Will Coty's Innovation Pipeline Reignite Top-Line Growth?

Coty Inc.’s COTY leadership is increasingly leaning on its innovation pipeline to reignite organic revenue growth, particularly as macro pressures weigh on discretionary beauty spending. In the first quarter of fiscal 2026, management underscored innovation as a core growth lever, with a sharper focus on fragrances and selective expansion into high-margin adjacencies to support a return to improved sales trends.

A central pillar of this strategy is the global rollout of BOSS Bottled Beyond, which is already tracking as a top male fragrance launch in Europe and Australia. The product is positioned to unlock incremental growth for Hugo Boss in the United States, where brand penetration has historically lagged. In parallel, Coty is accelerating its push into fragrance mists, a fast-growing and margin-accretive category. Recent launches under Calvin Klein, Kylie Cosmetics and adidas are delivering encouraging early results, boosting brand engagement while supporting strong margins.

The innovation pipeline also extends into Prestige and ultra-premium segments. Ultra-premium fragrance collections delivered 17% growth in the first quarter, reinforcing management’s confidence in higher-end offerings. Looking ahead, Coty-developed ultra-premium fragrances under the Etro brand are slated for launch in 2026, alongside the debut of Marc Jacobs Beauty makeup. In addition, fragrance launches tied to newer licenses such as Swarovski and Marni further expand the innovation runway.

Management expects this back-half-weighted slate of launches to play a key role in improving sales momentum. While near-term revenues remain pressured by trade inventory rightsizing, the concentration of innovation in the second half of fiscal 2026 supports confidence in a return to positive like-for-like sales growth.

Coty’s Zacks Rank & Share Price Performance

Shares of this Zacks Rank #3 (Hold) company have lost 2.8% in the past month against the broader Consumer Staples sector’s 2.4% growth. COTY has also underperformed the industry and the S&P 500 index’s rise of 6% and 1.3%, respectively, during the same period.

COTY Stock's Past Month Performance

Is COTY a Value Play Stock?

Coty currently trades at a forward 12-month P/E ratio of 6.69, below the industry and the sector’s average of 30.32 and 16.81, respectively. This valuation positions the stock at a modest discount relative to both its direct peers and the broader consumer staples sector.

COTY P/E Ratio (Forward 12 Months)

Stocks to Consider

The Estee Lauder Companies Inc. EL manufactures, markets and sells skin care, makeup, fragrance and hair care products worldwide. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Estee Lauder’s current fiscal-year sales and earnings calls for growth of 4.6% and 43.1%, respectively, from the year-ago reported numbers. EL delivered a trailing four-quarter average earnings surprise of 82.6%.

Ulta Beauty, Inc. ULTA operates as a specialty beauty retailer in the United States. It currently flaunts a Zacks Rank #1. ULTA delivered a trailing four-quarter earnings surprise of 15.7%, on average.

The Zacks Consensus Estimate for Ulta Beauty’s current fiscal-year sales and earnings calls for growth of 8.8% and 0.7%, respectively, from the year-ago reported numbers.

Five Below, Inc. FIVE operates as a specialty value retailer in the United States and currently flaunts a Zacks Rank #1. FIVE delivered a trailing four-quarter earnings surprise of 62.1%, on average.

The Zacks Consensus Estimate for Five Below’s current fiscal-year sales and earnings calls for growth of 22.3% and 23.4%, respectively, from the year-ago reported numbers.

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This article originally published on Zacks Investment Research (zacks.com).

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