Coty’s second quarter was marked by a clear negative market reaction, as the company’s results beat analyst expectations for revenue but reported positive adjusted EPS, not a loss. Management attributed underperformance to weak U.S. execution, significant retailer inventory destocking, and a challenging comparison to last year’s blockbuster fragrance launches. CEO Sue Nabi acknowledged that focusing investments on less profitable U.S. mass beauty contributed to softer results, while CFO Laurent Mercier added that macroeconomic uncertainty and promotional intensity pressured both Prestige and Consumer Beauty divisions.

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While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Coty’s Q2 Earnings Call

• Wendy Nicholson (Citi): asked how the new U.S. leadership will address market share losses; CEO Sue Nabi replied that the regional structure and incentive realignment are already yielding improvements, with early signs of narrowing the sell-out gap.
• Olivia Tong (Raymond James): questioned the sustainability of cost savings; CFO Laurent Mercier explained that while some savings are one-time, the company’s ongoing All-in to Win program will drive further productivity, but not all benefits will recur at the same pace.
• Steve Powers (Deutsche Bank): inquired about the timeline for destocking to normalize; Mercier indicated that inventory reductions will continue to impact the first half, with improvements expected as the year progresses and comps ease.
• Mark Astrachan (Stifel): asked about the potential impact of tariffs on pricing and consumer demand; Nabi said Coty is implementing price increases on Prestige fragrances but expects some offset from promotional activity in the market.
• Lauren Lieberman (Barclays): probed the outlook for the mass cosmetics segment; Nabi acknowledged continued challenges and reiterated a shift toward higher-return investments and efforts to reignite profitability in this category.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will monitor (1) the pace and effectiveness of Coty’s new product launches—especially in fragrances and makeup, (2) the company’s ability to offset tariff-related margin headwinds through supply chain adjustments, and (3) signs that U.S. market share stabilization efforts are gaining traction. The return to a steady innovation pipeline and execution of cost-saving initiatives will be critical markers of progress.

Coty currently trades at $3.81, down from $4.83 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).

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