Amidst a challenging fiscal year, Coty Inc. has expressed dissatisfaction with its net revenue performance, despite strengthening strategic, operational, and financial foundations.

Coty predicts a return to growth as it moves forward with its initiatives to optimise processes, despite reporting a 6% decline in revenue for the third quarter, ending March 31, with a decrease in revenue of $1.299 billion (£978 million). Short-term reductions helped the owner of Kylie Cosmetics and Rimmel London achieve a 2% improvement in adjusted EBITDA to $204.2 million (£153 million).

This dip highlights the decline in the prestige fragrance sector. A loss in sales of prestige makeup, and higher comparisons from the previous year due to significant fragrance launches caused prestige revenue to fall by 4% to $829.4 million (£625 million).

At the same time, revenue in the consumer cosmetics division dropped 9% to $469.7 million (£353 million). This indicates a decline in sales of body care and colour cosmetics, which has been countered by an increase in mass skincare and fragrance sales.

Looking ahead, Coty revealed its “robust” plans to boost premium growth in FY26 and beyond. These plans include potential in fragrance, “blockbuster” new launches, and the expansion of one of its “major” brands into the US.

The company’s CEO, Sue Nabi, conveyed confidence in future growth, citing a “multi-pronged attack-plan” focused on innovation, distribution, and efficiency improvements. This approach aims to drive operational and financial improvements in fiscal year 2026 and beyond, even as the company navigates a “transition year” in fiscal 2025.

Innovations across its mass fragrance brands, the introduction of new fragrance lines co-developed with important retail partners, and the introduction of “cutting-edge” technology within its cosmetics portfolio are anticipated to generate revenue growth in the consumer beauty sector.  A focus on high-performing channels, such as e-commerce and TikTok Shop, will help to support this.

The next phase of Coty’s All in To Win program will support wider company growth by increasing agility and scale and unlocking $370 million in productivity and fixed cost savings in FY26 and FY27.

Sue Nabi, CEO at Coty, said: “Across economic cycles, beauty has remained resilient for decades. Even in this challenging landscape, we have significantly strengthened our strategic, operational, and financial fundamentals, driving margin expansion, stronger cash flow generation, and substantial deleveraging over the past four years.

“While we are not satisfied with our revenue performance, Coty’s strong fundamentals, coupled with our multi-pronged attack-plan for accelerating innovation, distribution and efficiencies, gives us confidence for the years ahead.

“Importantly, we are in control of our destiny and are already making the changes needed to address many of these challenges, with new leadership in the US as the market has slowed in recent months, an updated organisational structure to drive faster changes and improved execution, and a robust cost savings program to protect our P&L and increase our firepower to accelerate our business.”

As part of a new push to streamline its operations, Coty plans to lay off up to 700 employees. According to the corporation, the cost-cutting plan aims to strengthen its emphasis on important innovations and strategic market priorities, simplify and scale the operating model, and simplify various activities and markets.

The following are important pillars of the “next phase of transformation”:

• Markets and regions at scale – Simplifying the organisational structure in important markets to improve alignment with the local and regional retail landscape consolidation, eliminate redundancy, and unleash operational efficiencies.
• Support functions to be streamlined to better fit the new regional structures by centralising and consolidating support function operations.
• Increase the effect of innovation by focusing organisational resources and efforts on a smaller number of more significant projects and by identifying important launch priorities early in the process.
•  Spend less on general and administrative expenses. Reduce non-person fixed costs in all areas of spending in a structural manner.