Coty Inc. Q3 FY2026 earnings call

• On prestige sell-in vs sell-out gap: Reasons include Middle East impact, promotional environment, European retailers overstocking post-Christmas. On consumer beauty: Closed gap to category, changed to sell-out oriented with smaller bundles and innovation focus. - Innovation: Focus on right innovation with halo effect, reducing number of activities but making bigger, better ones. - Consumer engagement: Change to fewer assets, more working media, focus on advocacy. - Sell-out culture: Change company culture to sell-out oriented, ask sell-out plans for innovations, align with retailer cadence. - ROI lens: Measure all actions and media spending for ROI.

For prestige, saw some sellout growth but sell-in trailing with reasons like Middle East, promotional environment, and European retailers overstocking for Christmas. For consumer beauty, closed gap to category in unit volume and value, changed to sell-out oriented with smaller bundles and exiting smaller markets. Revenue contribution % not detailed explicitly in absolute terms provided.

• Expectations for Q4 and FY27 regarding selling vs sellout gap improvement. - Plan to manage oil price impact on raw materials, distribution, logistics. - Expect to improve EBITDA year-on-year trends in FY27 with focus on sell-out and managing inflation.

• Middle East situation impacting sales. - Higher oil prices affecting raw materials, distribution, logistics. - Elevated promotional environment affecting margins.

Q: Filippo Falroni asked about selling versus sellout gap for prestige and consumer beauty and margin exposure to oil prices.

A: Marcus and Laurent discussed reasons for prestige sell-in vs sell-out gap and consumer beauty's progress, and Laurent talked about oil price impact on margins.

Q: Olivia Tong asked about when sell-in and sell-out would converge and building blocks for category growth.

A: Marcus discussed innovation, consumer engagement, sell-out culture, and ROI lens as building blocks.

Q: Sydney Wagner asked about repeatable strategic steps from CoverGirl and fit in mass retail.

A: Marcus talked about making CoverGirl a Gen X brand and applying model to other brands.

Q: Oliver Chen asked about sell-out culture's impact on systems, working capital, and A&P shift.

A: Marcus and Laurent discussed culture change, working capital benefits, and A&P focus on big bets.

Q: Susan Anderson asked about Orveda exit and tariffs.

A: Marcus discussed Orveda exit timeline and Laurent talked about tariffs.

Q: Charles Scotti asked about competitive environment and license disposal rumors.

A: Marcus talked about competitive environment resilience and denied license disposal rumors.

Q: Andrea Tesarov asked about brand rationalization iteration and margin impact.

A: Marcus talked about innovation iteration and margin benefits from sell-out focus.

Q: Bonnie Herzog asked about FY27 impact from Middle East and EBITDA.

A: Marcus and Laurent discussed Middle East dynamics and EBITDA trend expectations.

Q: Anna Lazoul asked about promotional environment normalization.

A: Marcus talked about managing promotional environment and revenue management.