfolio. It has comfortably outperformed its benchmark—a combination of the S&P 500, Russell, and S&P Midcap indexes—achieving returns of more than 91% since its inception. On a separate note, check out our take on –Buy or Fear Coty Stock?
Tariffs have also dealt a painful blow, with the U.S. having imposed a 15% tariff on European imports, threatening to shave roughly $70 million off Coty’s fiscal 2026 profits. To counter this, the company is shifting parts of its mass-market fragrance production to U.S. facilities, but the transition adds its own operational pressures. At the same time, Coty continues to battle consumer caution in its core markets, with Gen-Z buyers leaning toward alternative beauty trends and Asia-Pacific markets—especially China and travel retail—underperforming expectations. Balance sheet concerns further cloud the picture. Coty carries over $4 billion in debt against just $257 million in cash, leaving little room for missteps.
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What’s Next?
Management expects the first half of fiscal 2026 to remain pressured, guiding for a 6–8% sales decline, but forecasts a rebound in the second half driven by new product launches and premium fragrance price hikes designed to offset tariff costs. The company is also investing heavily in digital and social commerce, including platforms like TikTok Shop, to capture younger consumers and revive its mass-market brands like CoverGirl. Meanwhile, its “All-In to Win” strategy aims to streamline operations, strengthen margins, and return Coty to profitability, with projected adjusted earnings per share of 33 to 36 cents in early fiscal 2026.
Coty’s fall has been steep and unnerving, reflecting both external shocks and internal challenges. But its strong position in fragrances, ongoing cost efficiencies, and push into digital sales offer a glimmer of recovery potential.
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