Amid macroeconomic pressures, Coty Inc. is the latest beauty conglomerate to share its Q3 FY2025 results. Despite reporting a 3% year-over-year (YoY) sales decline in the three months ending March 31, the beauty giant is laying down the foundations for what it calls a “multiprolonged plan of attack” to fuel growth and resilience in FY2026 and beyond.
“We are much more strongly positioned to navigate the current complex dynamics, including tariffs and broader macroeconomic uncertainty, supported by the strategic, operational, and financial fundamentals, which we’ve significantly strengthened over the last four years,” Coty CEO Sue Nabi shared during the company’s Q3 FY2025 earnings call. “These improved fundamentals, coupled with our multipronged plan of attack for accelerating innovation, distribution, and efficiencies, give us measured confidence that business trends should gradually improve over the course of FY26.”
The Benefit of Fragrance Resilience
Coty remains bullish on its future trajectory, anchored by fragrance momentum, new product launches, and sweeping operational efficiencies. Even as the beauty market saw a moderate decline in Q3 (Coty revenue in the Americas dropped 10% while Asia Pacific was down 5% and Europe 3%), fragrance stood out as a growth driver as consumer interest in affordable luxuries during uncertain times strayed from the lipstick effect to the fragrance effect.
“Beauty has always been a resilient category across economic cycles … we expect this economic cycle will be no different,” Nabi said. “Fragrances, both prestige and mass, are now positioned to be one of the better-performing beauty categories as the ‘fragrance index’ remains at play. In fact, even as the US beauty market is now in a moderate decline, the fragrance category continues to grow solidly across price points.”
Looking to fiscal 2026, Coty intends to double down on its prestige fragrance portfolio with two major launches, one in the first half of the year and another in the second, particularly targeting the US market. The company is also set to introduce a major prestige brand to the US, although specific details about this have not yet been publicly disclosed. However, in late 2024, Coty entered a long-term licensing agreement with Swarovski to rejuvenate its fragrance division, as well as securing a licensing agreement with luxury fashion house Marni, with the intention to distribute new fragrance lines in 2026.
In addition to this expansion, Coty is set to diversify its fragrance format offerings in the upcoming year. These include ultra-premium scented body mists and pen sprays, aligning with the growing consumer trend of favoring varied fragrance applications. In 2024, the US prestige beauty market (valued at $33.9 billion) saw a notable increase in fragrance sales, with a 12% growth during the year, as products such as body sprays experienced a 94% surge in sales.
These moves are part of a broader strategy to capitalize on scent-driven trends and reinforce its leadership in the global prestige fragrance category, which now represents nearly 65% of Coty’s revenue base.
On the mass side of Coty’s fragrance business, the conglomerate is building on the successful launch of Adidas Vibes, with new innovations planned for FY2026, including new fragrance lines co-developed with key retail partners.
Coty also plans to turn up the volume on digital commerce and social platforms in both fragrance and cosmetics, as CoverGirl is set to launch on TikTok Shop next month. “We are over-driving the winning channels such as e-com and TikTok Shop,” Nabi noted.
Portfolio Realignment, Cost Discipline, and Operational Strength
As part of its strategic overhaul, Coty divested its 20% stake in Kim Kardashian’s SKKN BY KIM, selling it to her shapewear company SKIMS back in March. The move resulted in a $71.1 million loss for Coty, however, the company ensures it aligns with its focus on streamlining operations and investing in core brands. The proceeds from the sale were earmarked for debt reduction and innovation across Coty’s wider brand portfolio.
Additionally, amid new tariff announcements, Coty’s cost management strategy is expected to be a key buffer. Its next phase of the “All in to Win” program will target $370 million in cost savings across FY2026 and FY2027. These savings, combined with brand pricing power, are expected to offset increased costs from tariffs and supply chain adjustments.
“Coty remains relatively better positioned to weather the tariff headwinds given our geographically diverse sales base, manufacturing, and sourcing,” Nabi added.
Despite looming pressures, Coty says it's entering FY2026 with a strong foundation: brand equity at a multiyear high, a robust innovation pipeline, and improved margins and debt ratios compared to four years ago.
“We have the levers to protect our profitability and cash flow in a variety of macroeconomic scenarios,” Nabi stated. “Coty remains well-positioned to succeed and outperform in the coming years.”
However, the business has realigned its forecast for FY2025, predicting a high single-digit decline in like-for-like sales during the fourth quarter of 2025 and a 2% decline for the full year. Coty now predicts a per-share profit for the year to be between 49 and 50 cents, in comparison to a previous forecast of 50 and 52 cents per share.
As the ever-competitive beauty landscape continues to evolve, it is clear that Coty has one message: transformation is already underway, and FY2026 will hopefully mark the beginning of a more agile, innovation-led growth phase.
Coty Q3 FY2025 Key Metrics
For the three months ended March 31, 2025, compared to the three months ended March 31, 2024:
