By Kelly Cloonan

Coty's sales edged down in its latest quarter as the conflict in the Middle East hurt demand for its beauty products in the region.

The beauty company posted a fiscal third-quarter loss of $411.4 million, or 47 cents a share, compared with a loss of $409 million, or 47 cents a share, a year earlier.

Adjusted loss per share was 3 cents.

The recent earnings per share figures include a 5 cent headwind from a mark-to-market on an equity swap.

The company had previously forecast approximately breakeven adjusted earnings per share excluding the equity swap.

Revenue ticked down 1% to $1.28 billion, compared with analyst estimates of $1.27 billion.

Excluding currency translation, revenue declined 7%, including an estimated 1.4% headwind from the conflict in the Middle East, Coty said. The company had guided for like-for-like revenues to decline by a mid-single-digit percentage.

Sales in Coty's prestige business, which includes brands such as Kylie Cosmetics and fragrances by Gucci and Marc Jacobs, were flat at $830.9 million. In its consumer beauty segment, which includes drugstore brands like CoverGirl, Sally Hansen and Rimmel, revenue fell 4% to $450.7 million.

Coty said its results were below its potential on an absolute basis, but its profitability tracked ahead of its expectations despite disruption from the conflict.

"This was a welcome first step, as we begin to gradually strengthen our operational control and execution," Interim Chief Executive Markus Strobel said.

Coty is working to focus its investments and boost support behind its core businesses, including efforts to cut down on the number of smaller launches and decrease its marketing asset production costs with the help of artificial intelligence. The company is also looking to ramp up its spending on consumer engagement and simplify its operations, Strobel said, noting the efforts will take time.

Coty said the conflict in the Middle East continues to weigh on sales trends in the region, though consumer demand in developed markets has remained consistent with recent periods.

For the fiscal fourth quarter, Coty guided for revenue to decline by a mid-single-digit percentage on a like-for-like basis. The company expects headwinds in its Middle East business to weigh on fourth-quarter sales by an estimated 2% to 3%.

Coty expects adjusted earnings of breakeven to a loss of 2 cents per share, excluding the equity swap, for the current quarter.

For the full year, the company now expects adjusted earnings of 33 cents to 35 cents, excluding the equity swap. It forecasts adjusted earnings before interest, taxes, depreciation and amortization of about $838 million to $848 million. In February, the company withdrew its prior fiscal-year guidance for adjusted Ebitda, citing a complex beauty market backdrop and its leadership transition.

Write to Kelly Cloonan at kelly.cloonan@wsj.com

(END) Dow Jones Newswires

May 05, 2026 16:30 ET (20:30 GMT)

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