Coty to receive about $400M for Gucci Beauty exit
Coty’s Gucci Beauty transition includes approximately $400.0 million in consideration, while a ratings downgrade reinstated Senior Secured Notes covenants.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
Coty Inc. (COTY) reported results for the three months ended September 30, 2026: net revenue was $1,555.2 million versus $1,577.2 million a year earlier, and operating income was $170.4 million versus $185.0 million. Net income attributable to Coty Inc. was $109.5 million, compared with $67.9 million; net cash provided by operating activities was $130.4 million versus $65.2 million.
Coty agreed to transition the Gucci Beauty license back to Kering while continuing to operate the brand through at least June 30, 2027. Aggregate consideration is approximately $400.0 million. Coty received $250.0 million upon signing; an additional $150.0 million is payable on the earlier of the anticipated termination date and September 30, 2027, subject to a potential holdback of up to $30.0 million in certain specified circumstances. The $250.0 million received is recorded as deferred income until the termination date.
A July 9, 2026 downgrade from one ratings agency ended the covenant suspension for the Senior Secured Notes, reinstating related covenants, guarantees and collateral, as applicable.
2 points · 0 major0 major · 2 points
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNet income attributable to Coty rose to $109.5 million from $67.9 million.
- Moderate pointNet cash provided by operating activities was $130.4 million versus $65.2 million.
Negative
- Moderate pointOperating income declined to $170.4 million from $185.0 million.
- Moderate pointJuly 9 downgrade reinstated Senior Secured Notes' covenants, guarantees and collateral.
Key Figures
Net revenues: $1,555.2 million
Operating income: $170.4 million
Net income attributable to Coty Inc.: $109.5 million
+4 more
7 metrics
Net revenues
$1,555.2 million
Three months ended September 30, 2026; $1,577.2 million in 2025.
Operating income
$170.4 million
Three months ended September 30, 2026; $185.0 million in 2025.
Net income attributable to Coty Inc.
$109.5 million
Three months ended September 30, 2026; $67.9 million in 2025.
Net cash provided by operating activities
$130.4 million
Three months ended September 30, 2026; $65.2 million in 2025.
Aggregate Gucci Beauty license transition consideration
Approximately $400.0 million
License Termination and Transition Agreement with Kering.
Cash received upon signing
$250.0 million
Gucci Beauty License Termination and Transition Agreement; recorded as deferred income until the termination date.
Additional Gucci Beauty consideration
$150.0 million
Payable on the earlier of the anticipated termination date and September 30, 2027, subject to a potential holdback of up to $30.0 million.
Key Terms
deferred income, covenant suspension period, forward repurchase contracts, Monte Carlo simulation
4 terms
deferred income financial
"reflected as deferred income, within Other current liabilities"
Deferred income is money a company has received but has not yet earned because it still must deliver goods or services; accounting treats it as an obligation rather than current profit. Think of it like a prepaid gift card: the cash is in hand today, but the company still owes the holder a product or service later. Investors watch deferred income because it affects reported revenue, shows future revenue visibility, and can signal timing of earnings and cash flow strength.
covenant suspension period financial
"a covenant suspension period was in effect from September 2024 until July 2026"
forward repurchase contracts financial
"entered into certain forward repurchase contracts"
Monte Carlo simulation technical
"estimated using a Monte Carlo simulation"
A Monte Carlo simulation is a computerized way to model many possible future outcomes by running thousands of randomized “what-if” scenarios, like rolling dice repeatedly to see the range of results. For investors it shows the probability of different returns, losses, or timing outcomes under varied assumptions, helping quantify uncertainty and compare risk — similar to using many practice runs to judge how often a plan succeeds or fails.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How did COTY's results compare for the quarter ended September 30, 2026?
Net revenues were $1,555.2 million, compared with $1,577.2 million in 2025. Operating income was $170.4 million versus $185.0 million; net income attributable to Coty Inc. was $109.5 million versus $67.9 million. Net cash provided by operating activities was $130.4 million versus $65.2 million.
What consideration is Coty receiving for the Gucci Beauty license transition?
Coty is to receive aggregate consideration of approximately $400.0 million for the transition of the Gucci Beauty license back to Kering. Coty received $250.0 million in cash upon signing; an additional $150.0 million is payable on the earlier of the anticipated termination date and September 30, 2027, subject to a potential holdback of up to $30.0 million in certain specified circumstances.
How long does the Marc Jacobs license extension run?
Coty entered into an agreement on November 3, 2026 to extend the Marc Jacobs Trademark License for an initial period through 2046. Coty may extend it for an additional twenty years at its discretion, provided minimum royalty thresholds are met in the year before the initial term ends. The one-time fee is $40.0 million, with $20.0 million payable upon execution and $20.0 million in July 2027.
AI-generated analysis. How Rhea-AI works. Not financial advice.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
| FOR THE QUARTERLY PERIOD ENDED | ||||||||
| OR | ||||||||
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
| FOR THE TRANSITION PERIOD FROM TO | ||||||||
| COMMISSION FILE NUMBER | ||||||||
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
| | |||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
(212 ) 389-7300
Registrant’s telephone number, including area code
Securities Registered Pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | |||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||||||||
| Emerging growth company | |||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ | |||||||||||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý
At October 28, 2026, 881,343,089 shares of the registrant’s Class A Common Stock, $0.01 par value, were outstanding.
COTY INC.
INDEX TO FORM 10-Q
| Page | ||||||||
Part I: | FINANCIAL INFORMATION | |||||||
Item 1. | Condensed Consolidated Financial Statements (Unaudited) | 1 | ||||||
Condensed Consolidated Statements of Operations for the three months ended September 30, 2026 and 2025 | 1 | |||||||
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended September 30, 2026 and 2025 | 2 | |||||||
Condensed Consolidated Balance Sheets as of September 30, 2026 and June 30, 2026 | 3 | |||||||
Condensed Consolidated Statements of Equity for the three months ended September 30, 2026 and 2025 | 4 | |||||||
Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2026 and 2025 | 6 | |||||||
Notes to Condensed Consolidated Financial Statements | 8 | |||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 26 | ||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 44 | ||||||
Item 4. | Controls and Procedures | 44 | ||||||
Part II: | OTHER INFORMATION | |||||||
Item 1. | Legal Proceedings | 45 | ||||||
Item 1A. | Risk Factors | 45 | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 45 | ||||||
Item 3. | Defaults Upon Senior Securities | 45 | ||||||
Item 4. | Mine Safety Disclosures | 45 | ||||||
Item 5. | Other Information | 45 | ||||||
Item 6. | Exhibits | 46 | ||||||
Signatures | 47 | |||||||
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
COTY INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Net revenues | $ | $ | |||||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Amortization expense | |||||||||||||||||||||||
| Restructuring costs | ( | ( | |||||||||||||||||||||
| Loss (gain) on brand exit | |||||||||||||||||||||||
| Operating income | |||||||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Other (income) expense, net | ( | ||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Provision for income taxes | |||||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Net income attributable to noncontrolling interests | |||||||||||||||||||||||
| Net income attributable to redeemable noncontrolling interests | |||||||||||||||||||||||
| Net income attributable to Coty Inc. | $ | $ | |||||||||||||||||||||
| Amounts attributable to Coty Inc. | |||||||||||||||||||||||
| Net income attributable to Coty Inc. | |||||||||||||||||||||||
| Convertible Series B Preferred Stock dividends | ( | ( | |||||||||||||||||||||
| Net income attributable to common stockholders | $ | $ | |||||||||||||||||||||
| Earnings per common share: | |||||||||||||||||||||||
| Earnings per common share - basic | |||||||||||||||||||||||
| Earnings per common share - diluted | |||||||||||||||||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
See notes to Condensed Consolidated Financial Statements.
1
Table of Contents
COTY INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Net income | $ | $ | |||||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ||||||||||||||||||||||
Net unrealized derivative gain (loss) on cash flow hedges, net of taxes of $ | ( | ||||||||||||||||||||||
Pension and other post-employment benefits adjustment, net of tax of $ | ( | ||||||||||||||||||||||
| Total other comprehensive (loss) income, net of tax | ( | ||||||||||||||||||||||
| Comprehensive income | |||||||||||||||||||||||
| Comprehensive income attributable to noncontrolling interests: | |||||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ||||||||||||||||||||||
| Total comprehensive income attributable to noncontrolling interests | |||||||||||||||||||||||
| Comprehensive income attributable to redeemable noncontrolling interests: | |||||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Foreign currency translation adjustment | |||||||||||||||||||||||
| Total comprehensive income attributable to redeemable noncontrolling interests | |||||||||||||||||||||||
| Comprehensive income attributable to Coty Inc. | $ | $ | |||||||||||||||||||||
See notes to Condensed Consolidated Financial Statements.
2
Table of Contents
COTY INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)
| September 30, 2026 | June 30, 2026 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
Trade receivables—less allowances of $ | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Deferred income taxes | |||||||||||
| Other noncurrent assets | |||||||||||
| TOTAL ASSETS | $ | $ | |||||||||
| LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued expenses | $ | $ | |||||||||
| Short-term debt and current portion of long-term debt | |||||||||||
| Current operating lease liabilities | |||||||||||
| Income and other taxes payable | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt, net | |||||||||||
| Long-term operating lease liabilities | |||||||||||
| Pension and other post-employment benefits | |||||||||||
| Deferred income taxes | |||||||||||
| Other noncurrent liabilities | |||||||||||
| Total liabilities | |||||||||||
| COMMITMENTS AND CONTINGENCIES (See Note 20) | |||||||||||
CONVERTIBLE SERIES B PREFERRED STOCK, $ | |||||||||||
| REDEEMABLE NONCONTROLLING INTERESTS | |||||||||||
| EQUITY: | |||||||||||
Preferred Stock, $ | |||||||||||
Class A Common Stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
Treasury stock—at cost, shares: | ( | ( | |||||||||
| Total Coty Inc. stockholders’ equity | |||||||||||
| Noncontrolling interests | |||||||||||
| Total equity | |||||||||||
| TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY | $ | $ | |||||||||
See notes to Condensed Consolidated Financial Statements.
3
Table of Contents
COTY INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
For the Three Months Ended September 30, 2026
(In millions, except per share data)
(Unaudited)
| Preferred Stock | Class A Common Stock | Additional Paid-in Capital | (Accumulated Deficit) | Accumulated Other Comprehensive (Loss) Income | Treasury Stock | Total Coty Inc. Stockholders’ Equity | Noncontrolling Interests | Total Equity | Redeemable Noncontrolling Interests | Convertible Series B Preferred Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BALANCE—July 1, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of employee stock options and restricted stock units | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends Accrued - Convertible Series B Preferred Stock | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends Paid - Convertible Series B Preferred Stock | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustment of redeemable noncontrolling interests to redemption value | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distribution to noncontrolling interests, net | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BALANCE—September 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
See notes to Condensed Consolidated Financial Statements.
4
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COTY INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
For the Three Months Ended September 30, 2025
(In millions, except per share data)
(Unaudited)
| Preferred Stock | Class A Common Stock | Additional Paid-in Capital | (Accumulated Deficit) | Accumulated Other Comprehensive (Loss) Income | Treasury Stock | Total Coty Inc. Stockholders’ Equity | Noncontrolling Interests | Total Equity | Redeemable Noncontrolling Interests | Convertible Series B Preferred Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BALANCE—July 1, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of employee stock options and restricted stock units | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends Accrued - Convertible Series B Preferred Stock | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends Paid - Convertible Series B Preferred Stock | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustment of redeemable noncontrolling interests to redemption value | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distribution to noncontrolling interests, net | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BALANCE—September 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
See notes to Condensed Consolidated Financial Statements.
5
Table of Contents
COTY INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
| Three Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Non-cash lease expense | |||||||||||
| Deferred income taxes | |||||||||||
| Provision for bad debts | |||||||||||
| Provision for pension and other post-employment benefits | |||||||||||
| Share-based compensation | |||||||||||
| Foreign exchange effects | ( | ( | |||||||||
| (Gains)/losses on forward repurchase contracts, net | ( | ||||||||||
| Other | |||||||||||
| Change in operating assets and liabilities | |||||||||||
| Trade receivables | ( | ( | |||||||||
| Inventories | ( | ( | |||||||||
| Prepaid expenses and other current assets | |||||||||||
| Accounts payable and accrued expenses | |||||||||||
| Other current liabilities | |||||||||||
| Operating lease liabilities | ( | ( | |||||||||
| Income and other taxes payable | |||||||||||
| Other noncurrent assets | |||||||||||
| Other noncurrent liabilities | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Proceeds from brand exit and sale of other long-lived assets | |||||||||||
| Net cash provided by (used in) investing activities | ( | ||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Net repayments of short-term debt | ( | ||||||||||
| Proceeds from revolving loan facilities | |||||||||||
| Repayments of revolving loan facilities | ( | ( | |||||||||
| Dividend payments on Series B Preferred Stock | ( | ( | |||||||||
| Net proceeds from (payments of) foreign currency contracts | ( | ||||||||||
| Distributions to noncontrolling interests | ( | ( | |||||||||
| Payments related to forward repurchase contracts, including hedge valuation adjustments | ( | ( | |||||||||
| All other | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ( | ( | |||||||||
| NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | |||||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period | |||||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period | $ | $ | |||||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: | |||||||||||
| Cash paid for interest | $ | $ | |||||||||
6
Table of Contents
| Cash paid for income taxes, net of refunds received | |||||||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||||||||
| Accrued capital expenditure additions | $ | $ | |||||||||
7
Table of Contents
COTY INC. & SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in millions, except per share data)
(Unaudited)
1. DESCRIPTION OF BUSINESS
Coty Inc. and its subsidiaries (collectively, the “Company” or “Coty”) manufacture, market, sell and distribute branded beauty products, including fragrances, color cosmetics and skin & body related products throughout the world. Coty is a global beauty company with a rich entrepreneurial history and an iconic portfolio of brands.
The Company’s sales generally increase during the second fiscal quarter as a result of increased demand associated with the winter holiday season. Financial performance, working capital requirements, sales, cash flows and borrowings generally experience variability during the three to six months preceding the holiday season. Product innovations, new product launches and the size and timing of orders from the Company’s customers may also result in variability.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The unaudited interim Condensed Consolidated Financial Statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and include the Company’s consolidated domestic and international subsidiaries. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, these unaudited interim Condensed Consolidated Financial Statements and accompanying footnotes should be read in conjunction with the Company’s Consolidated Financial Statements as of and for the year ended June 30, 2026. In the opinion of management, all adjustments, of a normal recurring nature, considered necessary for a fair presentation have been included in the Condensed Consolidated Financial Statements. The results of operations for the three months ended September 30, 2026 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending June 30, 2027. All dollar amounts (other than per share amounts) in the following discussion are in millions of United States (“U.S.”) dollars, unless otherwise indicated.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the period reported. Significant accounting policies that contain subjective management estimates and assumptions include those related to revenue recognition, the net realizable value of inventory, the assessment of goodwill, other intangible assets and long-lived assets for impairment and income taxes. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates and assumptions will be reflected in the Condensed Consolidated Financial Statements in future periods.
Recently Adopted Accounting Pronouncements
In July 2025, the FASB issued Accounting Standards Update (“ASU”) 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The update offers a practical expedient under which entities can elect to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset when estimating expected credit losses. The Company adopted the standard in the first quarter of fiscal 2027 but did not apply the practical expedient. Therefore, the adoption has no impact on the Company’s Condensed Consolidated Financial Statements.
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3. LICENSE TERMINATION AGREEMENT
Gucci Beauty License Termination
On July 7, 2026, the Company entered into a License Termination and Transition Agreement (the “Termination Agreement”) to transition the Gucci Beauty license back to Kering. Pursuant to the terms of the Termination Agreement, Coty will continue to operate the Gucci Beauty brand through at least June 30, 2027, ending the license approximately one year prior to its originally scheduled expiration. Under the terms of the Termination Agreement, the Company will receive aggregate consideration of approximately $400.0 . The Company received $250.0 in cash upon signing the Termination Agreement, and will receive an additional $150.0 , subject to a potential holdback of up to $30.0 in certain specified circumstances, on the earlier of the anticipated termination date and September 30, 2027. As of September 30, 2026, the $250.0 paid to the Company upon signing has been reflected as deferred income, within Other current liabilities in the Condensed Consolidated Balance Sheets, until the termination date when it will be realizable. Coty has also agreed to sell to Kering an amount of Gucci Beauty inventory sufficient to support the transition and payments for that inventory are payable upon being invoiced. Gains and losses attributable to activities related to the Termination Agreement are recognized in the Condensed Consolidated Statement of Operations within Loss (gain) on brand exit, which is a component of Operating Income.
4. SEGMENT REPORTING
Operating and reportable segments (referred to as “segments”) reflect the way the Company is managed and for which separate financial information is available and evaluated regularly by the Company's chief operating decision maker ("CODM") in deciding how to allocate resources and assess performance. The Company has designated its Interim Chief Executive Officer ("Interim CEO") as the CODM.
Certain income and shared costs and the results of corporate initiatives are managed by Corporate. Corporate primarily includes stock compensation expense, restructuring and realignment costs, costs related to acquisition and divestiture activities and impairments of long-lived assets. Corporate costs are not used by the CODM to measure the underlying performance of the segments.
With the exception of goodwill and acquired intangible assets, the Company does not identify or monitor assets by segment. The Company does not present assets by reportable segment since various assets are shared between reportable segments. The allocation of goodwill by segment is presented in Note 8—Goodwill and Other Intangible Assets, net.
We have identified and presented significant segment expenses, which are included in the table below. The CODM evaluates operating income (loss) and compares to budget and actual historical results to assess segment performance and make operating decisions and allocate resources among the segments.
| Three Months Ended September 30, 2026 | |||||||||||||||||||||||
| SEGMENT DATA | Prestige | Consumer Beauty | Corporate | Total | |||||||||||||||||||
| Net revenues | $ | $ | $ | $ | |||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Cost of sales | ( | ||||||||||||||||||||||
| Advertising and consumer promotion costs | |||||||||||||||||||||||
Other segment items (a) | |||||||||||||||||||||||
| Operating income (loss) | $ | $ | ( | $ | ( | $ | |||||||||||||||||
| Reconciliation: | |||||||||||||||||||||||
| Operating income | $ | ||||||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Other income, net | ( | ||||||||||||||||||||||
| Income before income taxes | $ | ||||||||||||||||||||||
| Other segment disclosures: | |||||||||||||||||||||||
| Depreciation and amortization | $ | $ | $ | $ | |||||||||||||||||||
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| Three Months Ended September 30, 2025 | |||||||||||||||||||||||
| SEGMENT DATA | Prestige | Consumer Beauty | Corporate | Total | |||||||||||||||||||
| Net revenues | $ | $ | $ | $ | |||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Advertising and consumer promotion costs | |||||||||||||||||||||||
Other segment items (a) | |||||||||||||||||||||||
| Operating income (loss) | $ | $ | ( | $ | ( | $ | |||||||||||||||||
| Reconciliation: | |||||||||||||||||||||||
| Operating income | $ | ||||||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Other expense, net | |||||||||||||||||||||||
| Income before income taxes | $ | ||||||||||||||||||||||
| Other segment disclosures: | |||||||||||||||||||||||
| Depreciation and amortization | $ | $ | $ | $ | |||||||||||||||||||
(a) Other segment items primarily include administrative costs, logistics costs, stock compensation expense, amortization of definite-lived intangible assets, restructuring costs, impairments of long-lived assets, goodwill and intangibles, transactional foreign exchange gains/losses, bad debt expense, loss (gain) on brand exit, and other miscellaneous costs.
Fragrance products include a variety of perfumes, colognes, and mists offering various scents to suit individual preferences and occasions. Color cosmetics products include lip, eye, facial and other color products including nail color. Body care and other products include shower gels, body sprays, and deodorants. Skincare products include moisturizers, serums, sun treatment, cleansers, toners and anti-aging creams designed to nourish, protect and improve the skin's appearance and health.
Presented below are the percentage of net revenues associated with the Company’s product categories:
| Three Months Ended September 30, | |||||||||||||||||||||||
| PRODUCT CATEGORY | 2026 | 2025 | |||||||||||||||||||||
| Fragrance | % | % | |||||||||||||||||||||
| Color Cosmetics | |||||||||||||||||||||||
| Body Care & Other | |||||||||||||||||||||||
| Skincare | |||||||||||||||||||||||
| Total | % | % | |||||||||||||||||||||
5. RESTRUCTURING COSTS
Restructuring costs for the three months ended September 30, 2026 and 2025 are presented below:
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Fixed Cost Reduction Plan | |||||||||||||||||||||||
| Current Restructuring Actions and Other | ( | ( | |||||||||||||||||||||
| Consumer Beauty Restructuring | |||||||||||||||||||||||
| Total Restructuring Actions | $ | ( | $ | ( | |||||||||||||||||||
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Fixed Cost Reduction Plan
On April 24, 2025, the Company announced a new plan to strengthen its operating model and simplify its fixed cost structure (the “Fixed Cost Reduction Plan”). Total restructuring charges, which consisted of employee severance, have been recorded in Corporate. The related liability balances were $47.2 and $50.1 at September 30, 2026 and June 30, 2026, respectively. The Company currently estimates that the total accrual will result in cash expenditures of approximately $19.8 , $5.4 , and $22.0 in fiscal 2027, 2028 and thereafter, respectively.
Current Restructuring Actions and Other
The Company continues to analyze its cost structure and evaluate opportunities to streamline operations through a range of smaller initiatives and other cost reduction activities to optimize operations in select businesses. The liability, which consisted primarily of employee severance, balances were $11.2 and $14.2 at September 30, 2026 and June 30, 2026, respectively. The Company estimates that the total remaining accrual will result in cash expenditures of approximately $10.2 , $1.0 , and $0.0 in fiscal 2027, 2028 and thereafter, respectively.
Consumer Beauty Restructuring
During June 2026, the Company implemented a plan to sharpen its focus, simplify Consumer Beauty’s innovation, processes and improve service quality to its brands and consumers (“Consumer Beauty Restructuring”). The cumulative restructuring charges, which have been recorded in Corporate, and the related liability balance, were $4.8 and $5.6 at September 30, 2026 and June 30, 2026, respectively. The Company currently estimates that the total accrual will result in cash expenditures of approximately $4.2 , $0.6 , and $0.0 in fiscal 2027, 2028 and thereafter, respectively.
6. INVENTORIES
Inventories as of September 30, 2026 and June 30, 2026 are presented below:
| September 30, 2026 | June 30, 2026 | ||||||||||
| Raw materials | $ | $ | |||||||||
| Work-in-process | |||||||||||
| Finished goods | |||||||||||
| Total inventories | $ | $ | |||||||||
7. DERIVATIVE ASSET RELATED TO WELLA DISTRIBUTION RIGHTS
On December 18, 2025, the Company completed the sale of its remaining 25.8 % equity interest in Wella to an entity affiliated with Kohlberg Kravis Roberts & Co. L.P. ("KKR"). Under the terms of the Purchase and Sale Agreement, the Company has a right to future proceeds from a subsequent sale or initial public offering of Wella, after KKR achieves a preferred return (the "Wella Distribution Rights").
The fair value of the derivative asset was $39.0 and $39.0 as of September 30, 2026 and June 30, 2026, respectively. The fair value of the Wella Distribution Rights is classified as Level 3 within the fair value hierarchy and is included in Other noncurrent assets in the Condensed Consolidated Balance Sheets. The fair value of the Wella Distribution Rights was estimated using a Monte Carlo simulation incorporating significant unobservable inputs, including expected volatility of Wella’s equity value based on historical volatility of comparable companies. The Monte Carlo simulation incorporated multiple scenarios for Wella’s enterprise value, including timing of exit, and distribution waterfall provisions. The Company considered developments during the period, including operating performance, market conditions, and factors affecting the timing and amount of potential future distributions. Based on the information available as of September 30, 2026, the Company did not identify any developments that resulted in a material adjustment to the estimated fair value of the derivative asset. Changes in fair value, if any, are recorded in Other (income) expense, net in the Condensed Consolidated Statements of Operations.
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8. GOODWILL AND OTHER INTANGIBLE ASSETS, NET
Goodwill
Goodwill as of September 30, 2026 and June 30, 2026 is presented below:
| Prestige | Consumer Beauty | Total | |||||||||||||||
| Gross balance at June 30, 2026 | $ | $ | $ | ||||||||||||||
| Accumulated impairments | ( | ( | ( | ||||||||||||||
| Net balance at June 30, 2026 | $ | $ | $ | ||||||||||||||
| Changes during the period ended September 30, 2026 | |||||||||||||||||
| Foreign currency translation | ( | ( | ( | ||||||||||||||
| Gross balance at September 30, 2026 | $ | $ | $ | ||||||||||||||
| Accumulated impairments | ( | ( | ( | ||||||||||||||
| Net balance at September 30, 2026 | $ | $ | $ | ||||||||||||||
Other Intangible Assets, net
Other intangible assets, net as of September 30, 2026 and June 30, 2026 are presented below:
| September 30, 2026 | June 30, 2026 | ||||||||||
| Indefinite-lived other intangible assets | $ | $ | |||||||||
| Finite-lived other intangible assets, net | |||||||||||
| Total Other intangible assets, net | $ | $ | |||||||||
The changes in the carrying amount of indefinite-lived other intangible assets are presented below:
| Trademarks | Total | ||||||||||
| Gross balance at June 30, 2026 | $ | $ | |||||||||
| Accumulated impairments | ( | ( | |||||||||
| Net balance at June 30, 2026 | $ | $ | |||||||||
| Changes during the period ended September 30, 2026 | |||||||||||
| Foreign currency translation | ( | ( | |||||||||
| Gross balance at September 30, 2026 | $ | $ | |||||||||
| Accumulated impairments | ( | ( | |||||||||
| Net balance at September 30, 2026 | $ | $ | |||||||||
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Intangible assets subject to amortization are presented below:
| Cost | Accumulated Amortization | Accumulated Impairment | Net | ||||||||||||||||||||
| June 30, 2026 | |||||||||||||||||||||||
| License agreements and collaboration agreements | $ | $ | ( | $ | ( | $ | |||||||||||||||||
| Customer relationships | ( | ( | |||||||||||||||||||||
| Trademarks | ( | ( | |||||||||||||||||||||
| Product formulations and technology | ( | ||||||||||||||||||||||
| Total | $ | $ | ( | $ | ( | $ | |||||||||||||||||
| September 30, 2026 | |||||||||||||||||||||||
| License agreements and collaboration agreements | $ | $ | ( | $ | ( | $ | |||||||||||||||||
| Customer relationships | ( | ( | |||||||||||||||||||||
| Trademarks | ( | ( | |||||||||||||||||||||
| Product formulations and technology | ( | ||||||||||||||||||||||
| Total | $ | $ | ( | $ | ( | $ | |||||||||||||||||
Amortization expense was $33.6 and $39.3 for the three months ended September 30, 2026 and 2025, respectively.
9. LEASES
The Company leases office facilities under non-cancelable operating leases with terms generally ranging between 4 and 25 years. The Company utilizes these leased office facilities for use by its employees in countries in which the Company conducts its business. Leases are negotiated with third parties and, in some instances, contain renewal, expansion and termination options. The Company also subleases certain office facilities to third parties when the Company no longer intends to utilize the space. None of the Company’s leases restrict the payment of dividends or the incurrence of debt or additional lease obligations, or contain significant purchase options.
The following chart provides additional information about the Company’s operating leases:
| Three Months Ended September 30, | |||||||||||||||||||||||
| Lease Cost: | 2026 | 2025 | |||||||||||||||||||||
| Operating lease cost | $ | $ | |||||||||||||||||||||
| Short-term lease cost | |||||||||||||||||||||||
| Variable lease cost | |||||||||||||||||||||||
| Sublease income | ( | ( | |||||||||||||||||||||
| Net lease cost | $ | $ | |||||||||||||||||||||
| Other information: | |||||||||||||||||||||||
| Operating cash outflows from operating leases | $ | ( | $ | ( | |||||||||||||||||||
| Right-of-use assets obtained in exchange for lease obligations - net of lease terminations | $ | $ | |||||||||||||||||||||
| Weighted-average remaining lease term - real estate | |||||||||||||||||||||||
| Weighted-average discount rate - real estate leases | % | % | |||||||||||||||||||||
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Future minimum lease payments for the Company’s operating leases are as follows:
| Fiscal Year Ending June 30, | |||||
| 2027, remaining | $ | ||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| 2031 | |||||
| Thereafter | |||||
| Total future lease payments | $ | ||||
| Less: imputed interest | ( | ||||
| Total present value of lease liabilities | $ | ||||
| Current operating lease liabilities | |||||
| Long-term operating lease liabilities | |||||
| Total operating lease liabilities | $ | ||||
10. SUPPLIER FINANCING PROGRAMS
The Company facilitates voluntary supplier finance programs which allow participating suppliers to finance payment obligations of the Company with designated third-party financial institutions. Participating suppliers negotiate arrangements directly with the financial institution. If a supplier chooses to participate in the program, it may request an invoice be paid prior to its scheduled due date and the financial institution, at its discretion, may elect to make an early payment to the supplier at a discount. The Company’s obligations to its suppliers, including amounts due and scheduled payment terms, are not impacted by a supplier's participation in the arrangement. The Company has not pledged any assets as security under its supplier finance programs.
As of September 30, 2026 and June 30, 2026, we had $59.6 and $48.0 , respectively, of payment obligations outstanding under our supplier finance programs, which are included in Accounts payable and accrued expenses in our Condensed Consolidated Balance Sheets.
11. DEBT
The Company’s debt balances consisted of the following as of September 30, 2026 and June 30, 2026, respectively:
| September 30, 2026 | June 30, 2026 | ||||||||||
| Short-term debt | $ | $ | |||||||||
| Senior Secured Notes (a) | |||||||||||
| 2027 Euro Senior Secured Notes due May 2027 (b) | |||||||||||
| 2029 Dollar Senior Secured Notes due January 2029 | |||||||||||
| 2030 Dollar Senior Secured Notes due July 2030 | |||||||||||
| 2031 Dollar Senior Secured Notes due January 2031 | |||||||||||
| 2018 Coty Credit Agreement | |||||||||||
| 2023 Coty Revolving Credit Facility due July 2028 | |||||||||||
| Other debt | |||||||||||
| Total debt | |||||||||||
| Less: Short-term debt and current portion of other debt | ( | ( | |||||||||
| Total Long-term debt | |||||||||||
| Less: Unamortized financing fees and discounts on long-term debt | ( | ( | |||||||||
| Total Long-term debt, net | $ | $ | |||||||||
(a) As described further below in Recent Developments, a covenant suspension period was in effect from September 2024 until July 2026 for each of the Senior Secured Notes, and in certain cases a collateral release, due to the achievement of investment grade ratings for such notes in September 2024 and a subsequent withdrawal of such ratings in July 2026.
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Short-Term Debt
The Company maintains short-term lines of credit and other short-term debt with financial institutions around the world. Total outstanding short-term debt consisted of overdraft borrowings of $0.0 and $12.3 as of September 30, 2026 and June 30, 2026, respectively. In addition, the Company had undrawn letters of credit of $4.8 and $4.8 , and bank guarantees of $16.6 and $17.7 as of September 30, 2026 and June 30, 2026, respectively.
Long-Term Debt
Recent Developments
On July 9, 2026, the Company received a rating downgrade from one of the ratings agencies. As a result, the covenant suspension related to our Senior Secured Notes is no longer applicable, and the related covenants, guarantees and collateral, as applicable, have been reinstated.
Senior Secured Notes
For a description of the terms of the Company's Senior Secured Notes, refer to Note 13 — Debt, in the Annual Report on Form 10-K for the fiscal year ended June 30, 2026.
Optional Redemption
The Company's Senior Secured Notes contain customary optional redemption provisions. There have been no material changes to such provisions since June 30, 2026. Refer to Note 13 — Debt, in the Annual Report on Form 10-K for the fiscal year ended June 30, 2026 for additional information.
2018 Coty Credit Agreement
For a description of the terms of the 2023 Coty Revolving Credit Facility, refer to Note 13 — Debt to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2026. There have been no material changes to the terms of such facilities since June 30, 2026.
Deferred Financing Costs
The decrease in unamortized deferred financing costs reflects the normal amortization of existing balances. The Company wrote off unamortized deferred issuance fees and discounts of $0.0 and nil during the three months ended September 30, 2026 and 2025, respectively. Additionally, the Company capitalized deferred issuance fees of $0.0 and nil during the three months ended September 30, 2026 and 2025, respectively.
Interest
Borrowings under the 2023 Coty Revolving Credit Facility bear interest at variable rates based on SOFR or an alternate base rate, plus an applicable margin. There have been no material changes to the terms of the facilities since June 30, 2026.
Fair Value of Debt
| September 30, 2026 | June 30, 2026 | ||||||||||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||
| Senior Secured Notes | $ | $ | $ | $ | |||||||||||||||||||
| 2023 Coty Revolving Credit Facility | |||||||||||||||||||||||
The fair value of the 2023 Coty Revolving Credit Facility is equal to its carrying value, as the liability can be settled at par value. The Company uses the market approach to value its other debt instruments. The Company obtains fair values from independent pricing services or utilizes the U.S. dollar SOFR curve to determine the fair value of these debt instruments. Based on the assumptions used to value these liabilities at fair value, these debt instruments are categorized as Level 2 in the fair value hierarchy.
Debt Maturities Schedule
Aggregate maturities of the Company’s long-term debt, excluding short-term debt and other debt as of September 30, 2026, are presented below:
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| Fiscal Year Ending June 30, | |||||
| 2027, remaining | $ | ||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| 2031 | |||||
| Thereafter | |||||
| Total | $ | ||||
Covenants
The 2018 Coty Credit Agreement contains affirmative and negative covenants. The negative covenants include, among other things, limitations on debt, liens, dispositions, investments, fundamental changes, restricted payments and affiliate transactions. With certain exceptions as described below, the 2018 Coty Credit Agreement, as amended, includes a financial covenant that requires us to maintain a Total Net Leverage Ratio (as defined below), equal to or less than the ratios shown below for each respective test period.
| Quarterly Test Period Ending | Total Net Leverage Ratio (a) | ||||||||||
September 30, 2026 through July 11, 2028 | |||||||||||
(a) Total Net Leverage Ratio means, as of any date of determination, the ratio of: (a) (i) Total Indebtedness minus (ii) unrestricted and Cash Equivalents of the Parent Borrower and its Restricted Subsidiaries as determined in accordance with GAAP to (b) Adjusted EBITDA for the most recently ended Test Period (each of the defined terms, including Adjusted EBITDA, used within the definition of Total Net Leverage Ratio have the meanings ascribed to them within the 2018 Coty Credit Agreement, as amended). Adjusted EBITDA, as defined in the 2018 Coty Credit Agreement, as amended, includes certain add backs related to cost savings, unusual events such as COVID-19, operating expense reductions and future unrealized synergies subject to certain limits and conditions as specified in the 2018 Coty Credit Agreement, as amended.
As of September 30, 2026, the Company was in compliance with all covenants contained within the 2018 Coty Credit Agreement, as amended.
12. INTEREST EXPENSE, NET
Interest expense, net for the three months ended September 30, 2026 and 2025, respectively, is presented below:
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Interest expense | $ | $ | |||||||||||||||||||||
| Foreign exchange gains, net of derivative contracts | ( | ( | |||||||||||||||||||||
| Interest income | ( | ( | |||||||||||||||||||||
| Total interest expense, net | $ | $ | |||||||||||||||||||||
13. INCOME TAXES
The effective income tax rate for the three months ended September 30, 2026 and 2025 was 28.6 % and 30.9 %, respectively. The decrease in the effective tax rate for the three months ended September 30, 2026 is primarily due to higher limitations on the deductibility of executive stock compensation in the prior period.
The effective tax rate of 28.6 % for the three months ended September 30, 2026 was higher than the Federal statutory rate of 21% primarily due to the limitation on the deductibility of interest expense.
The effective tax rate of 30.9 % for the three months ended September 30, 2025 was higher than the Federal statutory rate of 21% primarily due to the limitation on the deductibility of interest expense and limitations on the deductibility of executive stock compensation.
The effective income tax rates vary from the U.S. federal statutory rate of 21% due to the effect of (i) jurisdictions with different statutory rates, including impacts of rate changes, (ii) adjustments to the Company’s unrealized tax benefits (“UTBs”) and accrued interest, (iii) non-deductible expenses, (iv) audit settlements, and (v) valuation allowance changes.
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As of September 30, 2026 and June 30, 2026, the gross amount of UTBs was $231.2 and $230.5 , respectively. As of September 30, 2026, the total amount of UTBs that, if recognized, would impact the effective income tax rate is $157.3 . As of September 30, 2026 and June 30, 2026, the liability associated with UTBs, including accrued interest and penalties, was $194.2 and $189.9 , respectively, which was recorded in Income and other taxes payable and Other noncurrent liabilities in the Condensed Consolidated Balance Sheets. The total interest and penalties recorded in the Condensed Consolidated Statements of Operations related to UTBs was $0.7 and $1.1 for the three months ended September 30, 2026 and 2025, respectively. The total gross accrued interest and penalties recorded in the Condensed Consolidated Balance Sheets as of September 30, 2026 and June 30, 2026 was $36.7 and $36.0 , respectively.
14. EMPLOYEE BENEFIT PLANS
The components of net periodic benefit cost for pension plans and other post-employment benefit plans recognized in the Condensed Consolidated Statements of Operations are presented below:
| Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||
| Pension Plans | Other Post- Employment Benefits | ||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | International | Total | |||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Interest cost | |||||||||||||||||||||||||||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Amortization of net (gain) | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Net periodic benefit cost (credit) | $ | $ | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||
15. DERIVATIVE INSTRUMENTS
Foreign Exchange Risk
The Company is exposed to foreign currency exchange fluctuations through its global operations. The Company may reduce its exposure to fluctuations in the cash flows associated with changes in foreign exchange rates by creating offsetting positions through the use of derivative instruments and also by designating foreign currency denominated borrowings and cross-currency swaps as hedges of net investments in foreign subsidiaries. The Company expects that through hedging, any gain or loss on the derivative instruments would generally offset the expected increase or decrease in the value of the underlying forecasted transactions.
As of September 30, 2026 and June 30, 2026, the notional amount of the outstanding foreign exchange forward contracts designated as cash flow hedges were $27.1 and $30.4 , respectively.
The Company also uses certain derivatives not designated as hedging instruments consisting primarily of foreign currency forward contracts and cross-currency swaps to hedge intercompany transactions and foreign currency denominated external debt. Although these derivatives were not designated for hedge accounting, the overall objective of mitigating foreign currency exposure is the same for all derivative instruments. For derivatives not designated as hedging instruments, changes in fair value are recorded in the line item in the Condensed Consolidated Statements of Operations to which the derivative relates. As of September 30, 2026 and June 30, 2026, the notional amounts of these outstanding non-designated foreign currency forward contracts were $1,036.3 and $1,021.5 , respectively.
Interest Rate Risk
In addition, the Company from time to time uses cross-currency swaps to economically lower the interest rate on our loan portfolio. In January and April 2025, the Company entered into cross-currency swap contracts designated as hedges of net investment in a certain foreign subsidiary to effectively reduce the interest rates on the 2030 and 2029 Dollar Senior Secured Notes from 6.625 % and 4.75 % in U.S. dollars to 2.671 % and 1.248 % in Swiss Franc, respectively. The cross-currency swaps will expire upon maturity of the respective debt.
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Net Investment Hedge
Foreign currency gains and losses on borrowings designated as a net investment hedge, except ineffective portions, are reported in the cumulative translation adjustment (“CTA”) component of AOCI/(L), along with the foreign currency translation adjustments on those investments.
In January and April 2025, the Company expanded its net investment hedge activity by entering into cross-currency swaps with a gross notional value at inception of $750.0 and ₣676.9 million (Swiss Franc) and $250.0 and ₣203.6 million, respectively, maturing in July 2030 and January 2029, respectively, and designated these cross-currency swaps as hedges of its net investment in a certain foreign subsidiary.
As of September 30, 2026 and June 30, 2026, the nominal exposures of foreign currency denominated borrowings designated as net investment hedges were €900.7 million and €879.1 million, respectively. All designated hedge amounts were considered highly effective.
Forward Repurchase Contracts
In December 2022 and November 2023, the Company entered into certain forward repurchase contracts to start hedging for potential $196.0 and $294.0 share buyback programs, in 2025 and 2026, respectively. These forward repurchase contracts are accounted for at fair value, with changes in the fair value recorded in Other (income) expense, net in the Condensed Consolidated Statements of Operations.
In December 2024, the Company entered into an agreement to extend the maturity date of the December 2022 forward repurchase contracts by one year . Subsequently, in January 2026, the Company entered into amendment agreements with all of the counterparties to extend both maturity dates of the December 2022 and November 2023 forward repurchase contracts by one year to January 2027. Refer to Note 16—Equity and Convertible Preferred Stock.
Derivative and non-derivative financial instruments which are designated as hedging instruments:
Foreign currency borrowings classified as net investment hedges—The accumulated loss on foreign currency borrowings classified as net investment hedges in the foreign currency translation adjustment component of Accumulated other comprehensive income (loss) ("AOCI/(L)") was $(61.4 ) and $(77.1 ) as of September 30, 2026 and June 30, 2026, respectively.
Cross-currency swap instruments classified as net investment hedges—The accumulated loss on derivative instruments classified as net investment hedges in the foreign currency translation adjustment component of AOCI/(L) was $(96.5 ) and $(108.3 ) as of September 30, 2026 and June 30, 2026, respectively.
Foreign exchange forward contracts classified as cash flow hedges—The accumulated loss on derivative instruments classified as cash flow hedges in AOCI/(L), net of tax, was $(0.3 ) and $(0.3 ) as of September 30, 2026 and June 30, 2026, respectively. The estimated net loss related to these effective hedges that is expected to be reclassified from AOCI/(L) into earnings within the next twelve months is $(0.3 ). As of September 30, 2026, all of the Company's foreign currency forward contracts designated as hedges were highly effective.
The amount of gains and losses recognized in Other comprehensive income (loss) (“OCI”) in the Condensed Consolidated Balance Sheets related to the Company’s derivative and non-derivative financial instruments which are designated as hedging instruments is presented below:
| Gain (Loss) Recognized in OCI | Three Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Foreign exchange forward contracts | $ | ( | $ | ( | |||||||||||||||||||
| Cross-currency swap contracts | ( | ||||||||||||||||||||||
| Net investment hedges | ( | ||||||||||||||||||||||
| Location and Amount of Gain (Loss) Recognized in Income on Cash Flow Hedging Relationships | Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| Cost of sales | Cost of sales | ||||||||||||||||||||||||||||||||||
| Foreign exchange forward contracts: | |||||||||||||||||||||||||||||||||||
| Amount of gain (loss) reclassified from AOCI into income | $ | ( | $ | ( | |||||||||||||||||||||||||||||||
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Derivatives not designated as hedging:
The amount of gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments is presented below:
| Condensed Consolidated Statements of Operations Classification of Gain (Loss) Recognized in Operations | Three Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Foreign exchange contracts | Selling, general and administrative expenses | $ | ( | $ | ( | |||||||||||||||||||||
Foreign exchange contracts(a) | Interest expense, net | |||||||||||||||||||||||||
| Forward repurchase contracts | Other income (expense), net | ( | ||||||||||||||||||||||||
(a) The losses and gains for these foreign exchange contracts were offset against the gains and losses from revaluation of debt denominated in foreign currency included in Interest expense, net.
16. EQUITY AND CONVERTIBLE PREFERRED STOCK
Common Stock
As of September 30, 2026, the Company’s common stock consisted of Class A Common Stock with a par value of $0.01 per share. The holders of Class A Common Stock are entitled to one vote per share. As of September 30, 2026, total authorized shares of Class A Common Stock were 1,250.0 million and total outstanding shares of Class A Common Stock were 880.7 million.
The Company's Majority Stockholder
As of September 30, 2026, JAB Beauty B.V. ("JAB"), the Company’s largest stockholder, may be deemed to beneficially own approximately 54 % of Coty’s Class A Common Stock. This includes all voting interests of Mr. Peter Harf, who served as the Company's Chairman through December 31, 2025, and HFS Holdings S.à r.l., (“HFS”), which is beneficially owned by Mr. Harf, including its shares of Convertible Series B Preferred Stock (the "Series B Preferred Stock") on an if-converted basis.
Preferred Stock
As of September 30, 2026, total authorized shares of preferred stock are 20.0 million.
Series A Preferred Stock
As of September 30, 2026, there were 1.0 0.01 per share, authorized, issued, and outstanding. Holders of Series A Preferred Stock are not entitled to receive any dividends and have no voting rights except as required by law.
On March 27, 2017, a Series A Preferred Stock subscription agreement was entered into with Lambertus J.H. Becht (“Mr. Becht”), the Company’s former Chairman of the Board. Under the terms provided in the subscription agreement, the Series A Preferred Stock immediately vested on the grant date and the holder was entitled to exchange the vested shares after the fifth anniversary of the date of issuance. This exchange right expired on March 27, 2024. The Company has the right to redeem the Series A Preferred Stock (1.0 million shares) at a redemption price of $0.01 per share. The Company plans to redeem these shares of Series A Preferred Stock in accordance with their terms.
Convertible Series B Preferred Stock
In 2020, the Company completed the issuance and sale to KKR Rainbow Aggregator L.P. (“KKR Aggregator”) of 1.0 million shares of Series B Preferred Stock, par value $0.01 per share, for an aggregate purchase price of $1,000 per share. On August 27, 2021, KKR Aggregator and its affiliated investment funds sold 146,057 shares of Series B Preferred Stock to HFS, which is beneficially owned by Mr. Harf.
As a result of various conversions and exchanges of KKR Aggregator's shares of the Series B Preferred Stock, as of December 31, 2021, KKR and its affiliates had fully redeemed or exchanged all of their Series B Preferred Stock.
Cumulative preferred dividends accrue daily on the Series B Preferred Stock at a rate of 9.0 % per year. During each of the three months ended September 30, 2026 and 2025, the Board of Directors declared dividends on the Series B Preferred Stock of $3.3 3.3 3.3
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Dividends
On April 29, 2020, the Board of Directors suspended the payment of dividends on Class A Common Stock. No dividends on Class A Common Stock were declared during the three months ended September 30, 2026.
The change in accrued dividends recorded in Additional paid-in capital ("APIC") in the Condensed Consolidated Balance Sheets as of September 30, 2026 and 2025 was $0.0 and $0.0 , respectively. In addition, the Company made no
Total accrued dividends on unvested RSUs and phantom units included in Other current liabilities were $0.7
Treasury Stock
Share Repurchase Program
Since February 2014, the Board has authorized the Company to repurchase its Class A Common Stock under approved repurchase programs. On February 3, 2016, the Board authorized the Company to repurchase up to $500.0 of its Class A Common Stock, and on November 13, 2023, the Board increased the Company's share repurchase authorization by an additional $600.0 (the “Share Repurchase Program”). Repurchases may be made from time to time at the Company’s discretion, based on ongoing assessments of the capital needs of the business, the market price of its Class A Common Stock, and general market conditions. As of September 30, 2026, the Company has $796.8 remaining under the Share Repurchase Program.
In December 2022 and November 2023, the Company entered into forward repurchase contracts with three large financial institutions (“Counterparties”) to hedge for potential $196.0 and $294.0 share repurchase programs in 2025 and 2026, respectively.
In December 2024, the Company entered into an agreement to extend the maturity date of the December 2022 forward repurchase contracts by one year to December 2025 if net cash settlement is elected, or to January 2026 with physical settlement. Subsequently, in January 2026, the Company entered into amendment agreements with all of the Counterparties to extend maturity dates of the December 2022 and November 2023 forward repurchase contracts by one year to December 2026 if net cash settlement is elected, or to January 2027 with physical settlement.
As part of the agreements, the Company will pay interest on the outstanding underlying notional amount of the forward repurchase contracts held by the Counterparties during the contract periods. The interest rates are variable, based on the United States secured overnight funding rate (“SOFR”) plus a spread. The weighted average interest rate plus applicable spread for the December 2022 and November 2023 forward repurchase transactions were 6.7 % and 6.6 %, respectively, as of September 30, 2026.
In addition, the forward repurchase contracts include a provision for a potential true-up in cash upon specified changes in the price of the Company’s Class A Common Stock relative to the Initial Price (“Hedge Valuation Adjustment”). Any Hedge Valuation Adjustment does not result in an early termination of the contract or an adjustment of the number of the Company's Class A Common Stock shares purchased by the Counterparties at inception. There were no Hedge Valuation Adjustments during the three months ended September 30, 2026.
Since the forward repurchase contracts permit a net cash settlement alternative in addition to the physical settlement, the Company accounted for the forward repurchase contracts initially and subsequently at their fair value, with changes in the fair value recorded in Other (income) expense, net in the Condensed Consolidated Statement of Operations. See Note 15—Derivative Instruments for additional information.
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Accumulated Other Comprehensive Income (Loss)
| Foreign Currency Translation Adjustments | |||||||||||||||||||||||||||||
| Loss on Cash Flow Hedges | (Loss) gain on Net Investment Hedge | Other Foreign Currency Translation Adjustments | Pension and Other Post-Employment Benefit Plans (a) | Total | |||||||||||||||||||||||||
| Balance—July 1, 2026 | $ | ( | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||
| Other comprehensive (loss) income before reclassifications | ( | ( | ( | ( | |||||||||||||||||||||||||
| Net amounts reclassified from AOCI/(L) | |||||||||||||||||||||||||||||
| Net current-period other comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||||||||
| Balance—September 30, 2026 | $ | ( | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||
(a) For the three months ended September 30, 2026, other comprehensive loss before reclassifications of $1.6 and net amounts reclassified from AOCI/(L) related to pensions and other post-employment benefit plans included amortization of prior service credits and actuarial losses of $1.1 , net of tax of $0.4 .
| Foreign Currency Translation Adjustments | |||||||||||||||||||||||||||||
| Loss on Cash Flow Hedges | Loss on Net Investment Hedge | Other Foreign Currency Translation Adjustments | Pension and Other Post-Employment Benefit Plans | Total | |||||||||||||||||||||||||
| Balance—July 1, 2025 | $ | ( | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||
| Other comprehensive (loss) income before reclassifications | ( | ( | |||||||||||||||||||||||||||
| Net amounts reclassified from AOCI/(L) | |||||||||||||||||||||||||||||
| Net current-period other comprehensive (loss) income | ( | ( | |||||||||||||||||||||||||||
| Balance—September 30, 2025 | $ | ( | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||
17. SHARE-BASED COMPENSATION PLANS
Share-based compensation expense is recognized on a straight-line basis over the requisite service period. Total share-based compensation is shown in the table below:
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
Equity plan expense (a) | $ | $ | |||||||||||||||||||||
| Liability plan (income) expense | |||||||||||||||||||||||
| Total share-based compensation expense | $ | $ | |||||||||||||||||||||
(a) Equity plan share-based compensation expense was recorded to additional paid in capital and presented in the Condensed Consolidated Statements of Equity.
As of September 30, 2026, the total unrecognized share-based compensation expense related to stock options, RSUs and other share awards, and performance restricted stock units ("PRSUs") is $2.9 , $34.8 , and $0.4 , respectively. The unrecognized share-based compensation expense related to stock options, RSUs and other share awards, and PRSUs, is expected to be recognized over a weighted-average period of 2.25 , 1.89 , and 0.94 years, respectively.
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Restricted Stock Units and Other Share Awards
The Company granted 0.9 million and no shares of RSUs and other share awards during the three months ended September 30, 2026 and 2025, respectively. The Company recognized share-based compensation expense of $6.8 and $13.4 for the three months ended September 30, 2026 and 2025, respectively.
Performance Restricted Stock Units
The Company granted no 0.1 and $1.1 for the three months ended September 30, 2026 and 2025, respectively.
Qualified Stock Options
The Company granted no 0.3 and $0.0 for the three months ended September 30, 2026 and 2025, respectively.
18. NET INCOME ATTRIBUTABLE TO COTY INC. PER COMMON SHARE
Reconciliation between the numerators and denominators of the basic and diluted income per share (“EPS”) computations is presented below:
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Amounts attributable to Coty Inc.: | |||||||||||||||||||||||
| Net income attributable to Coty Inc. | $ | $ | |||||||||||||||||||||
| Convertible Series B Preferred Stock dividends | ( | ( | |||||||||||||||||||||
| Net income attributable to common stockholders | $ | $ | |||||||||||||||||||||
Weighted-average common shares outstanding: | |||||||||||||||||||||||
| Weighted-average common shares outstanding—Basic | |||||||||||||||||||||||
Effect of dilutive stock options (a) | |||||||||||||||||||||||
Effect of restricted stock and RSUs (b) | |||||||||||||||||||||||
Effect of Convertible Series B Preferred Stock (c) | |||||||||||||||||||||||
Effect of Forward Repurchase Contracts (d) | |||||||||||||||||||||||
| Weighted-average common shares outstanding—Diluted | |||||||||||||||||||||||
| Earnings per common share: | |||||||||||||||||||||||
| Earnings per common share - basic | $ | $ | |||||||||||||||||||||
Earnings per common share - diluted (e) | |||||||||||||||||||||||
(a) For the three months ended September 30, 2026 and 2025, outstanding stock options with rights to purchase 2.6 million and 3.4 million shares of Common Stock were anti-dilutive and excluded from the computation of diluted EPS.
(b) For the three months ended September 30, 2026 and 2025, there were 3.6 million and 13.3 million anti-dilutive RSUs, respectively, excluded from the computation of Diluted EPS.
(c) For the three months ended September 30, 2026 and 2025, no
(d) For the three months ended September 30, 2026 and 2025, no
(e) Diluted EPS is adjusted by the effect of dilutive securities, including awards under the Company's equity compensation plans, the Convertible Series B Preferred Stock, and the Forward Repurchase Contracts. When calculating any potential dilutive effect of stock options, restricted stock, and RSUs, the Company uses the treasury method and the if-converted method for the Convertible Series B Preferred Stock and the Forward Repurchase Contracts. The treasury method typically does not adjust the net income attributable to Coty Inc., while the if-converted method requires an adjustment to reverse the impact of the preferred stock dividends of $3.3 , and to reverse the impact of fair market value gains/(losses) for contracts with the option to settle in shares or cash of $14.8 and $(26.5 ), respectively, if dilutive, for the three months ended September 30, 2026 and 2025 on net income applicable to common stockholders during the period.
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19. REDEEMABLE NONCONTROLLING INTERESTS
Subsidiary in the Middle East
As of September 30, 2026, the noncontrolling interest holder in the Company’s subsidiary in the Middle East had a 25 % ownership share. The Company adjusts the redeemable noncontrolling interests (“RNCI”) to redemption value at the end of each reporting period with changes recognized as adjustments to APIC. The Company recognized $62.3 and $74.7 as the RNCI balances as of September 30, 2026 and June 30, 2026, respectively.
20. COMMITMENTS AND CONTINGENCIES
Legal Matters
The Company is involved, from time to time, in various litigation, administrative and other legal proceedings, including regulatory actions, incidental or related to its business, including consumer class or collective actions, personal injury (mostly involving allegations related to alleged asbestos in the Company’s talc-based cosmetic products as described below), intellectual property, competition, compliance and advertising claims litigation and disputes, among others (collectively, “Legal Proceedings”). While the Company cannot predict any final outcomes relating thereto, management believes that the outcome of current Legal Proceedings will not have a material effect upon its business, prospects, financial condition, results of operations, cash flows or the trading price of the Company’s securities, except for litigation related to cosmetic talcum powder discussed below. However, management’s assessment of the Company’s current Legal Proceedings is ongoing, and could change in light of the discovery of additional facts with respect to Legal Proceedings not presently known to the Company, further legal analysis, or determinations by judges, arbitrators, juries or other finders of fact or deciders of law which are not in accord with management’s evaluation of the probable liability or outcome of such Legal Proceedings. From time to time, the Company is in discussions with regulators, including discussions initiated by the Company, about actual or potential violations of law in order to remediate or mitigate associated legal or compliance risks and liabilities or penalties. As the outcomes of such proceedings are unpredictable, the Company can give no assurance that the results of any such proceedings will not materially affect its reputation, business, prospects, financial condition, results of operations, cash flows or the trading price of its securities.
Cosmetic Talcum Powder Matters. The Company has been named as a defendant in numerous civil actions alleging that certain cosmetic talcum powder products sold by the Company were contaminated with asbestos leading to claims of bodily injury. Most of these actions involve a number of co-defendants and, to date, many such actions have been resolved by dismissal, settlement or other resolution acceptable to the Company. While the Company and its legal counsel intend to continue to defend these cases vigorously as well as exploring various means of resolving claims before trial, there can be no assurances regarding the ultimate resolution of these matters, individually or collectively, or that such resolutions will not be material in nature.
In each of the years prior to fiscal 2026, the value of settlements, both individually and in the aggregate, has not been material; however, due to the rising number of filed and pending cases against the Company, as well as the evolving litigation landscape, inclusive of significant judgments and settlements by third party companies, settlement values and other costs associated with these cases have increased substantially and are expected to increase in the future. In addition, the Company has experienced higher recent settlement demands and volumes driven in part by the maturation of cases that have been previously filed and are now reaching the trial stage as well as the general nature of litigation in this area which sometimes involves expedited trial dates and substantial settlements or judgments involving third parties.
The Company believes that a limited portion of its costs incurred in defending and resolving certain of these claims will be covered by insurance policies issued by several insurance carriers, subject to deductibles, exclusions, retentions, carrier insolvencies and policy limits and in some cases there may be indemnity obligations of third parties.
The Company has accrued for such litigation when the likelihood of loss is probable and a reasonable estimate of such loss can be made. For the three months ended September 30, 2026 and 2025, the aggregated expense was $26.5 and $6.7 , respectively. These amounts include the settlements paid as well as accruals related to probable and estimable claims, net of insurance recoveries, during the period, but do not include the legal fees or related litigation costs incurred to defend the Company. The amounts incurred in fiscal 2027 and 2026 may not be indicative of amounts that may be incurred in the future, which may fluctuate from period to period, and the Company cannot predict the magnitude, timing or pace of any change in such amounts.
Amounts accrued for such legal contingencies often result from a complex set of judgments about future events and uncertainties that rely on estimates and assumptions including timing of related payments. The ability to make such estimates can be affected by various factors such as whether the damages are substantiated, status of discovery, including experts, stage of proceedings, the court where the claim is filed, whether significant facts are in dispute, and the number of parties in the claim. The range of reasonably possible losses in excess of accrued liabilities currently cannot be reasonably estimated.
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Certain Other Litigation. On June 10, 2026, the actions were consolidated under the caption In re Coty Inc. Securities Litigation, Case No. 1:26-cv-02343-RA-VF, and a consolidated amended complaint was filed on August 31, 2026. The plaintiffs allege that certain of the defendants’ statements in May 2025, August 2025 and November 2025 regarding the Company’s strategic priorities and product launches were materially false and/or misleading. The plaintiffs assert claims under the federal securities laws and seeks, among other things, monetary damages. Defendants’ deadline to move to dismiss or otherwise respond is November 9, 2026.
On April 3, 2026 and April 14, 2026, respectively, two stockholder derivative lawsuits were filed in the Supreme Court of the State of New York (County of New York), captioned Fernicola v. Nabi, et al., Index No. 154383/2026, and Mody v. Ballini, et al., Index No. 652215/2026, against certain current and former Coty officers and board members. The complaints assert causes of action of breach of fiduciary duty, gross mismanagement, unjust enrichment, and waste of corporate assets, based on substantially the same allegations as the putative securities class actions. On behalf of the Company, the complaints seeks unspecified monetary damages, governance reforms, and fees and costs.
On April 9, 2026, a derivative lawsuit was filed in the U.S. District Court for the Southern District of New York, captioned Moar v. Nabi, et al., Case No. 12:36-cv-02931-RA (S.D.N.Y.), against certain current and former Coty officers and board members. The complaint asserts claims of violations of Section 14(a) of the Exchange Act, breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and contribution, based on allegedly false and/or misleading statements made in August and November 2025 and in its September 2025 Proxy Statement regarding the Company’s earnings guidance and risk oversight. On behalf of the Company, the complaint seeks unspecified monetary damages, governance reforms, and fees and costs.
At this time, the Company cannot reasonably estimate a range of loss, if any, not covered by available insurance, that may result given the current status of these lawsuits.
Brazilian Tax Assessments
The Company’s Brazilian subsidiaries receive tax assessments from local, state and federal tax authorities in Brazil from time to time. Current open tax assessments as of September 30, 2026 are:
| Assessment received | Type of assessment | Type of Tax | Tax period impacted | Estimated amount, including interest and penalties as of September 30, 2026 | |||||||||||||
| Aug-20 | State sales tax credits, which the Treasury Office of the State of Goiás considers as improperly registered | ICMS | 2017-2019 | R$ | |||||||||||||
| Oct-20 | Federal excise taxes, which the Treasury Office of the Brazil’s Internal Revenue Service considers as improperly calculated | IPI | 2016-2017 | R$ | |||||||||||||
| Nov-22 | IPI | 2018-2019 | R$ | ||||||||||||||
| Mar-24 | IPI | 2020 | R$ | ||||||||||||||
| Nov-20 | State sales taxes, which the Treasury Office of the State of Minas Gerais considers as improperly calculated | ICMS | 2016-2019 | R$ | |||||||||||||
For the Goiás State tax ICMS assessment received in August 2020, the Company has in parallel a judicial case about an additional claim for fees over the tax incentive ("the Protege Fee") wherein the Company asserts such fee was not enforceable against Coty due to its prior contractual agreement with the Goiás State. The Company filed an interlocutory appeal for the full bench of judges on the Superior Court of Justice to review the case, and the court rendered a verdict granting the Company's request to remand the case to the state court of Goiás during the prior year. The case is expected to be heard in fiscal 2027. The Company has been required to provide surety bonds of R$193.5 million (approximately $37.2 ) and cash deposits of R$259.2 million (approximately $49.8 ) as of September 30, 2026, to guarantee payment if the case is resolved against Coty. The cash deposits are included in the Other noncurrent assets on the Condensed Consolidated Balance Sheets.
In relation to the judicial case for the Goiás State tax ICMS assessment received in August 2020, this case has moved into the judicial court in October 2024, relating to a tax assessment demanding payment of the underlying ICMS taxes due to non-payment of the Protege Fee. The case is running in parallel of the Protege Fee case above. In the third quarter of fiscal 2025, the Goiás State filed a tax enforcement against the Company to collect the ICMS taxes. In response to the enforcement, the Company has obtained a stay pending the Protege Fee case. The Company has been required to provide surety bonds of R$541.9 million (approximately $104.1 ) as of September 30, 2026, to guarantee payment if the case is resolved against Coty.
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The Minas Gerais State tax ICMS assessment received in November 2020 is currently at the judicial process. The Company has filed an annulment action and is currently awaiting judgment. The Company has been required to provide surety bonds of R$366.3 million (approximately $70.4 ) as of September 30, 2026, to guarantee payment if the case is resolved against the Company.
The Treasury Office of the Brazil’s Internal Revenue Service IPI assessment received in November 2022 is currently at the judicial process. The Company has filed an annulment action and is currently awaiting judgment.
All other cases are currently in the administrative process.
The Company expects that cases may move from the administrative to the judicial process in case Coty does not receive a favorable decision at the administrative level, although the exact timing is uncertain. For cases in the judicial process, the Company will be required to make a judicial deposit or enter into a surety bond for the disputed tax assessment, interest and penalties. The judicial process in Brazil is likely to take a number of years to conclude. The Company is seeking favorable judicial and administrative decisions on the tax enforcement actions filed by the tax authorities for these assessments. The Company believes it has meritorious defenses and it has not recognized a loss for these assessments as the Company does not believe a loss is probable.
21. RELATED PARTY TRANSACTIONS
Performance Guarantee
In connection with the sales of certain businesses, the Company has assigned its rights and obligations under a real estate lease to JAB Partners LLP. The remaining term of this lease is approximately five years . While the Company is no longer the primary obligor under this lease, the lessor has not completely released the Company from its obligation, and holds it secondarily liable in the event that the assignee defaults on the lease. The maximum potential future payments that the Company could be required to make, if the assignee was to default as of September 30, 2026, would be approximately $2.5 . The Company has assessed the probability of default by the assignee and has determined it to be remote.
Secondment Agreement
On October 1, 2025, the Company entered into a secondment arrangement with an entity affiliated with JAB to obtain executive management services. Under the terms of the arrangement, the secondee provides services to the Company for a minimum period of one year , in exchange for a fixed fee payable to the affiliated entity. For the three months ended September 30, 2026, fees and compensation of $0.4 were recorded in Selling, general and administrative expense in the Condensed Consolidated Statement of Operations, with a corresponding $0.3 recorded in Other current liabilities in the Condensed Consolidated Balance Sheets.
Section 16(b) Settlement Agreement
On September 16, 2026, the Company entered into a Settlement Agreement (the "Settlement Agreement”) with certain affiliates of JAB to resolve a legal action brought under Section 16(b) of the Securities Exchange Act of 1934 by stockholders on behalf of and for the benefit of the Company, in which the Company is named only as a nominal defendant, seeking disgorgement of alleged short-swing profits. Under the Settlement Agreement, JAB affiliates specifically disclaimed any wrongful acts or liability but agreed to pay the Company $1.1 in cash (the “Settlement Amount”). The Settlement Amount was recognized in Selling, general and administrative expense in the Condensed Consolidated Statement of Operations for the three months ended September 30, 2026.
22. SUBSEQUENT EVENTS
On November 3, 2026, the Company entered into an agreement to extend the Marc Jacobs Trademark License for an initial period through 2046, with the option to extend the agreement for an additional twenty years at the discretion of the Company, provided the Company meets certain minimum royalty thresholds in the year prior to the end of the initial term. In connection with the extension, the Company shall pay the Licensor a one-time fee of $40.0 , of which $20.0 is payable upon execution of the agreement and the remaining $20.0 is payable in July 2027.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the financial condition and results of operations of Coty Inc. and its consolidated subsidiaries, should be read in conjunction with the information contained in the Condensed Consolidated Financial Statements and related notes included elsewhere in this document, and with our other public filings with the Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K for the fiscal year ended June 30, 2026 (“Fiscal 2026 Form 10-K”). When used in this discussion, the terms “Coty,” the “Company,” “we,” “our,” or “us” mean, unless the context otherwise indicates, Coty Inc. and its majority and wholly-owned subsidiaries. Also, when used in this Quarterly Report on Form 10-Q, the term “includes” and “including” means, unless the context otherwise indicates, including without limitation. The following report includes certain non-GAAP financial measures. See “Overview—Non-GAAP Financial Measures” for a discussion of non-GAAP financial measures and how they are calculated.
All dollar amounts in the following discussion are in millions of United States (“U.S.”) dollars, unless otherwise indicated.
More information about potential risks and uncertainties that could affect our business and financial results is included under the heading “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q and other periodic reports we have filed and may file with the SEC from time to time.
Forward-looking Statements
Certain statements in this Form 10-Q are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, strategic planning, targets and outlook for future reporting periods (including the extent and timing of revenue, expense and profit trends and changes in operating cash flows and cash flows from operating activities and investing activities, as well as the Company’s expectations for the impact of the exit from the Gucci Beauty license), the Company’s future operations and strategy (including the ongoing refinement and implementation and related impact of its global business strategies), the Company’s plans to evaluate its central organization, manufacturing and asset base, and certain market structures to adjust its scope and size for its future business, the Company’s ongoing and future cost efficiency, optimization and restructuring initiatives and programs (including plans to develop a significant fixed-cost savings plan in connection with the exit from the Gucci Beauty license), the ongoing strategic review of the Company’s consumer beauty business, including its mass color cosmetics business and associated brands and the Company’s distinct Brazil business comprised of local Brazilian brands, the timing and outcome of such strategic review and any transactions related thereto, use of proceeds from any such transactions, expectations and/or plans with respect to joint ventures, the timing and size of any future distribution related to the Wella Distribution Rights, the Company’s capital allocation strategy and payment of dividends (including suspension of dividend payments and the duration thereof and any plans to resume cash dividends on common stock or to continue to pay dividends in cash on preferred stock) and expectations for stock repurchases or investments, plans and expectations with respect to licenses and/or portfolio changes, product launches, relaunches or rebranding (including the expected timing or impact thereof), plans for strengthening presence in certain categories, markets and channels, expectations for the impact, costs, timing and outcome of any future divestitures, expectations for synergies, savings, performance, cost, timing and integration of any future acquisitions, expectations for future cash flows, liquidity and borrowing capacity (including any refinancing or deleveraging activities), timing and size of cash outflows and debt deleveraging, the timing and magnitude of any “true-up” payments in connection with our forward repurchase contracts and plans for the settlement of such contracts, the timing and extent of any future impairments, and synergies, savings, impact, cost and timing of the Company’s ongoing refinement and implementation of its global business strategies (including operational and organizational structure changes, operational execution and simplification initiatives, fixed cost reduction plans, continued process improvements and supply chain changes), the expected impact of geopolitical risks including the ongoing war in Ukraine and/or the war in the Middle East on our business operations, sales outlook and strategy, expectations regarding the impact of tariffs (including magnitude, scope and timing) and plans to manage such impact, expectations of the impact of inflationary pressures and the timing, magnitude and impact of pricing actions to offset inflationary costs, the expected impact of global supply chain challenges and/or inflationary pressures (including as a result of the war in Ukraine and/or the war in the Middle East (including the expected impact of elevated Brent crude oil prices), or due to a change in tariffs or trade policy impacting raw materials), expectations regarding future service levels, inventory levels and excess and obsolescence trends (including as a result of our Coty.Curated framework), the expected impact, cost, timing and implementation of e-commerce and digital initiatives, expectations regarding the expanded use of artificial intelligence (“AI”) and advanced analytics in the Company’s operations and the timing and impact thereof, the expected impact, cost, timing and implementation of sustainability initiatives (including progress, plans, goals and our ability to achieve sustainability targets), and the priorities of senior management. These forward-looking statements are generally identified by words or phrases, such as “anticipate”, “are going to”, “estimate”, “plan”, “project”, “expect”, “believe”, “intend”, “foresee”, “forecast”, “will”, “may”, “should”, “outlook”, “continue”, “temporary”, “target”, “aim”, “potential”, “goal” and similar words or phrases. These statements are based on certain assumptions and estimates that we consider reasonable, but are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual events or results
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(including our financial condition, results of operations, cash flows and prospects) to differ materially from such statements, including risks and uncertainties relating to:
•our ability to successfully implement our strategic priorities (including leveraging our leadership position and capabilities in global fragrances to fuel strong expansion and strengthen our presence in a limited number of structurally profitable and growing beauty categories and geographic markets at scale), achieve the benefits contemplated by our long-term objectives (including value creation, growth, profitability and debt deleveraging), and compete effectively in the beauty industry, in each case within the expected time frame or at all;
•our ability to anticipate, gauge and respond to market trends and consumer preferences, which may change rapidly, and the market acceptance of new products, including new products in our prestige fragrance and prestige cosmetics portfolios, any relaunched or rebranded products and the anticipated costs and discounting associated with such relaunches and rebrands, and consumer receptiveness to our current and future marketing philosophy and consumer engagement activities (including digital marketing and media), and our ability to effectively manage our production and inventory levels in response to demand;
•use of estimates and assumptions in preparing our financial statements, including with regard to revenue recognition, income taxes (including the expected timing and amount of the release of any tax valuation allowance), the assessment of goodwill, other intangible and long-lived assets for impairments, and the market value of inventory;
•the impact of any future impairments;
•managerial, transformational, operational, regulatory, legal and financial risks, including diversion of management attention to and management of cash flows, expenses and costs associated with our transformation agenda, our global business strategies, the management of our strategic partnerships, the strategic review of our consumer beauty business, and future strategic initiatives, and, in particular, our ability to manage and execute many initiatives simultaneously including any resulting complexity, employee attrition or diversion of resources;
•the timing, costs and impacts of divestitures and the amount and use of proceeds from any such transactions;
•future divestitures and the impact thereof on, and future acquisitions, new licenses and joint ventures and the integration thereof with, our business, operations, systems, financial data and culture and the ability to realize synergies, manage supply chain challenges and other business disruptions, reduce costs (including through our cash efficiency initiatives), avoid liabilities and realize potential efficiencies and benefits (including through our restructuring initiatives or current or future fixed-cost savings plans) at the levels and at the costs and within the time frames contemplated or at all;
•increased competition, consolidation among retailers, shifts in consumers’ preferred distribution and marketing channels (including to digital and prestige channels), distribution and shelf-space resets or reductions, compression of go-to-market cycles, changes in product and marketing requirements by retailers, reductions in retailer inventory levels and order lead-times or changes in purchasing patterns, impact from public health events on retail revenues, and other changes in the retail, e-commerce and wholesale environment in which we do business and sell our products and our ability to respond to such changes (including our ability to expand our digital, direct-to-consumer and e-commerce capabilities within contemplated timeframes or at all);
•our and our joint ventures’, business partners’ and licensors’ abilities to obtain, maintain and protect the intellectual property used in our and their respective businesses, protect our and their respective reputations (including those of our and their executives or influencers) and public goodwill, and defend claims by third parties for infringement of intellectual property rights;
•any change to our capital allocation and/or cash management priorities, including any change in our dividend policy and any change in our stock repurchase plans;
•any unanticipated problems, liabilities or integration or other challenges associated with a past or future acquired business, joint ventures or strategic partnerships, which could result in increased risk or new, unanticipated or unknown liabilities, including with respect to environmental, competition and other regulatory, compliance or legal matters, and specifically in connection with our strategic partnerships, risks related to the entry into a new distribution channel, the potential for channel conflict, risks of retaining customers and key employees, difficulties of integration (or the risks associated with limiting integration) and management of the partnerships, our relationships with our strategic partners, our ability to protect trademarks and brand names, litigation, investigations by governmental authorities, and changes in law, regulations and policies that affect the business or products of our strategic partnerships, including the risk that direct selling laws and regulations may be modified, interpreted or enforced in a manner that results in a negative impact to the business model, revenue, sales force or business of any of our strategic partnerships;
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•our international operations and joint ventures, including enforceability and effectiveness of our joint venture agreements and reputational, compliance, regulatory, economic and foreign political risks, including difficulties and costs associated with maintaining compliance with a broad variety of complex local and international regulations;
•our dependence on certain licenses (especially in the fragrance category) and our ability to renew expiring licenses on favorable terms or at all;
•our dependence on entities performing outsourced functions, including outsourcing of distribution functions, and third-party manufacturers, logistics and supply chain suppliers, and other suppliers, including third-party software providers, web-hosting and e-commerce providers;
•administrative, product development and other difficulties in meeting the expected timing of market expansions, product launches, re-launches and marketing efforts, including in connection with new products in our skincare and prestige cosmetics portfolios;
•changes in the demand for our products due to declining or depressed global or regional economic conditions, and declines in consumer confidence or spending, whether related to the economy (such as austerity measures, tax increases, high fuel costs, or higher unemployment), wars and other hostilities and armed conflicts, natural or other disasters, weather, pandemics, security concerns, terrorist attacks or other factors;
•global political and/or economic uncertainties, disruptions or major regulatory or policy changes, and/or the enforcement thereof that affect our business, financial performance, operations or products, including the impact of the war in Ukraine and any escalation or expansion thereof, war in the Middle East and any escalation or expansion thereof, the current administration in the U.S. and related changes to regulatory and trade policies, changes in the U.S. tax code and/or tax regulations in other jurisdictions where we operate (including implementation of the global minimum corporate tax (part of the “Pillar Two Model Rules”) that may impact our tax liability in the European Union (“EU”)), and recent changes and future changes in tariffs, retaliatory or trade protection measures, trade policies and other international trade regulations in the U.S., the EU, and Asia and in other regions where we operate (and our ability to manage the impact of such changes), potential regulatory limits on payment terms in the EU, future changes in sanctions regulations, recent and future changes in regulations impacting the beauty industry, including regulatory measures addressing products, formulations, raw materials and packaging, and recent and future regulatory measures restricting or otherwise impacting the use of web sites, mobile applications or social media platforms that we use in connection with our digital marketing and e-commerce activities;
•currency exchange rate volatility and currency devaluation and/or inflation, including the impact of elevated oil prices;
•the impact of ongoing wars and geo-political uncertainty on capital markets and the related impact on our ability to refinance outstanding debt at favorable rates;
•our ability to implement and maintain pricing actions to effectively mitigate increased costs and inflationary pressures, and the reaction of customers or consumers to such pricing actions;
•the number, type, outcomes (by judgment, order or settlement) and costs of current or future legal, compliance, tax, regulatory or administrative proceedings, investigations and/or litigation, including product liability cases (including asbestos and talc-related litigation for which indemnities and/or insurance may not be available), distributor or licensor litigation, and compliance, litigation or investigations relating to our joint ventures or strategic partnerships;
•our ability to manage seasonal factors and other variability and to anticipate future business trends and needs;
•disruptions in the availability and distribution of raw materials and components needed to manufacture our products, and our ability to effectively manage our production and inventory levels in response to supply challenges;
•disruptions in operations, sales and in other areas, including due to disruptions in our supply chain, restructurings and other business alignment activities, manufacturing or information technology systems, labor disputes, extreme weather and natural disasters, impact from public health events, the outbreak of war or hostilities (including the war in Ukraine and war in the Middle East and any escalation or expansion thereof), the impact of global supply chain challenges or other disruptions in the international flow of goods (including disruptions arising from the closure of strategic airspaces or critical maritime routes or from changing tariff scenarios), and the impact of such disruptions on our ability to generate profits, stabilize or grow revenues or cash flows, comply with our contractual obligations and accurately forecast demand and supply needs and/or future results;
•our ability to adapt our business to address climate change concerns, including through the implementation of new or unproven technologies or processes, and to respond to increasing governmental and regulatory measures relating to environmental, social and governance matters, including expanding mandatory and voluntary reporting, diligence and
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disclosure, as well as new taxes (including on energy and plastic), new diligence requirements and the impact of such measures or processes on our costs, business operations and strategy;
•restrictions imposed on us through our license agreements, credit facilities and senior unsecured bonds or other material contracts, our ability to generate cash flow to repay, refinance or recapitalize debt and otherwise comply with our debt instruments, and changes in the manner in which we finance our debt and future capital needs;
•increasing dependency on information technology, including as a result of expanded use of AI and advanced analytics in our operations as well as remote working practices, and our ability or the ability of any of the third-party service providers we use to support our business, to protect against service interruptions, data corruption, cyber-based attacks or network security breaches, including ransomware attacks, costs and timing of implementation and effectiveness of any upgrades or other changes to information technology systems, and the cost of compliance or our failure to comply with any privacy or data security laws (including the European Union General Data Protection Regulation (the “GDPR”), the California Consumer Privacy Act and similar state laws, the Brazil General Data Protection Law, and the China Data Security Law and Personal Information Protection Law) or to protect against theft of customer, employee and corporate sensitive information;
•our ability to attract and retain key personnel and the impact of senior management transitions;
•the distribution and sale by third parties of counterfeit and/or gray market versions of our products;
•the impact of our ongoing strategic transformation agenda and continued process improvements on our relationships with key customers and suppliers and certain material contracts;
•our relationship with JAB Beauty B.V., as our majority stockholder, and its affiliates, and any related conflicts of interest or litigation;
•our relationship with KKR, whose affiliates are investors in the Wella Company following the sale of a majority stake in our Professional and Retail Hair business and the subsequent sale of our remaining Wella stake, any related conflicts of interest or litigation, and the timing, terms and proceeds of any future sale or public offering of Wella and the impact thereof on our distribution rights;
•future sales of a significant number of shares by our majority stockholder or the perception that such sales could occur; and
•other factors described elsewhere in this document and in documents that we file with the SEC from time to time.
More information about potential risks and uncertainties that could affect our business and financial results is included under the heading “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q and other periodic reports we have filed and may file with the SEC from time to time.
All forward-looking statements made in this document are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this document, and we do not undertake any obligation, other than as may be required by applicable law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in future operating results over time or otherwise.
Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance unless expressed as such, and should only be viewed as historical data.
Industry, Ranking and Market Data
Unless otherwise indicated, information contained in this Quarterly Report on Form 10-Q concerning our industry and the markets in which we operate, including our general expectations about our industry, market position, market opportunity and market sizes, is based on data from various sources including internal data and estimates as well as third-party sources widely available to the public, such as independent industry publications, government publications, reports by market research firms or other published independent sources and on our assumptions based on that data and other similar sources. We did not fund and are not otherwise affiliated with the third-party sources that we cite. Industry publications and other published sources generally state that the information contained therein has been obtained from third-party sources believed to be reliable. Internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which we operate and management’s understanding of industry conditions, and such information has not been verified by any independent sources. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. While we generally believe the market, industry and other information included in this Quarterly Report on Form 10-Q to be the most recently available and to be reliable, such information is inherently imprecise and we have not independently verified any third-party information or verified that more recent information is not available.
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Our fiscal year ends on June 30. Unless otherwise noted, any reference to a year preceded by the word “fiscal” refers to the fiscal year ended June 30 of that year. For example, references to “fiscal 2027” refer to the fiscal year ending June 30, 2027. Any reference to a year not preceded by “fiscal” refers to a calendar year.
OVERVIEW
We are one of the world’s largest beauty companies, with an iconic portfolio of brands across fragrance, color cosmetics, and skin and body care. Our brands empower people to express themselves freely, creating their own visions of beauty; and we are committed to protecting the planet.
Recent Changes
We have been engaged in strategic planning and portfolio assessment designed to position us for consistent, profitable growth. While our long-term objectives remain focused on value creation, growth, profitability, and deleveraging, we have been advancing our comprehensive review of the business, including the strategic review of the Consumer Beauty business, and expect to complete the review by the end of calendar 2026. We are also evaluating our central organization, manufacturing and asset base, and certain market structures to adjust our scope and size for our future business.
In parallel, we are implementing our Coty.Curated strategic framework, focusing on our core brands and markets, reducing portfolio complexity, increasing agility through organizational simplification, and identifying savings opportunities to support increased investment in consumer engagement while protecting profitability. As one measure of our progress, we evaluate the revenue performance of our six largest Prestige core brands (Hugo Boss, Burberry, Calvin Klein, Marc Jacobs, Kylie Cosmetics, and Chloé). Gucci is excluded from our core brands as we will exit the license after June 30, 2027. For the three months ended September 30, 2026, net revenues from these brands increased 5% like-for-like compared to the prior year. We believe the revenue performance of these brands provides useful information regarding the effectiveness of our Coty.Curated strategic framework and our efforts to focus resources on key areas of our business.
We are focused on leveraging our leadership position and capabilities in global fragrances to fuel expansion. We have sharpened our priorities to capitalize on structural tailwinds in the fragrance market, while responding to recent performance challenges. In both divisions, we are focused on returning to market share growth, accelerating data-driven operations powered by AI, and improving our advocacy capability and execution.
Global Economic Landscape and Business Impact
Our products are sold globally. As a geographically diverse company, we are susceptible to global economic trends, geopolitical conflicts, domestic and foreign governmental policies, and changes in foreign exchange rates. We remain attentive to economic and geopolitical conditions that may materially impact our business.
Tariffs: Recent changes in U.S. and international trade policies—particularly tariff increases—and the ongoing uncertainty surrounding such policies may present challenges to our business operations and financial condition. These challenges may include supply chain disruptions and commodity price volatility, resulting in increases in our cost of goods sold.
On July 24, 2026, the previous Section 122 tariffs expired and tariffs under Section 301, ranging from 10% to 12.5% became effective. On September 8, 2026, Canada imposed retaliatory tariffs of up to 50% on certain U.S. goods in response to tariffs imposed by the U.S. under Sections 338 and 232.
We currently estimate that our operating results will be impacted by approximately $29.8 in gross costs related to tariff increases, after prior mitigating actions, in fiscal 2027. In the first three months of fiscal 2027, approximately $6.7 of net tariff costs are reflected in our operating results. Despite our efforts, reductions in consumer confidence and discretionary spending could impact demand for our products and negatively affect our sales. We are closely monitoring developments, evaluating potential impacts, and proactively taking steps to mitigate adverse effects on our business.
The Company is actively pursuing refund recovery activities related to IEEPA tariffs following ongoing validation and reconciliation of its claims; however, recovery of such amounts is ultimately contingent upon U.S. Customs and Border Protection ("CBP") review and acceptance of the Company's submissions and supporting documentation. As a result, the amount and timing of any refunds ultimately received could differ materially from the amounts claimed.
Middle East Conflict: In February 2026, geopolitical tensions in the Middle East escalated significantly leading to a military conflict involving the United States, Israel, and Iran, and resulting in regional instability and increased volatility in global energy markets. Continued or expanded conflict could adversely affect global economic conditions, supply chains, transportation logistics, and customer demand, and is expected to impact our financial condition, and results of operations. Impacts may vary depending on how conditions develop across the region and in global markets. Net revenues in the Middle East accounted for approximately low-single digit percentage of our consolidated net revenues for the first quarter of fiscal 2027, and declined by a high double-digit percentage compared to the prior year. The Middle East accounted for approximately mid-single-digit percentage and low-single-digit percentage of Prestige and Consumer Beauty segment first quarter fiscal 2027 net revenues, respectively. We currently estimate that, if Brent crude oil prices remain within the range of $90 to $100 per barrel due to the Middle East conflict, our operating results in fiscal 2027 could be impacted by an increase of approximately $25.0 to $30.0 in cost of goods sold.
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Market Trends and Sales Performance
Changing market trends continue to impact sales of our products across and within product categories and geographic regions. Consumer demand for beauty remains resilient despite broader economic uncertainty, with continued growth in fragrances and cosmetics, although consumers are increasingly selective in their purchasing decisions.
Fragrances: Overall, the prestige fragrance market grew by mid-single digits in the first quarter of fiscal 2027 while our net revenues from Prestige fragrances decreased by a low-single digit percentage. The Gucci license exit will result in a decrease in net revenues and net income in fiscal 2028; we expect partial mitigation of the impact through stronger performance in our top core prestige fragrance brands, as well as debuts of Etro and Swarovski fragrances in the coming year. Net revenue from Consumer Beauty fragrances declined by low-double digits in the first quarter of fiscal 2027, while the mass fragrance market grew by low-double digits.
Color Cosmetics: Our net revenues from Prestige cosmetics increased by a double-digits percentage in the first quarter of fiscal 2027, outpacing the low-single digit growth of the prestige color cosmetics market, driven by the launch of Marc Jacobs Beauty makeup and growth in other brands. In Consumer Beauty, color cosmetics net revenues declined by a mid-single digit percentage despite low-single digit market growth. We have narrowed our retail sales gap to the market in certain Consumer Beauty color cosmetics brands, driven by improving sell-out performance in the United States.
Skin and Body Care: Net revenues from Prestige skincare decreased by a double-digit percentage in the first quarter of fiscal 2027, despite low-single digit market growth. Net revenues from Consumer Beauty skin and body care increased by a double-digit percentage in the first quarter of fiscal 2027 outpacing mid-single digit market growth. This performance was primarily attributable to our Brazil skin and body care brands and further supported by continued positive trends in the Brazil mass body care market.
Geographic Regions: Net revenues in the Americas increased by a low-single digit percentage during the first quarter of fiscal 2027, reflecting stable sales in the U.S. Net revenues from Europe, the Middle East and Africa (“EMEA”) declined by a mid-single digit percentage, reflecting the impacts from the Middle East conflict and contrasting with low- to mid-single digit growth in most European markets. Market trends, however, remained mixed, with some markets experiencing accelerating growth while others continue to decelerate. Net revenues in the Asia Pacific region increased by a double-digit percentage in the first quarter of fiscal 2027, reflecting positive trending growth across many Asian markets.
Financial Outlook
We expect our reported net revenues for the second quarter of fiscal 2027 to decline by a low- to mid-single digit percentage compared with the prior year, which includes an estimated low-single digit percentage unfavorable impact from foreign exchange.
Non-GAAP Financial Measures
To supplement the financial measures prepared in accordance with GAAP, we use non-GAAP financial measures for Coty Inc. including Adjusted operating income (loss), Adjusted EBITDA, Adjusted net income (loss), and Adjusted net income (loss) attributable to Coty Inc. to common stockholders (collectively, the “Adjusted Performance Measures”). The reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are shown in tables below. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for or superior to, financial measures reported in accordance with GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of the business as determined in accordance with GAAP. Other companies, including companies in the beauty industry, may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.
Despite the limitations of these non-GAAP financial measures, our management uses the Adjusted Performance Measures as key metrics in the evaluation of our performance and annual budgets and to benchmark performance of our business against our competitors. The following are examples of how these Adjusted Performance Measures are utilized by our management:
•strategic plans and annual budgets are prepared using the Adjusted Performance Measures;
•senior management receives a monthly analysis comparing budget to actual operating results that is prepared using the Adjusted Performance Measures; and
•senior management’s annual compensation is calculated, in part, by using some of the Adjusted Performance Measures.
In addition, our financial covenant compliance calculations under our debt agreements are substantially derived from these Adjusted Performance Measures.
Our management believes that Adjusted Performance Measures are useful to investors in their assessment of our operating performance and the valuation of the Company. In addition, these non-GAAP financial measures address questions we routinely receive from analysts and investors and, in order to ensure that all investors have access to the same data, our
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management has determined that it is appropriate to make this data available to all investors. The Adjusted Performance Measures exclude the impact of certain items (as further described below) and provide supplemental information regarding our operating performance. By disclosing these non-GAAP financial measures, our management intends to provide investors with a supplemental comparison of our operating results and trends for the periods presented. Our management believes these measures are also useful to investors as such measures allow investors to evaluate our performance using the same metrics that our management uses to evaluate past performance and prospects for future performance. We provide disclosure of the effects of these non-GAAP financial measures by presenting the corresponding measure prepared in conformity with GAAP in our financial statements, and by providing a reconciliation to the corresponding GAAP measure so that investors may understand the adjustments made in arriving at the non-GAAP financial measures and use the information to perform their own analyses.
Adjusted operating income (loss) / Adjusted EBITDA excludes restructuring costs and business structure realignment programs, amortization, acquisition- and divestiture-related costs and acquisition accounting impacts, stock-based compensation, and asset impairment charges and other adjustments as described below. For adjusted EBITDA, in addition to the preceding, we exclude adjusted depreciation as defined below. We do not consider these items to be reflective of our core operating performance due to the variability of such items from period-to-period in terms of size, nature and significance. They are primarily incurred to realign our operating structure and integrate new acquisitions, and implement divestitures of components of our business, and fluctuate based on specific facts and circumstances. Additionally, Adjusted net income (loss) attributable to Coty Inc. and Adjusted net income (loss) attributable to Coty Inc. per common share are adjusted for certain interest and other (income) expense items, as described below, and the related tax effects of each of the items used to derive Adjusted net income (loss) as such charges are not used by our management in assessing our operating performance period-to-period.
Adjusted Performance Measures reflect adjustments based on the following items:
•Costs related to acquisition and divestiture activities: We have excluded acquisition- and divestiture-related costs and the accounting impacts such as those related to transaction costs and costs associated with the revaluation of acquired inventory in connection with business combinations because these costs are unique to each transaction. Additionally, for divestitures, we exclude write-offs of assets that are no longer recoverable and contract related costs due to the divestiture. The nature and amount of such costs vary significantly based on the size and timing of the acquisitions and divestitures, and the maturities of the businesses being acquired or divested. Also, the size, complexity and/or volume of past transactions, which often drives the magnitude of such expenses, may not be indicative of the size, complexity and/or volume of any future acquisitions or divestitures.
•Restructuring and other business realignment costs: We have excluded costs associated with restructuring and business structure realignment programs to allow for comparable financial results to historical operations and forward-looking guidance. In addition, the nature and amount of such charges vary significantly based on the size and timing of the programs. By excluding the referenced expenses from our non-GAAP financial measures, our management is able to further evaluate our ability to utilize existing assets and estimate their long-term value. Furthermore, our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.
•Asset impairment charges: We have excluded the impact of asset impairments as such non-cash amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.
•Amortization expense: We have excluded the impact of amortization of finite-lived intangible assets, as such non-cash amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance. Although we exclude amortization of intangible assets from our non-GAAP expenses, our management believes that it is important for investors to understand that such intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets.
•Gain or loss on brand exit, sale and early license termination: We have excluded the impact of gain or loss on brand exit, sale and early license termination as such amounts are inconsistent in amount and frequency and are significantly impacted by the size of the brand exit, sale and early license termination.
•Costs related to market exit: We have excluded the impact of direct incremental costs related to our decision to wind down our business operations in Russia. We believe that these direct and incremental costs are inconsistent and infrequent in nature. Consequently, our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.
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•Stock-based compensation: Although stock-based compensation is a key incentive offered to our employees, we have excluded the effect of these expenses from the calculation of adjusted operating income (loss) and adjusted EBITDA. This is due to their primarily non-cash nature; in addition, the amount and timing of these expenses may be highly variable and unpredictable, which may negatively affect comparability between periods.
•Depreciation and Adjusted depreciation: Our adjusted operating income (loss) excludes the impact of accelerated depreciation for certain restructuring projects that affect the expected useful lives of Property, Plant and Equipment, as such charges vary significantly based on the size and timing of the programs. Further, we have excluded adjusted depreciation, which represents depreciation expense net of accelerated depreciation charges, from our adjusted EBITDA. Our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.
•Other (income) expense: We have excluded the impact of pension curtailment (gains) and losses and pension settlements as such events are triggered by our restructuring and other business realignment activities and the amount of such charges vary significantly based on the size and timing of the programs. Further, we have excluded realized and unrealized gains and losses on the investment in Wella, as our management believes these gains and losses do not reflect our underlying ongoing business, and the adjustment of such impact helps investors and others compare and analyze performance from period to period. Such transactions do not reflect our operating results and we have excluded the impact as our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.
•Noncontrolling interest: This adjustment represents the after-tax impact of the non-GAAP adjustments included in Net income attributable to noncontrolling interests based on the relevant noncontrolling interest percentage.
•Tax: This adjustment represents the impact of the tax effect of the pretax items excluded from Adjusted net income (loss). The tax impact of the non-GAAP adjustments is based on the tax rates related to the jurisdiction in which the adjusted items are received or incurred. Additionally, adjustments are made for the tax impact of any intra-entity transfer of assets and liabilities. Also, in connection with our market exit in Russia, we have adjusted for the release of tax charges previously taken related to certain direct incremental impacts of the decision.
Constant Currency
We operate on a global basis, with the majority of our net revenues generated outside of the U.S. Accordingly, fluctuations in foreign currency exchange rates can affect our results of operations. Therefore, to supplement financial results presented in accordance with GAAP, certain financial information is presented in “constant currency”, excluding the impact of foreign currency exchange translations to provide a framework for assessing how our underlying businesses performed excluding the impact of foreign currency exchange translations. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. We calculate constant currency information by translating current and prior-period results for entities reporting in currencies other than U.S. dollars into U.S. dollars using prior year foreign currency exchange rates. The constant currency calculations do not adjust for the impact of revaluing specific transactions denominated in a currency that is different to the functional currency of that entity when exchange rates fluctuate. The constant currency information we present may not be comparable to similarly titled measures reported by other companies.
Basis of Presentation of Acquisitions, Divestitures, Terminations or Market Exit
During the period when we complete an acquisition, divestiture, early license termination, or market exit, the financial results of the current year period are not comparable to the financial results presented in the prior year period. When explaining such changes from period to period and to maintain a consistent basis between periods, we exclude the financial contribution of: (i) the acquired brands or businesses in the current year period until we have twelve months of comparable financial results, and (ii) the divested brands or businesses or early terminated brands or markets exited in the prior year period, to maintain comparable financial results with the current fiscal year period. There are no acquisitions, divestitures, early license terminations, and market exits that would impact the comparability of financial results between periods presented in the Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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THREE MONTHS ENDED SEPTEMBER 30, 2026 AS COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2025
NET REVENUES
In the three months ended September 30, 2026, net revenues decreased 1%, or $22.0, to $1,555.2 from $1,577.2 in the three months ended September 30, 2025, primarily as a result of a negative price and mix impact of 5% (primarily driven by prestige fragrances, color cosmetics and mass fragrance) partially offset by an increase in unit volume of 3% (primarily driven by prestige cosmetics and prestige fragrances), and reflecting a neutral foreign currency exchange translation impact. The overall decrease in net revenues reflects sales declines within Prestige and Consumer Beauty as described in detail below. Net revenues decreased in EMEA, partially offset by an increase in the Asia Pacific region.
Net Revenues by Segment
| Three Months Ended September 30, | |||||||||||||||||
| (in millions) | 2026 | 2025 | Change % | ||||||||||||||
| NET REVENUES | |||||||||||||||||
| Prestige | $ | 1,058.4 | $ | 1,069.5 | (1) | % | |||||||||||
| Consumer Beauty | 496.8 | 507.7 | (2) | % | |||||||||||||
| Total | $ | 1,555.2 | $ | 1,577.2 | (1) | % | |||||||||||
Prestige
In the three months ended September 30, 2026, net revenues from the Prestige segment decreased $11.1 to $1,058.4 compared to $1,069.5 in the three months ended September 30, 2025, primarily as a result of a negative price and mix impact of 6% (primarily driven by increased trade incentives related to prestige fragrances), partially offset by an increase in unit volume of 5% (primarily due to higher sales volume in prestige fragrances and cosmetics) and reflecting a neutral foreign currency exchange translation impact. The decrease in net revenues primarily reflects:
•Prestige fragrance sales declines of $24.4 primarily due to weaker sales of Gucci and Calvin Klein particularly in certain distribution channels, negative performance of several brands across major markets and lower sales in the Middle East impacted by the ongoing conflict in the region, partially offset by increased net revenues from Kylie Fragrances due to the launch of Mood Stones; and
•Prestige skincare sales decline of $4.0.
These decreases were partially offset by:
•Prestige cosmetics sales increase of $17.3 primarily driven by the launch of Marc Jacobs Beauty makeup line.
Consumer Beauty
In the three months ended September 30, 2026, net revenues from the Consumer Beauty segment decreased 2%, or $10.9, to $496.8 from $507.7 in the three months ended September 30, 2025, reflecting a negative price and mix impact of 6% (primarily driven by mass fragrances and higher markdowns on color cosmetics), partially offset by an increase in unit volume of 3%, and a positive foreign currency exchange translation impact of 1%. The decrease in net revenues primarily reflects:
•Color cosmetics sales declines of $11.4 due to a decline in sales primarily in Europe led by Rimmel and MaxFactor.
•Mass fragrance sales declines of $11.0 primarily due to lower sales across several brands in the U.S. and Europe.
These decreases were partially offset by:
•Mass body care sales increases of $8.6 and
•Mass skincare sales increases of $2.9.
COST OF SALES
In the three months ended September 30, 2026, cost of sales increased 2%, or $10.0, to $570.4 from $560.4 in the three months ended September 30, 2025. Cost of sales as a percentage of net revenues increased to 36.7% in the three months ended September 30, 2026 from 35.5% in the three months ended September 30, 2025, resulting in a gross margin decrease of approximately 120 basis points, primarily reflecting:
(i)approximately 60 basis points increase related to excess and obsolescence costs as a percentage of net revenues;
(ii)approximately 50 basis points related to increased freight costs as a percentage of net revenues, primarily driven by the impact of rising fuel surcharges; and
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(iii)approximately 20 basis points, primarily due to an increase in manufacturing and material costs as a percentage of net revenues.
These decreases were partially offset by:
(iv)approximately 10 basis points related to decreased designer license fees as a percentage of net revenues.
Gross margin was also negatively impacted by higher returns and less favorable customer trade terms in the current period, which reduced the net revenue base.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
In the three months ended September 30, 2026, selling, general and administrative expenses decreased 2%, or $13.9, to $779.6 from $793.5 in the three months ended September 30, 2025. Selling, general and administrative expenses as a percentage of net revenues decreased to 50.1% in the three months ended September 30, 2026 from 50.3% in the three months ended September 30, 2025, or approximately 20 basis points. This decrease primarily reflects:
(i)70 basis points due to a decrease in advertising and consumer promotional costs as a percentage of net revenues related to a reduction of both working and non-working media in the fiscal period;
(ii)40 basis points due to a decrease in stock-based compensation cost primarily related to higher expense in the prior year recognized in connection with awards granted to the former CEO; and
(iii)20 basis points due to favorable transactional impact from our exposure to foreign currency as a percentage of net revenues.
These decreases were partially offset by:
(iv)100 basis points due to an increase in operational accruals as a percentage of net revenues; and
(v)20 basis points due to an increase in fixed costs as a percentage of net revenues due to an increase in administrative expense.
OPERATING INCOME
In the three months ended September 30, 2026, operating income was $170.4 compared to income of $185.0 in the three months ended September 30, 2025. Operating income margin worsened to 11.0% in the three months ended September 30, 2026 as compared to 11.7% in the three months ended September 30, 2025. The decrease in operating margin is primarily driven by an increase in cost of goods sold (approximately 115 basis points), an increase in other operating expenses as a percentage of net revenues (approximately 90 basis points) and an increase in fixed costs as a percentage of net revenues (approximately 20 basis points), partially offset by a decrease in advertising and consumer promotional costs as a percentage of net revenues (approximately 70 basis points), a decrease in stock compensation expense as a percentage of net revenues (approximately 40 basis points) and a decrease in amortization expense as a percentage of net revenues (approximately 30 basis points).
Operating Income (Loss) by Segment
| Three Months Ended September 30, | |||||||||||||||||
| (in millions) | 2026 | 2025 | Change % | ||||||||||||||
| Operating income (loss) | |||||||||||||||||
| Prestige | $ | 211.0 | $ | 208.9 | 1 | % | |||||||||||
| Consumer Beauty | (24.1) | (7.7) | <(100%) | ||||||||||||||
| Corporate | (16.5) | (16.2) | (2) | % | |||||||||||||
| Total | $ | 170.4 | $ | 185.0 | (8) | % | |||||||||||
Prestige
In the three months ended September 30, 2026, operating income for Prestige was $211.0 compared to income of $208.9 in the three months ended September 30, 2025. Operating margin increased to 19.9% of net revenues in the three months ended September 30, 2026 as compared to 19.5% in the three months ended September 30, 2025, driven by a decrease in advertising and consumer promotional costs as a percentage of net revenues (approximately 60 basis points), a decrease in amortization expense as a percentage of net revenues (approximately 50 basis points) and a decrease in other operating expenses as a percentage of net revenues (approximately 40 basis points), partially offset by an increase in cost of goods sold as a percentage of net revenues (approximately 110 basis points)
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Consumer Beauty
In the three months ended September 30, 2026, operating loss for Consumer Beauty was $24.1 compared to loss of $7.7 in the three months ended September 30, 2025. Operating loss margin worsened to 4.9% of net revenues in the three months ended September 30, 2026 as compared to an operating loss margin of 1.5% in the three months ended September 30, 2025, driven by an increase in other operating expenses as a percentage of net revenues (approximately 350 basis points) driven by higher operational accruals and an increase in cost of goods sold as a percentage of net revenues (approximately 150 basis points), partially offset by a decrease in advertising and consumer promotional costs as a percentage of net revenues (approximately 110 basis points) and a decrease in fixed costs as a percentage of net revenues (approximately 60 basis points).
Corporate
Corporate primarily includes income and expenses not directly relating to our operating activities. These items are included in Corporate since we consider them to be Corporate responsibilities, and these items are not used by our management to measure the underlying performance of the segments.
In the three months ended September 30, 2026, the operating loss for Corporate was $16.5 compared to a loss of $16.2 in the three months ended September 30, 2025. The increase in the operating loss for Corporate was primarily driven by a $6.4 increase in restructuring and other business realignment costs and a $1.2 increase in loss (gain) on brand exit and early license termination costs, partially offset by a $7.3 decrease in stock-based compensation.
Adjusted Operating Income (Loss) by Segment
We believe that adjusted operating income by segment further enhances an investor’s understanding of our performance. See “Overview—Non-GAAP Financial Measures.” A reconciliation of reported operating income (loss) to adjusted operating income (loss) is presented below, by segment:
| Three Months Ended September 30, 2026 | |||||||||||||||||
| (in millions) | Reported (GAAP) | Adjustments (a) | Adjusted (Non-GAAP) | ||||||||||||||
| Operating income (loss) | |||||||||||||||||
| Prestige | $ | 211.0 | $ | 24.5 | $ | 235.5 | |||||||||||
| Consumer Beauty | (24.1) | 9.1 | (15.0) | ||||||||||||||
| Corporate | (16.5) | 16.5 | — | ||||||||||||||
| Total | $ | 170.4 | $ | 50.1 | $ | 220.5 | |||||||||||
| Three Months Ended September 30, 2025 | |||||||||||||||||
| (in millions) | Reported (GAAP) | Adjustments (a) | Adjusted (Non-GAAP) | ||||||||||||||
| Operating income (loss) | |||||||||||||||||
| Prestige | $ | 208.9 | $ | 30.1 | $ | 239.0 | |||||||||||
| Consumer Beauty | (7.7) | 9.2 | 1.5 | ||||||||||||||
| Corporate | (16.2) | 16.2 | — | ||||||||||||||
| Total | $ | 185.0 | $ | 55.5 | $ | 240.5 | |||||||||||
(a)See a reconciliation of reported net income to operating income (loss) to adjusted operating income (loss) and adjusted EBITDA for Coty Inc. and reconciliations of segment operating income (loss) to segment adjusted operating income (loss) and segment adjusted EBITDA for the Prestige, Consumer Beauty and Corporate segments with a description of the adjustments under “Net Income, Adjusted Operating Income and Adjusted EBITDA for Coty Inc.” and “Segment Operating Income (Loss), Segment Adjusted Operating Income (Loss) and Segment Adjusted EBITDA”, below. All adjustments are reflected in Corporate, except for amortization and asset impairment charges on goodwill, indefinite-lived intangible assets, and finite-lived intangible assets, which are reflected in the Prestige and Consumer Beauty segments.
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Net Income, Adjusted Operating Income and Adjusted EBITDA for Coty Inc.
We believe that adjusted operating income further enhances an investor’s understanding of our performance. See “Overview—Non-GAAP Financial Measures.” Reconciliation of reported net income to adjusted operating income and adjusted EBITDA is presented below:
| Three Months Ended September 30, | |||||||||||||||||
| (in millions) | 2026 | 2025 | Change % | ||||||||||||||
| Net income | $ | 112.4 | $ | 74.0 | 52 | % | |||||||||||
| Net income margin | 7.2 | % | 4.7 | % | |||||||||||||
| Provision for income taxes | 45.0 | 33.1 | 36 | % | |||||||||||||
| Income before income taxes | $ | 157.4 | $ | 107.1 | 47 | % | |||||||||||
| Interest expense, net | 31.2 | 46.6 | (33) | % | |||||||||||||
| Other (income) expense, net | (18.2) | 31.3 | <(100%) | ||||||||||||||
| Reported operating income | $ | 170.4 | $ | 185.0 | (8) | % | |||||||||||
| Reported operating income margin | 11.0 | % | 11.7 | % | |||||||||||||
| Amortization expense | 33.6 | 39.3 | (15) | % | |||||||||||||
| Restructuring and other business realignment costs | 8.1 | 1.7 | >100% | ||||||||||||||
| Stock-based compensation | 7.2 | 14.5 | (50) | % | |||||||||||||
| Loss (gain) on brand exit and early license termination costs | 1.2 | — | N/A | ||||||||||||||
| Total adjustments to reported operating income | $ | 50.1 | $ | 55.5 | (10) | % | |||||||||||
| Adjusted operating income | $ | 220.5 | $ | 240.5 | (8) | % | |||||||||||
| Adjusted operating income margin | 14.2 | % | 15.2 | % | |||||||||||||
| Adjusted depreciation | 53.7 | 55.6 | (3) | % | |||||||||||||
| Adjusted EBITDA | $ | 274.2 | $ | 296.1 | (7) | % | |||||||||||
| Adjusted EBITDA margin | 17.6 | % | 18.8 | % | |||||||||||||
In the three months ended September 30, 2026, adjusted operating income decreased $20.0 to $220.5 from $240.5 in the three months ended September 30, 2025. Adjusted operating margin decreased to 14.2% of net revenues in the three months ended September 30, 2026 from 15.2% in the three months ended September 30, 2025. In the three months ended September 30, 2026, adjusted EBITDA decreased $21.9 to $274.2 from $296.1 in the three months ended September 30, 2025. Adjusted EBITDA margin decreased to 17.6% of net revenues in the three months ended September 30, 2026 from 18.8% in the three months ended September 30, 2025.
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Segment Operating Income (Loss), Segment Adjusted Operating Income (Loss) and Segment Adjusted EBITDA
Operating Income, Adjusted Operating Income and Adjusted EBITDA - Prestige Segment
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| (in millions) | 2026 | 2025 | Change % | |||||||||||||||||||||||
| Reported operating income | $ | 211.0 | $ | 208.9 | 1 | % | ||||||||||||||||||||
| Reported operating income margin | 19.9 | % | 19.5 | % | ||||||||||||||||||||||
| Amortization expense | 24.5 | 30.1 | (19) | % | ||||||||||||||||||||||
| Total adjustments to reported operating income | $ | 24.5 | $ | 30.1 | (19) | % | ||||||||||||||||||||
| Adjusted operating income | $ | 235.5 | $ | 239.0 | (1) | % | ||||||||||||||||||||
| Adjusted operating income margin | 22.3 | % | 22.3 | % | ||||||||||||||||||||||
| Adjusted depreciation | 27.0 | 28.6 | (6) | % | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 262.5 | $ | 267.6 | (2) | % | ||||||||||||||||||||
| Adjusted EBITDA margin | 24.8 | % | 25.0 | % | ||||||||||||||||||||||
Operating Loss, Adjusted Operating (Loss) Income and Adjusted EBITDA - Consumer Beauty Segment
| Three Months Ended September 30, | |||||||||||||||||
| (in millions) | 2026 | 2025 | Change % | ||||||||||||||
| Reported operating loss | $ | (24.1) | $ | (7.7) | <(100%) | ||||||||||||
| Reported operating loss margin | (4.9) | % | (1.5) | % | |||||||||||||
| Amortization expense | 9.1 | 9.2 | (1) | % | |||||||||||||
| Total adjustments to reported operating loss | $ | 9.1 | $ | 9.2 | (1) | % | |||||||||||
| Adjusted operating (loss) income | $ | (15.0) | $ | 1.5 | <(100%) | ||||||||||||
| Adjusted operating (loss) income margin | (3.0) | % | 0.3 | % | |||||||||||||
| Adjusted depreciation | 26.7 | 27.0 | (1) | % | |||||||||||||
| Adjusted EBITDA | $ | 11.7 | $ | 28.5 | (59) | % | |||||||||||
| Adjusted EBITDA margin | 2.4 | % | 5.6 | % | |||||||||||||
Operating Loss, Adjusted Operating Income and Adjusted EBITDA - Corporate Segment
| Three Months Ended September 30, | |||||||||||||||||
| (in millions) | 2026 | 2025 | Change % | ||||||||||||||
| Reported operating loss | $ | (16.5) | $ | (16.2) | (2) | % | |||||||||||
| Reported operating loss margin | N/A | N/A | |||||||||||||||
| Restructuring and other business realignment costs | 8.1 | 1.7 | >100% | ||||||||||||||
| Stock-based compensation | 7.2 | 14.5 | (50) | % | |||||||||||||
| Loss (gain) on brand exit and early license termination costs | 1.2 | — | N/A | ||||||||||||||
| Total adjustments to reported operating loss | $ | 16.5 | $ | 16.2 | 2 | % | |||||||||||
| Adjusted operating income | $ | — | $ | — | N/A | ||||||||||||
| Adjusted operating income margin | N/A | N/A | |||||||||||||||
| Adjusted depreciation | — | — | N/A | ||||||||||||||
| Adjusted EBITDA | $ | — | $ | — | N/A | ||||||||||||
| Adjusted EBITDA margin | N/A | N/A | |||||||||||||||
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Amortization Expense
In the three months ended September 30, 2026, amortization expense decreased to $33.6 from $39.3 in the three months ended September 30, 2025. In the three months ended September 30, 2026, amortization expense of $24.5 and $9.1 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended September 30, 2025, amortization expense of $30.1 and $9.2 was reported in the Prestige and Consumer Beauty segments, respectively.
Restructuring and Other Business Realignment Costs
In the three months ended September 30, 2026, we incurred restructuring and other business structure realignment costs of $8.1 as follows:
•We incurred a credit in Restructuring costs of $0.3, which is included in the Condensed Consolidated Statements of Operations; and
•We incurred business structure realignment costs of $8.4, which is reported in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.
In the three months ended September 30, 2025, we incurred restructuring and other business structure realignment costs of $1.7, as follows:
•We incurred a credit in restructuring costs of $1.0, which is included in the Condensed Consolidated Statements of Operations; and
•We incurred business structure realignment costs of $2.7, which is reported in Selling, general and administrative expenses.
Stock-Based Compensation
In the three months ended September 30, 2026, stock-based compensation was $7.2 as compared with $14.5 in the three months ended September 30, 2025.
Loss (Gain) on Brand Exit and Early License Termination
In the three months ended September 30, 2026, we incurred costs related to the Gucci Beauty license brand exit of $1.5.
In the three months ended September 30, 2025, we did not incur any costs related to a brand exit or early termination of a license.
Adjusted Depreciation Expense
In the three months ended September 30, 2026, adjusted depreciation expense of $27.0 and $26.7 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended September 30, 2025, adjusted depreciation expense of $28.6 and $27.0 was reported in the Prestige and Consumer Beauty segments, respectively.
INTEREST EXPENSE, NET
In the three months ended September 30, 2026, net interest expense was $31.2 as compared with $46.6 in the three months ended September 30, 2025. The decrease in interest expense is primarily due to lower average debt balance in the current period as well as due to higher gains on foreign exchange forward contracts on the Euro as compared to the prior year.
OTHER (INCOME) EXPENSE, NET
In the three months ended September 30, 2026, other income was $18.2 as compared with other expense of $31.3 in the three months ended September 30, 2025. The change of $49.5 is primarily due to favorable changes in the fair value of forward repurchase contracts of $53.9, partially offset by miscellaneous other expenses.
INCOME TAXES
The effective income tax rate for the three months ended September 30, 2026 and 2025 was 28.6% and 30.9%, respectively. The decrease in the effective tax rate was primarily attributable to higher limitations on the deductibility of executive stock compensation in the prior period.
The effective tax rate of 28.6% for the three months ended September 30, 2026 was higher than the Federal statutory rate of 21% primarily due to the limitation on the deductibility of interest expense.
The effective tax rate of 30.9% for the three months ended September 30, 2025 was higher than the Federal statutory rate of 21% primarily due to the limitation on the deductibility of interest expense and limitations on the deductibility of executive stock compensation.
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The effective income tax rates vary from the U.S. federal statutory rate of 21% due to the effect of (i) jurisdictions with different statutory rates, including impacts of rate changes, (ii) adjustments to the Company’s unrealized tax benefits (“UTBs”) and accrued interest, (iii) non-deductible expenses, (iv) audit settlements and (v) valuation allowance changes. Our effective tax rate could fluctuate significantly and could be adversely affected to the extent earnings are lower than anticipated in countries that have lower statutory rates and higher than anticipated in countries that have higher statutory rates.
Reconciliation of Reported Income Before Income Taxes to Adjusted Income Before Income Taxes and Effective Tax Rates:
| Three Months Ended September 30, 2026 | Three Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||
| (in millions) | Income Before Income Taxes | Provision for Income Taxes | Effective Tax Rate | Income Before Income Taxes | Provision for Income Taxes | Effective Tax Rate | |||||||||||||||||||||||||||||||||||
| Reported income before income taxes | $ | 157.4 | $ | 45.0 | 28.6 | % | $ | 107.1 | $ | 33.1 | 30.9 | % | |||||||||||||||||||||||||||||
Adjustments to reported operating income (a) | 50.1 | 55.5 | |||||||||||||||||||||||||||||||||||||||
Change in fair value of investment in Wella Company (c) | — | (1.0) | |||||||||||||||||||||||||||||||||||||||
Total Adjustments (b) | 50.1 | 8.5 | 54.5 | 11.4 | |||||||||||||||||||||||||||||||||||||
| Adjusted income before income taxes | $ | 207.5 | $ | 53.5 | 25.8 | % | $ | 161.6 | $ | 44.5 | 27.5 | % | |||||||||||||||||||||||||||||
(a)See a description of adjustments under “Net Income, Adjusted Operating Income and Adjusted EBITDA for Coty Inc.”
(b)The tax effects of each of the items included in adjusted income are calculated in a manner that results in a corresponding income tax expense/provision for adjusted income. In preparing the calculation, each adjustment to reported income is first analyzed to determine if the adjustment has an income tax consequence. The provision for taxes is then calculated based on the jurisdiction in which the adjusted items are incurred, multiplied by the respective statutory rates and offset by the increase or reversal of any valuation allowances commensurate with the non-GAAP measure of profitability.
(c)For the three months ended September 30, 2025, this primarily represents the unrealized (gain) loss recognized for the change in fair value of the investment in the Wella Company.
The adjusted effective tax rate was 25.8% for the three months ended September 30, 2026 compared to 27.5% for the three months ended September 30, 2025. The difference is primarily due to the Company recognizing a loss on the forward repurchase contracts in the prior period compared to a gain in the current period.
NET INCOME ATTRIBUTABLE TO COTY INC.
Net income attributable to Coty Inc. was $109.5 in the three months ended September 30, 2026 as compared to net income of $67.9 in the three months ended September 30, 2025. The net income was primarily driven by favorable change in other (income) expense, net of $49.5, lower interest expense of $15.4, a decrease in selling, general, and administrative expenses of $13.9 and decrease in amortization expense of $5.7, partially offset by lower gross profit of $32.0, and a higher provision for income taxes of $11.9.
We believe that adjusted net income attributable to Coty Inc. provides an enhanced understanding of our performance. See “Overview—Non-GAAP Financial Measures.”
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| Three Months Ended September 30, | |||||||||||||||||
| (in millions) | 2026 | 2025 | Change % | ||||||||||||||
| Net income attributable to Coty Inc. | $ | 109.5 | $ | 67.9 | 61 | % | |||||||||||
Convertible Series B Preferred Stock dividends (a) | (3.3) | (3.3) | — | % | |||||||||||||
| Reported net income attributable to common stockholders | $ | 106.2 | $ | 64.6 | 64 | % | |||||||||||
| % of net revenues | 6.8 | % | 4.1 | % | |||||||||||||
Adjustments to reported operating income (b) | 50.1 | 55.5 | (10) | % | |||||||||||||
Change in fair value of investment in Wella Company (c) | — | (1.0) | 100 | % | |||||||||||||
Adjustments to noncontrolling interests (d) | (1.7) | (1.7) | — | % | |||||||||||||
| Change in tax provision due to adjustments to reported net income attributable to Coty Inc. | (8.5) | (11.4) | 25 | % | |||||||||||||
| Adjusted net income attributable to Coty Inc. | $ | 146.1 | $ | 106.0 | 38 | % | |||||||||||
| % of net revenues | 9.4 | % | 6.7 | % | |||||||||||||
| Per Share Data | |||||||||||||||||
| Adjusted weighted-average common shares | |||||||||||||||||
| Basic | 880.6 | 872.8 | |||||||||||||||
Diluted (a) | 906.4 | 876.3 | |||||||||||||||
| Adjusted net income attributable to Coty Inc. per common share | |||||||||||||||||
| Basic | $ | 0.17 | $ | 0.12 | |||||||||||||
Diluted (a) | $ | 0.16 | $ | 0.12 | |||||||||||||
(a)Adjusted Diluted EPS is adjusted by the effect of dilutive securities. For the three months ended September 30, 2026 and 2025, no dilutive shares of the Forward Repurchase Contracts were included in the computation of adjusted diluted EPS as their inclusion would be anti-dilutive. Accordingly, we did not reverse the impact of the fair market value gains/(losses) for contracts with the option to settle in shares or cash of $14.8 and $(26.5), respectively. For the three months ended September 30, 2026, as the Convertible Series B Preferred Stock was dilutive, an adjustment to reverse the impact of the preferred stock dividends of $3.3 was required. For the three months ended September 30, 2025, Convertible Series B Preferred Stock (23.7 million weighted average dilutive shares) was anti-dilutive. Accordingly, we excluded these shares from the diluted shares and did not adjust the earnings for the related dividend of $3.3.
(b)See a description of adjustments under “Net Income, Adjusted Operating Income and Adjusted EBITDA for Coty Inc."
(c)For the three months ended September 30, 2025, this represents the unrealized (gain) loss recognized for the change in fair value of the investment in the Wella Company.
(d)The amounts represent the after-tax impact of the non-GAAP adjustments included in net income attributable to noncontrolling interests based on the relevant noncontrolling interest percentage in the Condensed Consolidated Statements of Operations.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Overview
Our primary sources of funds include cash expected to be generated from operations, borrowings from issuance of debt and lines of credit provided by banks and lenders in the U.S. and abroad.
Our cash flows are subject to seasonal variation throughout the year, including demands on cash made during our first fiscal quarter in anticipation of higher global sales during the second fiscal quarter and strong cash generation in the second fiscal quarter as a result of increased demand by retailers associated with the holiday season.
Our principal uses of cash are to fund planned operating expenditures, capital expenditures, interest payments, dividends, share repurchases, any principal payments on debt, and from time to time, acquisitions and business structure realignment expenditures. Working capital movements are influenced by the sourcing of materials related to the manufacturing of products. Cash and working capital management initiatives, including the phasing of vendor and tax payments, factoring of trade receivables, and facilitation of supplier finance programs, from time-to-time, may also impact the timing and amount of our operating cash flows.
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We remain focused on deleveraging our balance sheet using cash flows generated from our operations as well as inorganic cash generating opportunities, with the objective of reducing interest costs and improving long-term profitability and cash flows. The Company continues to evaluate strategic alternatives for optimizing liquidity and the Company's capital structure. On July 7, 2026, we received proceeds of $250.0 from the early termination of the Gucci Beauty license, which was used to further reduce our debt. We will receive an additional $150.0 no later than September 30, 2027, of which up to $30.0 is contingent on certain criteria. Under the terms of the agreement, we will continue to operate the Gucci Beauty brand through at least June 30, 2027.
In addition to servicing debt and funding working capital requirements, the Company expects to utilize cash for restructuring plans and initiatives designed to simplify its operating model, optimize its cost structure and enhance operating efficiency. Total remaining cash costs associated with the Fixed Cost Reduction Plan, Consumer Beauty Restructuring and other initiatives are expected to be approximately $63.2, to be incurred across fiscal 2027, fiscal 2028, and thereafter. We incurred approximately $33.2 of cash costs life-to-date related to our previously announced Fixed Cost Reduction Plan as of September 30, 2026, which have been recorded in Corporate.
The Company is actively pursuing recovery of certain amounts paid in connection with IEEPA tariffs. While the Company believes it may be entitled to recover a portion of such amounts, recovery remains subject to review and approval by CBP. As a result, the amount and timing of any refunds ultimately received remain uncertain and could differ materially from the amounts claimed. The Company continues to monitor developments and evaluate the potential impact of such recoveries on its financial condition, results of operations and cash flows.
Debt Financing
We are in the process of deleveraging our company, including through refinancing or repayment of a portion of our debt. We expect to continue to take actions to improve the maturity mix of our debt, including through refinancings or new issuances of notes, as well as redemptions and/or tender offers for near-dated maturities, from time to time as market conditions permit. The applicable interest rates have been, and are likely to continue to be, higher than previous applicable interest rates, due in large part to prevailing macroeconomic conditions and our credit ratings at the time. Despite these higher interest rates, we expect that our interest expense will be favorably impacted by lower overall debt balances as we continue to deleverage. The Company recently received a rating downgrade. We do not currently believe this will materially impact our overall liquidity; however, it may potentially increase our borrowing costs for future issuances of debt. Refer to Note 11 — Debt for additional information.
Share Repurchases
In connection with our Share Repurchase Program, we entered into forward repurchase contracts in June 2022, December 2022, and November 2023 with three large financial institutions to hedge for $200.0, and a potential $196.0 and $294.0 of share repurchases in 2024, 2025 and 2026, respectively. We physically settled the June 2022 forward repurchase contracts by delivering approximately $200.0 cash in exchange for 27.0 million shares of our Class A Common Stock during fiscal 2024.
Our remaining forward repurchase contracts permit a net cash settlement alternative in addition to the physical settlement. We will continue to incur costs associated with the remaining forward repurchase contracts before settlement. Cash costs incurred in the current fiscal year to date for all forward repurchase contracts amounted to $1.0.
Reductions in the price of our Class A Common Stock may trigger additional payments under our remaining forward repurchase contracts. This would result in a downward adjustment to the initial price at acquisition for these forward repurchase contracts. During the three months ended September 30, 2026, no additional payments were triggered.
See Footnote 15—Derivative Instruments for additional information on the Company's forward repurchase contracts.
Factoring of Receivables
From time to time, we supplement the timing of our cash flows through the factoring of trade receivables. In this regard, we have entered into factoring arrangements with financial institutions.
The net amount outstanding under the factoring arrangements was $213.3 and $164.1 as of September 30, 2026 and June 30, 2026, respectively. The aggregate amount of trade receivable invoices factored on a worldwide basis amounted to $358.4 and $366.5 during the three months ended September 30, 2026 and 2025, respectively.
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Cash Flows
| Three Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Condensed Consolidated Statements of Cash Flows Data: (in millions) | |||||||||||
| Net cash provided by operating activities | $ | 130.4 | $ | 65.2 | |||||||
| Net cash provided by (used in) investing activities | 204.2 | (53.8) | |||||||||
| Net cash used in financing activities | (299.5) | (7.6) | |||||||||
Net cash provided by operating activities
Net cash provided by operating activities was $130.4 and $65.2 for the three months ended September 30, 2026 and 2025, respectively. The increase in cash provided by operating activities of $65.2 was primarily driven by a net inflow from changes in working capital accounts, partially offset by lower cash-related net income year-over-year. The net inflow from changes in working capital was mainly due to higher inflows from accounts payable and accrued expenses and a shift in timing of net revenues driving the year-over-year fluctuation in trade receivables, partially offset by an increase in inventory safety-stock levels.
Net cash provided by (used in) investing activities
Net cash provided by (used in) investing activities was $204.2 and $(53.8) for the three months ended September 30, 2026 and 2025, respectively. The decrease in cash used in investing activities of $258.0 was primarily attributable to $250.0 in proceeds received related to a license termination. The remaining increase was mainly driven by the timing of capital expenditures and related cash payments, which resulted in lower net cash outflows from investing activities compared to the prior-year period.
Net cash used in financing activities
Net cash used in financing activities during the three months ended September 30, 2026 and 2025 was $299.5 and $7.6, respectively. The increase in cash used in financing activities of $291.9 was primarily attributable to net repayments of the Company's revolving credit facility in the current period using the initial proceeds from a license termination, compared to net borrowings on the revolving facility in the prior period. Higher net repayments of debt were partially offset by lower payments associated with the Company's forward repurchase contracts, as no Hedge Valuation Adjustment payments were made in the current period compared to $53.9 of payments in the prior period.
Dividends
On April 29, 2020, the Board suspended the payment of dividends on Common Stock. As previously disclosed, we expect to suspend the payment of dividends until we approach a Net debt to Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) target of 2x. We expect to consider any future resumption of dividends in line with that target while continuing to pursue our deleveraging agenda and implementing our strategic initiatives. Any determination to pay dividends in the future will be at the discretion of our Board of Directors.
Dividends on the Convertible Series B Preferred Stock are payable in cash, or by increasing the amount of accrued dividends on Convertible Series B Preferred Stock, or any combination thereof, at the sole discretion of the Company. We expect to pay such dividends in cash on a quarterly basis, subject to the declaration thereof by our Board of Directors. The terms of the Convertible Series B Preferred Stock restrict our ability to declare cash dividends on our common stock until all accrued dividends on the Convertible Series B Preferred Stock have been declared and paid in cash.
For additional information on our dividends, see Note 16—Equity and Convertible Preferred Stock in the notes to our Condensed Consolidated Financial Statements.
Treasury Stock - Share Repurchase Program
For information on our Share Repurchase Program, see Note 16—Equity and Convertible Preferred Stock in the notes to our Condensed Consolidated Financial Statements.
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Commitments and Contingencies
See Note 19—Redeemable Noncontrolling Interests in the notes to our Condensed Consolidated Financial Statements for information on our subsidiary in the Middle East.
Legal Contingencies
Cosmetic Talcum Powder Matters. The Company has been named as a defendant in numerous civil actions alleging that certain cosmetic talcum powder products sold by the Company were contaminated with asbestos leading to claims of bodily injury. While the Company and its legal counsel intend to continue to defend these cases vigorously as well as exploring various means of resolving claims before trial, there can be no assurances regarding the ultimate resolution of these matters, individually or collectively, or that such resolutions will not be material in nature.
For additional information on our litigation matters and Brazilian tax assessments, see Note 20—Commitments and Contingencies in the notes to our Condensed Consolidated Financial Statements. In relation to the appeal of our Brazilian tax assessments, we have entered into surety bonds of R$1,101.7 (approximately $211.7) as of September 30, 2026.
Off-Balance Sheet Arrangements
We had undrawn letters of credit and bank guarantees that were not material to our liquidity as of September 30, 2026. For additional information on our arrangements, see Note 11—Debt in the notes to our Condensed Consolidated Financial Statements. We had undrawn letters of credit of $4.8 and $4.8 and bank guarantees of $16.6 and $17.7 as of September 30, 2026 and June 30, 2026, respectively.
Contractual Obligations
Our principal contractual obligations and commitments as of June 30, 2026 are summarized in Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Contractual Obligations and Commitments,” of our Fiscal 2026 Form 10-K. Refer to Item 2 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Share Repurchases” above for discussion of the obligations related to our announced share repurchase during fiscal 2024. For the three months ended September 30, 2026, there have been no other material changes in our contractual obligations outside the ordinary course of business.
Critical Accounting Policies
We believe that the critical accounting policies listed below involve our more significant judgments, assumptions and estimates and, therefore, could have the greatest potential impact on our Condensed Consolidated Financial Statements:
•Revenue Recognition;
•Goodwill, Other Indefinite-Lived Intangible Assets and Long-Lived Assets;
•Inventory; and
•Income Taxes.
As of September 30, 2026, there have been no material changes to the items disclosed as critical accounting policies and estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II—Item 7 of our Fiscal 2026 Form 10-K.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
See Note 15—Derivative Instruments for updates to our foreign currency risk management and interest rate risk management. There have been no material changes in market risk from the information provided in Item 7A. Quantitative and Qualitative Disclosures About Market Risk of our Fiscal 2026 Form 10-K.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
Our management, with the participation of our interim Chief Executive Officer (the “CEO”) and our Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2026. Based on the
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evaluation of our disclosure controls and procedures as of September 30, 2026, our CEO and CFO concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(f) of the Exchange Act during the first fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our CEO and CFO, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving our objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings.
For information on our legal matters, see Note 20—Commitments and Contingencies in the notes to our Condensed Consolidated Financial Statements.
Item 1A. Risk Factors.
There have been no material changes to the risk factors previously disclosed in Part I, Item 1A under the heading “Risk Factors” in our Annual Report on Form 10-K for fiscal 2026.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
No shares of our Class A Common Stock were repurchased during the fiscal quarter ended September 30, 2026.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the three months ended September 30, 2026, none of the Company’s directors or Section 16 reporting officers adopted terminated
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Item 6. Exhibits, Financial Statement Schedules.
The exhibits listed below are filed as part of this Quarterly Report on Form 10-Q:
| Exhibit Number | Description | |||||||||||||||||||||||||
10.1 | Employment Agreement, effective September 1, 2026, by and between COTY SAS and Soraya Zoueihed Benchikh (incorporated by reference to (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 20, 2026).† | |||||||||||||||||||||||||
10.2 | Transition Agreement dated September 9, 2026, by and between COTY SAS and Laurent Mercier. † | |||||||||||||||||||||||||
31.1 | Certification of Chief Executive Officer, pursuant to Rule 13a-14(a). | |||||||||||||||||||||||||
31.2 | Certification of Chief Financial Officer, pursuant to Rule 13a-14(a). | |||||||||||||||||||||||||
32.1 | Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350. | |||||||||||||||||||||||||
32.2 | Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350. | |||||||||||||||||||||||||
| 101.INS | Inline XBRL Instance Document. | |||||||||||||||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |||||||||||||||||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||||||||||||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||||||||||||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document. | |||||||||||||||||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). | |||||||||||||||||||||||||
| † Exhibit is a management contract or compensatory plan or arrangement. | ||||||||||||||||||||||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| COTY INC. | |||||||||||
| Date: November 5, 2026 | By: | /s/Markus Strobel | |||||||||
| Name: Markus Strobel | |||||||||||
| Title: Executive Chairman and Interim Chief Executive Officer | |||||||||||
| (Principal Executive Officer) | |||||||||||
| /s/Soraya Benchikh | |||||||||||
| Name: Soraya Benchikh | |||||||||||
| Title: Chief Financial Officer | |||||||||||
| (Principal Financial Officer) | |||||||||||
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