This article recaps the highlights from Coty’s Q2 2026 earnings call, focusing on the leadership message, the Consumer Beauty turnaround plan called Color the Future, margin pressure drivers, and channel and innovation strategies that management says will restore growth. It pulls the main points from remarks by Executive Chairman and Interim CEO Markus Strobel and CFO Laurent Mercier, and it keeps key short quotes exactly as delivered. Read on for a clear, no-fluff take on what management plans to do, where the risks still sit, and which moves might matter to the company’s recovery.
Coty opened the call acknowledging underperformance and a leadership reset. Management described a three- to four-point priority approach under a program they call Color the Future, centered on focusing on iconic Consumer Beauty franchises, simplifying innovation bundles, and reallocating marketing dollars into working media and digital tactics. The aim is straightforward: drive sell-out and market share rather than just sell-in.
Markus Strobel: All right. Thanks, Filippo. I’ll take that on. The company is targeting core brands such as CoverGirl and Rimmel and is trimming SKU clutter to protect fast-rotating products on shelf. Early results on tightened assortments are described as encouraging, but executives warned the tactical shift will cause near-term pipeline softness while improving velocity over time.
The innovation playbook is changing too. Instead of massive multi-SKU spring bundles that diluted returns, Coty plans smaller, sharper bundles with quicker rotation, plus experiments using AI to cut asset-creation costs. Management claimed some experiments suggest asset production can be 70% to 80% cheaper, freeing budget for consumer-facing activity and influencer work to drive true sell-out.
On margins, Laurent Mercier was blunt that the Consumer Beauty division has lagged and that the recovery will take time. He said the detailed plans are in place and that benefits from SKU rationalization, A&P optimization, and SG&A discipline should begin to show in fiscal 2027. The message was clear: execution speed matters and investors should not expect an immediate margin pop this quarter.
Channel strategy is getting a modern refresh. Coty noted strong recent growth on e-commerce platforms, with Prestige sales on Amazon up roughly 30% over the last six months and a successful Marc Jacobs launch cited as evidence. The company is also experimenting with TikTok Shop and other social commerce routes while stressing the need to protect traditional retail footprints where legacy consumers still shop.
Innovation versus core is a recurring tension. Management used Hugo Boss as an example where a successful new SKU, Boss Bottled Beyond, lifted the innovation but didn’t necessarily expand the overall franchise. The point: new launches must be surgical and designed to halo the franchise rather than cannibalize core SKUs and shelf presence.
Promotions and cost headwinds weighed on Q2 gross margin. Mercier pointed to elevated promotionality and markdowns in Prestige during the back half of the quarter, plus tariff and FX pressures—tariffs were cited at about $8 million in Q2 and expected to remain below $40 million for the full year. Those factors, combined with fixed cost under-absorption in color cosmetics, explain much of the margin softness.
Data and analytics work is a key operational pivot. Management wants a single source of truth, better offtake signals, and tighter joint business plans with retailers so sell-out drives sell-in. They are investing in a data lake and AI tools to tie KPIs to concrete actions, hoping better measurement will prevent repeats of past execution errors.
Leadership also addressed the upcoming Gucci license exit and portfolio moves. Plans include new product pipelines across brands like Marc Jacobs, Calvin Klein, Swarovski, Armani and Etro to offset gaps and to rethink cost structure as the business transitions. Management said it remains open to shareholder-friendly deals but emphasized organic pipeline and execution as primary levers.
Markus Strobel: All right. Thanks for the call. We recognize that our recent financial performance has not met expectations. There’s no sugar coating it.
