COTY INC.

Current report

We have been engaged in the process of strategic planning and portfolio assessment designed to position us for consistent, profitable growth. In September 2025, we announced a strategic review of our consumer beauty business, including its mass color cosmetics business and associated brands and our distinct Brazil business comprised of local Brazilian brands. Markus Strobel was appointed by the Board of Directors (the “Board”) as Executive Chairman of the Board and Interim Chief Executive Officer (“Interim CEO”), effective January 1, 2026, and in March 2026, the Company’s Board of Directors appointed five new independent directors. While our long-term objectives remain focused on value creation, growth, profitability, and deleveraging, our Interim CEO continues to conduct a comprehensive review of the business to assess opportunities to enhance performance, strengthen competitive positioning, and improve execution across key areas. We are also evaluating our central organization, manufacturing and asset base, and certain market structures to adjust our scope and size for our future business.

Current report

We are focused on leveraging our leadership position and capabilities in global fragrances to fuel expansion. We have sharpened our priorities to capitalize on structural tailwinds in the fragrance market, while responding to recent performance challenges. We will continue strengthening our presence in a limited number of structurally profitable and growing beauty categories, in growth channels such as e-commerce and the Travel Retail channel, all while continuing to deliver against our key sustainability priorities. We are methodically implementing the Coty.Curated strategic framework announced in the third quarter of fiscal 2026, centered on sharper priorities, more focused investments, improved execution, and increased support behind our core businesses. In both divisions, we are focused on returning to market share growth, accelerating data-driven operations powered by AI, and improving our advocacy capability and execution. On July 2, 2026 we announced that the Interim CEO will temporarily take direct control of Prestige commercial operations. This change will bring leadership closer to the markets, allows for faster decision-making, and sharpens accountability for sell-out and market share. As part of these changes, Coty will integrate Prestige R&D and sustainability with supply chain into one simplified function. Bringing prestige innovation, sustainability, and supply chain together under one leader streamlines how the company develops and delivers behind its core businesses. As part of the ongoing strategic review of the Consumer Beauty business, we continue to make progress on our “Color the Future” roadmap to improve Consumer Beauty cosmetics performance, supported by more consistent media investment behind key franchises, a more focused innovation pipeline, ongoing value chain optimization, and actions to stabilize gross margins over time.

Current report

On February 20, 2026, the U.S. Supreme Court issued a decision addressing the scope of tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). This ruling may allow for the recovery of IEEPA tariff amounts previously paid. The ruling leaves uncertainties regarding the timing and administration of any potential IEEPA tariff refunds by the U.S. government and may be subject to further legal and regulatory developments. Following the U.S. Supreme Court ruling, the administration replaced the invalidated IEEPA tariffs with tariffs under Section 122 of the Trade Act of 1974, in addition to any existing non-IEEPA tariffs. On April 20, 2026, Customs and Border Patrol “(CBP”) began accepting phase one IEEPA claim submissions for validation and processing in the Consolidated Administration and Processing of Entries system. On May 7, 2026, the U.S. Court of International Trade (“CIT”) ruled that Section 122 tariffs are unlawful; however, the court’s injunction applies only to the named plaintiffs, while tariffs remain in effect for all other importers pending appeal. On May 29, 2026, the administration issued notice to the CIT of its intent to appeal the court’s order requiring universal refunds and the reliquidation of finally liquidated entries. On July 24, 2026, the previous Section 122 tariffs expired and tariffs under Section 301 with rates of 10% to 12.5% went into effect. The Company is actively pursuing refund recovery activities related to IEEPA tariffs following ongoing validation and reconciliation of its claims; however, recovery of such amounts is ultimately contingent upon CBP review and acceptance of the Company's submissions and supporting documentation. As a result, the amount and timing of any refunds ultimately received could differ materially from the amounts claimed.

Current report

Middle East Conflict: In February 2026, geopolitical tensions in the Middle East escalated significantly leading to a military conflict involving the United States, Israel, and Iran, and resulting in regional instability and increased volatility in global energy markets. We have mitigated certain direct impacts, including those related to disruptions in regional shipping routes such as transit through the Strait of Hormuz. Continued or expanded conflict could adversely affect global economic conditions, supply chains, transportation logistics, and customer demand, and is expected to impact our financial condition, and results of operations. Impacts may vary depending on how conditions develop across the region and in global markets. Net revenues in the Middle East accounted for approximately mid-single digit percentage of our consolidated net revenue for fiscal 2026 and declined year over year by a mid-single digit percentage, with a larger impact in the second half of the year after the start of the regional conflict. The Middle East accounted for approximately mid-single-digit percentage and low-single-digit percentage of Prestige and Consumer Beauty segment fiscal 2026 net revenues, respe ctively. We currently estimate that, if Brent crude oil prices fall within the range of $90 to $100 per barrel due to the Middle East conflict, our operating results in fiscal 2027 could be impacted by an increase of approximately $20.0 to $30.0 in cost of goods sold.

Current report

•Fragrances: We believe fragrances will remain a structurally advantageous, though highly competitive, category, supported by beauty category-leading brand loyalty, strong consumer demand, increasing usage, broader price points and formats, and expanding global penetration. Overall, the Prestige fragrance market grew by mid-single digits. Our net revenues from prestige fragrances decreased by a low-single digit percentage in fiscal 2026, compared to low-single digit growth in the prior year. The Gucci license exit will result in a decrease in net revenues and net income in fiscal 2028; we expect partial mitigation of the impact as a result of anticipated major launches across several of our top brands and a planned calendar 2027 debut of Swarovksi fragrances. Net revenue from Consumer Beauty fragrance declined by high-single digits in fiscal 2026, while the mass fragrance market grew by low-double digits. Within our Consumer Beauty segment, we are planning to concentrate resources behind core brands and priority markets while simplifying the broader portfolio.

Current report

•Color Cosmetics: Our net revenues from prestige color cosmetics increased by a double-digits percentage, outpacing the mid-single digit growth of the prestige color cosmetics market, driven by strong sales from Burberry and Kylie cosmetics. We believe new portfolio additions from Marc Jacobs Beauty makeup, will further elevate our performance. In Consumer Beauty, color cosmetics net revenues declined by a mid-single digit percentage despite mid-single digit market growth. Encouragingly, through the second half of fiscal 2026 we narrowed our retail sales gap to the market in certain Consumer Beauty color cosmetics brands, with sell-out performance in the United States improving for CoverGirl and Sally Hansen.

Current report

•Skin and Body Care: Net revenues from Prestige skincare decreased by a low-single digit percentage in fiscal 2026, despite mid-single digit market growth. In Prestige skincare, profitability has improved materially in the past quarter as we transition out of a multi-year investment phase and sharpen our focus on the brands, markets and channels with the strongest return potential. Net revenues from Consumer Beauty skin and body care increased by a low-single digit percentage in fiscal 2026, an improvement from the low-double digit percentage decline in net revenues in fiscal 2025. Competitive pricing actions in Brazil that pressured demand for certain of our deodorant brands eased in the final months of fiscal 2026 and we are seeing an acceleration of our sell-out growth supported by positive trends in the Brazil mass body care market.

Current report

We expect fiscal 2027 to be a transition year as we strengthen our business and continue shaping a simpler, more focused Coty, factoring in the expected Gucci exit by fiscal 2028 and final decisions related to our strategic review of Consumer Beauty. The Gucci license exit will result in a decrease in net revenues and net income in fiscal 2028. We intend to take actions to mitigate this impact, including strengthening our innovation pipeline for our core prestige fragrance brands and supporting portfolio initiatives across our other major brands, with the goal of improving sales and profitability. We will continue to develop robust plans to mitigate the impact of the Gucci license exit while balancing other priorities that remain a focus of our ongoing strategic review. In anticipation of the Gucci license exit, we are developing a savings plan and expect to begin implementation in the second half of fiscal 2027. The plan will target stranded central and divisional costs through changes to the global go-to-market setup, manufacturing and distribution footprint, organizational layers, and the rightsizing of central functions.

Current report

We expect our reported net revenues for the first quarter of fiscal 2027 to decline by a low- to mid-single-digit percentage compared with the prior year, including a neutral impact from foreign exchange. We anticipate that our gross margin for the first quarter of fiscal 2027 will be pressured by lower sales and unfavorable cost absorption, partially offset by improved excess and obsolescence costs.

Current report

Non-GAAP Financial Measures

Current report

To supplement the financial measures prepared in accordance with GAAP, we use non-GAAP financial measures for Coty Inc. including Adjusted operating income (loss), Adjusted EBITDA, Adjusted net income (loss), Adjusted net income before income taxes and Adjusted net income (loss) attributable to Coty Inc. to common stockholders (collectively, the “Adjusted Performance Measures”). The reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are shown in tables below. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for or superior to, financial measures reported in accordance with GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of the business as determined in accordance with GAAP. Other companies, including companies in the beauty industry, may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.

Current report

Despite the limitations of these non-GAAP financial measures, our management uses the Adjusted Performance Measures as key metrics in the evaluation of our performance and annual budgets and to benchmark performance of our business against our competitors. The following are examples of how these Adjusted Performance Measures are utilized by our management:

Current report

•strategic plans and annual budgets are prepared using the Adjusted Performance Measures;

Current report

•senior management receives a monthly analysis comparing budget to actual operating results that is prepared using the Adjusted Performance Measures; and

Current report

•senior management’s annual compensation is calculated, in part, by using some of the Adjusted Performance Measures.

Current report

In addition, our financial covenant compliance calculations under our debt agreements are substantially derived from these Adjusted Performance Measures.

Current report

Our management believes that Adjusted Performance Measures are useful to investors in their assessment of our operating performance and the valuation of the Company. In addition, these non-GAAP financial measures address questions we routinely receive from analysts and investors and, in order to ensure that all investors have access to the same data, our management has determined that it is appropriate to make this data available to all investors. The Adjusted Performance Measures exclude the impact of certain items (as further described below) and provide supplemental information regarding our operating performance. By disclosing these non-GAAP financial measures, our management intends to provide investors with a supplemental comparison of our operating results and trends for the periods presented. Our management believes these measures are also useful to investors as such measures allow investors to evaluate our performance using the same metrics that our management uses to evaluate past performance and prospects for future performance. We provide disclosure of the effects of these non-GAAP financial measures by presenting the corresponding measure prepared in conformity with GAAP in our financial statements, and by providing a reconciliation to the corresponding GAAP measure so that investors may understand the adjustments made in arriving at the non-GAAP financial measures and use the information to perform their own analyses.

Current report

Adjusted operating income (loss) / Adjusted EBITDA excludes restructuring costs and business structure realignment programs, amortization, acquisition- and divestiture-related costs and acquisition accounting impacts, stock-based compensation, and asset impairment charges and other adjustments as described below. For Adjusted EBITDA, in addition to the preceding, we exclude adjusted depreciation as defined below. We do not consider these items to be reflective of our core operating performance due to the variability of such items from period-to-period in terms of size, nature and significance. They are primarily incurred to realign our operating structure and integrate new acquisitions, and implement divestitures of components of our business, and fluctuate based on specific facts and circumstances. Additionally, Adjusted net income attributable to Coty Inc. and Adjusted net income attributable to Coty Inc. per common share are adjusted for certain interest and other (income) expense items, as described below, and the related tax effects of each of the items used to derive Adjusted net income (loss) as such charges are not used by our management in assessing our operating performance period-to-period.

Current report

Adjusted Performance Measures reflect adjustments based on the following items:

Current report

•Costs related to acquisition and divestiture activities: We have excluded acquisition- and divestiture-related costs and the accounting impacts such as those related to transaction costs and costs associated with the revaluation of acquired inventory in connection with business combinations because these costs are unique to each transaction. Additionally, for divestitures, we exclude write-offs of assets that are no longer recoverable and contract related costs due to the divestiture. The nature and amount of such costs vary significantly based on the size and timing of the acquisitions and divestitures, and the maturities of the businesses being acquired or divested. Also, the size, complexity and/or volume of past transactions, which often drives the magnitude of such expenses, may not be indicative of the size, complexity and/or volume of any future acquisitions or divestitures.

Current report

•Restructuring and other business realignment costs: We have excluded costs associated with restructuring and business structure realignment programs to allow for comparable financial results to historical operations and forward-looking guidance. In addition, the nature and amount of such charges vary significantly based on the size and timing of the programs. By excluding the referenced expenses from our non-GAAP financial measures, our management is able to further evaluate our ability to utilize existing assets and estimate their long-term value. Furthermore, our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.

Current report

•Asset impairment charges: We have excluded the impact of asset impairments as such non-cash amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.

Current report

•Amortization expense: We have excluded the impact of amortization of finite-lived intangible assets, as such non-cash amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance. Although we exclude amortization of intangible assets from our non-GAAP expenses, our management believes that it is important for investors to understand that such intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets.

Current report

•Gain or loss on sale and early license termination: We have excluded the impact of gain or loss on sale and early license termination as such amounts are inconsistent in amount and frequency and are significantly impacted by the size of the sale and early license termination.

Current report

•Costs related to market exit: We have excluded the impact of direct incremental costs related to our decision to wind down our business operations in Russia. We believe that these direct and incremental costs are inconsistent and infrequent in nature. Consequently, our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.

Current report

•Gains on sale of real estate: We have excluded the impact of gains on sale of real estate as such amounts are inconsistent in amount and frequency and are significantly impacted by the size of the sale. Our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.

Current report

•Stock-based compensation: Although stock-based compensation is a key incentive offered to our employees, we have excluded the effect of these expenses from the calculation of Adjusted operating income (loss) and Adjusted EBITDA. This is due to their primarily non-cash nature; in addition, the amount and timing of these expenses may be highly variable and unpredictable, which may negatively affect comparability between periods.

Current report

•Depreciation and Adjusted depreciation: Our adjusted operating income excludes the impact of accelerated depreciation for certain restructuring projects that affect the expected useful lives of Property, Plant and Equipment, as such charges vary significantly based on the size and timing of the programs. Further, we have excluded adjusted depreciation, which represents depreciation expense net of accelerated depreciation charges, from our Adjusted EBITDA. Our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.

Current report

•Other (income) expense: We have excluded the impact of pension curtailment (gains) and losses and pension settlements as such events are triggered by our restructuring and other business realignment activities and the amount of such charges vary significantly based on the size and timing of the programs. Further, we have excluded the change in fair value of the investment in Wella and the Wella Distribution Rights, as well as expenses related to potential or actual sales transactions reducing equity investments, as our management believes these unrealized (gains) and losses do not reflect our underlying ongoing business, and the adjustment of such impact helps investors and others compare and analyze performance from period to period. Such transactions do not reflect our operating results and we have excluded the impact as our management believes that the adjustment of these items supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.

Current report

•Noncontrolling interest: This adjustment represents the after-tax impact of the non-GAAP adjustments included in Net income attributable to noncontrolling interests based on the relevant noncontrolling interest percentage.

Current report

•Tax: This adjustment represents the impact of the tax effect of the pretax items excluded from Adjusted net income (loss). The tax impact of the non-GAAP adjustments is based on the tax rates related to the jurisdiction in which the adjusted items are received or incurred. Additionally, adjustments are made for the tax impact of any intra-entity transfer of assets and liabilities. Also, in connection with our market exit in Russia, we have adjusted for the release of tax charges previously taken related to certain direct incremental impacts of the decision.

Current report

Constant Currency

Current report

We operate on a global basis, with the majority of our net revenues generated outside of the U.S. Accordingly, fluctuations in foreign currency exchange rates can affect our results of operations. Therefore, to supplement financial results presented in accordance with GAAP, certain financial information is presented in “constant currency,” excluding the impact of foreign currency exchange translations to provide a framework for assessing how our underlying businesses performed excluding the impact of foreign currency exchange translations. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. We calculate constant currency information by translating current and prior-period results for entities reporting in currencies other than U.S. dollars into U.S. dollars using prior year foreign currency exchange rates. The constant currency calculations do not adjust for the impact of revaluing specific transactions denominated in a currency that is different to the functional currency of that entity when exchange rates fluctuate, or for the impacts of hyperinflation. The constant currency information we present may not be comparable to similarly titled measures reported by other companies.

Current report

Basis of Presentation of Acquisitions, Divestitures, Terminations and Market Exits

Current report

During the period when we complete an acquisition, divestiture, early license termination, or market exit, the financial results of the current year period are not comparable to the financial results presented in the prior year period. When explaining such changes from period to period and to maintain a consistent basis between periods, we exclude the financial contribution of: (i) the acquired brands or businesses in the current year period until we have twelve months of comparable financial results, and (ii) the divested brands or businesses or early terminated brands or markets exited in the prior year period, to maintain comparable financial results with the current fiscal year period. Acquisitions, divestitures, early license terminations, and market exits that would impact the comparability of financial results between periods presented in the Management’s Discussion and Analysis of Financial Condition and Results of Operations are shown in the table below.

Current report

When used herein, the term “Acquisitions,” “Divestitures,” “Terminations,” and “Market Exit,” refer to the financial contributions of the related acquisitions or divestitures, early license terminations, and market exits shown above, during the period that is not comparable as a result of such acquisitions or divestitures, early license terminations, and market exits.

Current report

NET REVENUES

Current report

Consolidated Fiscal 2026 as Compared with Fiscal 2025

Current report

In fiscal 2026, net revenues decreased 2%, or $86.3, to $5,806.6 from $5,892.9 in fiscal 2025, reflecting a decrease in unit volume of 5%, offset by a positive foreign currency exchange translation impact of 4%. The overall decrease in net revenues reflects declines within both Consumer Beauty and Prestige. Declines within Consumer Beauty are primarily driven by increased market competitiveness in color cosmetics in the United States and in some European markets, as well as declining sales in mass fragrance, partially offset by growth in our mass skincare category. Declines in Prestige are primarily driven by prestige fragrances as a result of reduced distribution in certain sales channels, partially offset by growth in our prestige cosmetics category. Net revenues declined in the Americas and Europe, the Middle East and Africa (EMEA) region, but grew in Asia Pacific reflecting strong results in Asia travel retail. Improvements in digital and e-commerce channel sales partially offset the overall decrease in net revenues.

Current report

Consolidated Fiscal 2025 as Compared with Fiscal 2024

Previous report

We have been making progress on our strategic priorities. In Consumer Beauty, we have implemented the relaunch of our top brands. We are now focusing on diversifying our business by overdriving mass fragrances and adjacencies, while accelerating our color cosmetics business through digital advocacy, channel diversification and on-trend innovation, all of which is intended to step change our Consumer Beauty profitability. In Prestige, we are accelerating our fragrance business with exceptional new launches and franchise-building extensions, expanding our premium and ultra-premium category portfolio, extending into the rapidly growing fragrance mist adjacency with multiple brands, while also enhancing the assortment of our Prestige cosmetic products. We are continuing to thoughtfully expand our skincare portfolio (which contributed a mid-single digit percentage of our fiscal 2025 net revenue). We continue to expand our e-commerce capabilities across our portfolio, through online launches, our digital advocacy strategy and active participation in key online shopping events. We are adjusting our strategy in step with the beauty market evolution. Our aim is to continue expanding our footprint and diversifying into a limited number of structurally profitable and growing beauty categories and geographic markets at scale. We are leveraging and overdriving our leadership position and best-in-class capabilities in global fragrances to fuel strong expansion— with fragrances already constituting more than 65% of our fiscal 2025 net revenues and an even larger portion of our profits.

Previous report

•Fragrances: We believe fragrances will remain a structurally advantageous category, supported by beauty category-leading brand loyalty, strong consumer demand, increasing usage, broader price points and formats, and expanding global penetration. In fiscal 2025, our fragrance category experienced low-single digit percentage net revenue growth compared to the previous fiscal year, driven by high-single digit percentage, but decelerating, growth in the overall fragrance market. Net revenues from prestige fragrances increased by a low-single digit percentage in fiscal 2025, reflecting a deceleration in growth compared to the prior year, as the contribution from our fragrance innovation this fiscal year was more moderate than the contribution from major innovations in the previous fiscal year. With a slate of new launches scheduled for fiscal 2026 and beyond, we believe that our prestige fragrances are strategically positioned to achieve sustained growth and strong momentum across key markets. Within our Consumer Beauty segment, we are planning exciting new fragrance launches and strategic retail partnerships, expanding our mass fragrance presence into value segments. By innovating with leading brands and leveraging high-performing digital channels, we believe we are well positioned to build awareness and fuel demand.

Previous report

•Color Cosmetics: Our net revenues from mass color cosmetics declined by low-double digits percentage during the same period due to a weakening in market demand, particularly in the United States and in several European markets. Our net revenues from prestige color cosmetics declined by a double-digits percentage, impacted by economic conditions in Asia affecting a key brand in the region.

Previous report

•Skin and Body Care: Our skincare portfolio contributed a mid-single digit percentage of our fiscal 2025 net revenue. Competitive pricing actions in Brazil negatively impacted demand for certain of our deodorant brands leading to a high-double digit percentage decline in our body care net revenues during fiscal 2025, despite positive trends in the overall mass body care market. Positive, but decelerating, market trends in Brazil have supported volumes in the overall Consumer Beauty business, despite having a negative impact on the segment’s gross and operating margins.

Previous report

We expect that some of the market trends may continue into fiscal 2026.

Previous report

We expect that our reported net revenue for the first half of fiscal 2026 will decline in the low-single digit percentage versus the prior year, which includes an estimated low-single digit percentage benefit from foreign exchange. We anticipate that our first half fiscal 2026 gross margin will be pressured as a result of lower sales as well as the net impact from tariffs, with some easing in the second half fiscal 2026 as a result of mitigation efforts. We are re-accelerating our cost reduction efforts across to deliver savings of approximately $80.0 in fiscal 2026. We expect that our reported net revenue for the second half fiscal 2026 will return to growth versus the prior year, supported by major launches across both our Prestige and Consumer Beauty segments and more favorable comparisons.

Current report — wording carried from elsewhere

Recent changes in U.S. and international trade policies—particularly tariff increases—and the ongoing uncertainty surrounding such policies may present challenges to our business operations and financial condition. These challenges may include supply chain disruptions and commodity price volatility, resulting in increases in our cost of goods sold. Under the current tariff framework, the biggest areas of potential challenges for us are prestige fragrances shipped to the U.S. from our Barcelona plant, and the sourcing of various components and marketing materials from China. We currently estimate that our operating results will be impacted by approximately $32.7 in costs related to tariff increases, after mitigating actions, through the first quarter of fiscal 2027. Of this amount, approximately $29.3 was reflected in our fiscal 2026 operating results, with the remaining amount of approximately $3.4 expected to be reflected in the first quarter of fiscal 2027. Despite our efforts, reductions in consumer confidence and discretionary spending could impact demand for our products and negatively affect our sales. We are closely monitoring developments, evaluating potential impacts, and proactively taking steps to mitigate adverse effects on our business.