Coty beats quarterly revenue, calls fiscal 2027 'transition year' on business overhaul

Aug. 19 (Reuters) - Coty on Wednesday posted a surprise increase in fourth-quarter revenue on resilient demand for fragrances and cosmetics, and said fiscal 2027 would be a "transition year" as it conducts a strategic review to focus on its key brands.

The company is advancing its "Coty. Curated." strategy to simplify its business and conducting a review of the consumer beauty division, at a time when geopolitical conflicts and economic uncertainty have made customers tighten spending.

The review, expected to complete by year-end, could lead to the sale of brands such as CoverGirl and Rimmel.

The initiative, along with a cost-reduction program, would help offset a likely sales hit in fiscal 2028 from its early return of Gucci Beauty license to Kering, and support profit growth from fiscal 2029, Coty said.

Coty's net revenue rose 1.3% to $1.27 billion in the quarter ended June 30, compared with analysts' average estimate of a 4.6% decline, according to data compiled by LSEG.

"Consumer demand for beauty remains resilient, with continued growth in fragrances and cosmetics, although consumers are becoming increasingly selective in their purchasing decisions," the company said.

Coty said it saw a roughly 1% impact from the Middle East conflict, which was less severe than the 2% to 3% hit it forecast in May.

Quarterly adjusted loss per share narrowed to 2 cents from 5 cents a year ago, but was wider than analysts' expectation of a 1-cent loss.

Peers Estée Lauder and e.l.f. Beauty recently forecast a stronger year ahead on steady demand for beauty products.