Coty Shares Drop 20% After RBC Downgrade

Coty Shares Drop 20% After RBC Downgrade

Coty Inc. reported fourth‑quarter 2026 results that slightly beat expectations, with net revenue of $1.27 billion, a 1 % increase year‑on‑year, aided by a 3 % foreign‑exchange benefit. On a like‑for‑like basis, sales declined 1 %, which the company attributed to an estimated 1 % headwind from the conflict in the Middle East. Adjusted EBITDA fell 26 % to $93.6 million, and the adjusted loss per share narrowed to $0.02 from $0.05 in the prior quarter.

Guidance for the first quarter of fiscal 2027 indicated a low‑ to mid‑single‑digit like‑for‑like revenue decline, an adjusted gross‑margin contraction of 50 to 100 basis points, and adjusted earnings (excluding the equity swap) of $0.11 to $0.13 per share. The company declined to provide full‑year guidance, describing fiscal 2027 as a transition year.

RBC Capital Markets analyst Nik Modi downgraded Coty to “Sector Perform” and reduced the price target from $8 to $3, stating that the forward commentary left the path to top‑ and bottom‑line growth unclear. Modi highlighted the early termination of the Gucci license, the need for an additional fixed‑cost‑savings program to offset dilution, and an ongoing strategic review of the Consumer Beauty business.

In addition, Coty announced a chief‑financial‑officer transition: Soraya Benchikh will succeed Laurent Mercier as CFO effective 1 September 2026.

The market reacted with Coty shares falling approximately 20 % in pre‑market trading on Thursday following the earnings release and downgrade.