COTY 10-K & 10-Q changes, risk factors and insider trading

You should consider the following risks and uncertainties and all of the other information in this Annual Report on Form 10-K and our other filings in connection with evaluating our business and the forward-looking information contained in this Annual Report on Form 10-K. Our business and financial results may also be adversely affected by risks and uncertainties not presently known to us or that we currently believe to be immaterial. If any of the events contemplated by the following discussion of risks should occur or other risks arise or develop, our business, prospects, financial condition, results of operations, cash flows, as well as the trading price of our securities, may be materially and adversely affected. When used in this discussion, the term “includes” and “including” means, unless the context otherwise indicates, including without limitation and the terms “Coty,” the “Company,” “we,” “our,” or “us” mean, unless the context otherwise indicates, Coty Inc. and its majority and wholly-owned subsidiaries. These disclosures reflect the Company’s beliefs and opinions as to factors that could materially and adversely affect the Company and its securities in the future. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future.

•Our success depends on our ability to refine and achieve our global business strategies.

•A disruption in our manufacturing, distribution, logistics or other operations could adversely affect our business.

•We use AI in our business, and challenges with properly governing, managing or monitoring its use could result in harm to our brands, reputation, businessbusiness, operations or customers.

The beauty industry is highly competitive and can change rapidly due to consumer preferences and industry trends, such as the expansion of digital channels,channels and advances in technology such as AI, direct-to-consumer channels, new “disruptor” trendy brands and advancescelebrity inand technologyinfluencer-backed suchbeauty ascompanies artificialthat intelligencehave (“AI”).garnered significant followings. Competition in the beauty industry is based on several factors, including pricing, value and quality, product efficacy, packaging and brands, speed or quality of innovation and new product introductions, in-store presence and visibility, promotional activities (including influencers) and brand recognition, distribution channels, advertising, editorials and adaption to evolving technology and device trends, including via e-commerce initiatives. We must compete with a high volume of new product introductions and existing products by diverse companies across several different distribution channels.

Our competitors include large multinational consumer products companies, private label brands and emerging companies, among others, and some have greater resources than we do or may be able to respond more quickly or effectively to changing business and economic conditions than we can. It is difficult for us to predict the timing and scale of our competitors’ actions and their impact on the industry or on our business. For example, the fragrance category is being influenced by new product introductions, niche brands and growing e-commerce distribution. The color cosmetics category has been influenced by entry by new competitors and smaller competitors that are fast to respond to trends and engage with their customers through digital platforms, including usingleveraging newdata or advancing technologies such asanalytics, AI and datamachine analyticslearning, and innovative in-store activations. Furthermore, e‑commerce and the online retail industry is characterized by rapid technological evolution, changes in consumer requirements and preferences, frequent introductions of new products and services embodying new technologies and the emergence of new industry standards and practices and evolving regulatory regimes, any of which could render our existing technologies and systems obsolete. Our success will depend, in part, on our ability to identify, develop, acquire or license leading technologies useful in our business, and respond to technological advances and emerging industry standards and practices in a cost-effective and timely way. If we are unable to compete effectively on a global basis or in our key product categories or geographies, it could have an adverse impact on our business, prospects, financial condition, results of operations, cash flows, as well as the trading price of our securities.

Significant consolidation in the retail industry has occurred during the last several years.years, including through reorganizations, restructurings, bankruptcies and ownership changes. The trend toward consolidation, particularly in developed markets such as the U.S. and Western Europe, has resulted in our becoming increasingly dependent on our relationships with, and the overall business health of, fewer key retailers that control an increasing percentage of retail locations, which trend may continue. For example, certain retailers account for over 10% of our net revenues in certain geographies, including the U.S. We generally do not have long-term sales contracts or other sales assurances with our retail customers. Our success is dependent on our ability to manage our retailer relationships, including offering trade terms on mutually acceptable terms. Furthermore,We increasedhave online competition and declining in-store traffic has resulted,been and may continue to result,be negatively affected by changes in brick-and-mortarthe retailerspolicies closingor physicalpractices stores, which could negatively impactof our distribution strategies and/or sales ifcustomers, such retailers decide to significantly reduce theiras inventory levelsdestocking, forautomated ourfulfillment productsrequirements, orAI-aided category pricing pressures and algorithms, limitations on access to designate more shelf space to our competitors. Additionally, these retailers periodically assess(including the allocationdigital shelf), delisting of shelf space and have elected (and could further elect) to reduce the shelf space allocated to our products. Some of our brands, including CoverGirl, have experienced shelf space losses in the past, and such declines may continue or resume. Further consolidation and store closures, or reduction in inventory levels of our products or shelf space devoted to our products, or thesustainability, financialsupply distresschain ofor apackaging majorstandards retailer,or couldinitiatives. haveWe amay materialnot adversebe effectsuccessful onin ouradapting business,or prospects,effectively financialreacting condition, results of operations, cash flows, as well asto the tradingrapidly pricechanging ofretail ourlandscape, securities.changes Wein generallyconsumer dobehavior, not have long-term sales contractspreferences or otherpurchasing sales assurances with our retail customers.patterns.

We license trademarks for many of our product lines. Our brand licenses typically impose various obligations on us, including the payment of annual royalties, maintenance of the quality of the licensed products, achievement of minimum sales levels, promotion of sales and qualifications and behavior of our suppliers, distributors and retailers. We have breached, and may in the future breach, certain terms of our brand licenses. If we breach our obligations, our rights under the applicable brand license agreements could be terminated by the licensor and we could, among other things, have to pay damages, lose our ability to sell products related to that brand, lose any upfront investments made in connection with such license and sustain reputational damage. In addition, most brand licenses have renewal options for one or more terms, which can range from three to ten years. Certain brand licenses provide for automatic extensions, so long as minimum annual royalty payments are made, while renewal of others is contingent upon attaining specified sales levels or upon agreement of the licensor. We may not be able to renew expiring licenses on terms that are favorable to us or at all. We may also face difficulties in finding replacements for terminated or expired licenses. Upon the expiration or termination of a license, we may be unable to negotiate favorable transition arrangements, and the agreed transition parameters may require significant coordination, resources and time to implement, including with respect to inventory, distribution, sell-off rights, operational support or separation activities. Each of the aforementioned risks could have a material adverse effect on our business, prospects, financial condition, results of operations, cash flows, as well as the trading price of our securities.

Our success depends on our ability to refine and achieve our global business strategies.

OurWe continue to refine and implement our global business strategies, and our future performance and growth depends on the success of our global businessthese strategies, including our management team’s ability to successfully implement them, including aimplementing our Coty.Curated framework, returning to market share growth, accelerating data-driven operations powered by AI, improving our advocacy capability and execution, continuing to deliver on our key sustainability priorities, while maintaining focus on improving gross margin, deleveraging, and simplifying our business.deleveraging. The multi-year implementation of our global business strategies has resulted in and is expected to continue to result in changes to business priorities and operations, capital allocation priorities, operational and organizational structure, and increased demands on management. Such changes could result in short-term and one-time costs without any current revenues, lost customers, reduced sales volume, higher than expected restructuring costs, loss of key personnel, additional supply chain disruptions, higher costs of supply and other negative impacts on our business. ImplementationRefinement and implementation of our global business strategystrategies may take longer than anticipated, and, once implemented, we may not realize, in full or in part, the anticipated benefits or such benefits may be realized more slowly than anticipated. The failure to realize benefits, which may be due to our inability to execute plans, delays in the implementation of our global business strategies, global or local economic conditions, competition, changes in the beauty industry and the other risks described herein, could have a material adverse effect on our business, prospects, financial condition, results of operations, cash flows, as well as the trading price of our securities.

As previously announced, we are conducting an ongoing a strategic review process regarding our Company’s consumer beauty business, including its mass color cosmetics business and associated brands and the Company’s distinct Brazil business comprised of local Brazilian brands. Our strategy also includes executing on our brand repositioning and continuing to focus our brand-building efforts on priority categories, channels and markets.markets, including a focus on our fragrance expertise and profitable adjacent categories. In addition, we continue to prioritize our deleveraging objectives. In the future, we may dispose of or discontinue select brands and/or streamline operations, and dispose of select businesses or interests therein (including through strategic transactions or public offerings) and incur costs or restructuring and/or other charges in doing so. We may face risks of declines in brand performance and license terminations, due to expirations and/or allegations of breach or for other reasons, including with regard to any potentially divested or discontinued brands. If and when we decide to divest or discontinue any brands or lines of business, we cannot be sure that we will be able to locate suitable buyers or that we will be able to complete such divestitures (including through strategic transactions or public offerings) or discontinuances successfully, timely, at appropriate valuations and on commercially advantageous terms,terms (including with respect to retained liabilities), or without significant costs, including relating to any post-closing purchase price adjustments or claims for indemnification. Divestitures or discontinuations (including as a result of the termination of licenses) involve significant challenges and risks, including the need to provide transition services, and the separation of operations, systems and personnel. Any future divestitures and discontinuances could have a dilutive impact on our earnings, create dis-synergies, result in stranded costs, result in retained liabilities, structurally increase our leverage ratio through loss of earnings, reduce diversification across our brand portfolio and increase concentration risk in our remaining business, and divert significant financial, operational and managerial resources from our existing operations and make it more difficult to achieve our operating and strategic objectives. We also cannot be sure of the effect such divestitures or discontinuances would have on the performance of our remaining business or the ability to execute our global business strategies.strategies, and we may not be successful in restructuring the remaining business to address such impacts. For example, in connection with the early termination of the Gucci Beauty license, we are evaluating our central organization, manufacturing and asset base, and certain market structures to adjust our scope and size following the transition period. If we are unable to successfully or timely achieve sufficient savings, core business acceleration and portfolio expansion, we may not be able to fully mitigate the impact of the license termination on our business and performance.

We have incurred significant restructuring costs in the past, and, as we continue to refine and implement our global business strategiesstrategies, brand portfolio management and any future divestiture or restructuring initiatives, we expect to continue to incur one-time cash costs. In the past, as we integrated acquisitions, including the transformational acquisition of the P&G Beauty Business, we experienced challenges, including supply chain disruptions, higher than expected costs and lost customers and related revenue and profits, and we could experience these or other challenges arising from the implementation of our global business strategiesstrategies, brand portfolio management and any future divestiture or restructuring initiatives. The cash usage associated with such, and similar, expenses has impacted and could continue to impact our ability to execute our business strategies, improve operating results and deleverage our balance sheet.

If our management is not able to effectively manage these initiatives, address fixed and other costs, if we incur additional operating expenses or capital expenditures to realize synergies, simplifications and cost savings, or if any significant business activities are interrupted as a result of these initiatives, our business, prospects, financial condition, results of operations, cash flows, as well as the trading price of our securities may be materially adversely affected. The amount and timing of the above-referenced charges and management distraction could further adversely affect our business, prospects, financial condition, results of operations, cash flows, as well as the trading price of our securities. In addition, the implementation of our global business strategies, any continuing or future restructuring initiativesinitiatives, divestitures and brand portfolio management or the integration of future acquisitions may impact our ability to anticipate future business trends and accurately forecast future results.

The diversion of resources to the integration of the P&G Beauty Business, together with changes and turnover in our management teams as we reorganized our business, negatively impacted our fiscal 2018 and 2019 results. The implementation of our global business strategies could result in similar challenges. Although our global business strategies are intended to deliver meaningful, sustainable expense and cost management improvement, events and circumstances such as financial or strategic difficulties, significant employee turnover, business disruption and delays may occur or continue, resulting in new, unexpected or increased costs that could result in us not realizing all of the anticipated benefits of our global business strategies on our expected timetable or at all. In addition, we are executing many initiatives simultaneously, including changes to our operations and global strategy, which may result in further diversion of our resources, employee attrition and business disruption (including supply chain disruptions), and may adversely impact the execution of such initiatives. Any failure to implement our global business strategies and other initiatives in accordance with our expectations could adversely affect our business, prospects, financial condition, results of operations, cash flows, as well as the trading price of our securities.

Our acquisition activities and other strategic transactions expose us to certain risks related to integration, including diversion of management attention from existing core businesses and substantial investment of resources to support integration. In the past, we have explored and undertaken opportunities to acquire other companies and assets as part ofgrew our growthbusiness strategy. For example, we completed fivethrough significant acquisitions inand fiscalstrategic 2016transactions, through fiscal 2018 (including the acquisition of the P&G Beauty Business in October 2016), and we entered into athe joint venture with Kylie Jenner in fiscal 2020. These assets represent a significant portion of our net assets, particularly the P&G Beauty Business. As we consider growth opportunities, we may seek acquisitions that we believe strengthen our competitive position in our key segments and geographies or accelerate our ability to grow into adjacent product categories and channels and emerging markets or which otherwise fit our strategy. There can be no assurance that we will be able to identify suitable acquisition candidates, be the successful bidder or consummate acquisitions on favorable terms, have the funds to acquire desirable acquisitions or otherwise realize the full intended benefit of such transactions. In addition, acquisitions could adversely impact our deleveraging strategy. Our acquisition activities and other strategic transactions also expose us to certain risks related to integration, including diversion of management attention from existing core businesses and substantial investment of resources to support integration. Acquisition activities may also result in slower progress toward environmental, social and governance goals given challenges with data acquisition and integration, the difficulty of accessing and disclosing sufficient environmental, social and governance data to comply with current and emerging regulations, and integration of environmental, social and governance initiatives overall.

The assumptions we use to evaluate acquisition opportunities may prove to be inaccurate, and intended benefits may not be realized. Our due diligence investigations may fail to identify all of the problems, liabilities or other challenges associated with an acquired business which could result in increased risk of unanticipated or unknown issues or liabilities, including with respect to environmental, competition and other regulatory matters, and our mitigation strategies for such risks that are identified may not be effective. As a result, we may not achieve some or any of the benefits, including anticipated synergies or accretion to earnings or other financial measures, that we expect to achieve in connection with our acquisitions and joint ventures, or we may not accurately anticipate the fixed and other costs associated with such acquisitions and joint ventures, or the business may not achieve the performance we anticipated, which may materially adversely affect our business, prospects, financial condition, results of operations, cash flows, as well as the trading price of our securities. In some cases, acquired businesses, brands or strategic investments may underperform our expectations, require additional investment or restructuring, or ultimately be divested on terms that do not allow us to recover our original investment. Any financing for an acquisition could increase our indebtedness or result in a potential violation of the debt covenants under our existing facilities requiring consent or waiver from our lenders, which could delay or prevent the acquisition, or dilute the interests of our stockholders. For example, in connection with the acquisition of the P&G Beauty Business, Green Acquisition Sub Inc., a wholly-owned subsidiary of the Company, was merged with and into Galleria, with Galleria continuing as the surviving corporation and a direct wholly-owned subsidiary of the Company (the “Green Merger”) and pre-Green Merger holders of our stock were diluted to 46% of the fully diluted shares of common stock immediately following the Green Merger. In addition, acquisitions of foreign businesses, new entrepreneurial businesses and businesses in new distribution channels, such as our acquisition of the Brazilian personal care and beauty business of Hypermarcas S.A. (the “Hypermarcas Brands”) and our joint venture with Kylie Jenner, entail certain particular risks, including potential difficulties in geographies and channels in which we lack a significant presence, difficulty in seizing business opportunities compared to local or other global competitors, difficulty in complying with new regulatory frameworks, the acquisition of new or unexpected liabilities, the adverse impact of fluctuating exchange rates and entering lines of business where we have limited or no direct experience. See “—Fluctuations in currency exchange rates may negatively impact our financial condition and results of operations” and “—We are subject to risks related to our international operations.”

We cannot predict the amount and timing of any future impairments, if any. We have experienced impairment charges with respect to goodwill, intangible assets or other items in connection with past acquisitions, and we may experience such charges in connection with such acquisitions or future acquisitions, particularly if business performance declines or expected growth is not realized or the applicable discount rate changes adversely. For example, in fiscal 2022, we incurred impairment charges of $31.4, primarily related to impairments on indefinite-lived other intangible assets. In the third quarter of fiscal 2025, we incurred impairment charges of $212.8, related to indefinite-lived intangible assets for certain trademarks within the Consumer Beauty Segment and for our Philosophy trademark within the Prestige Segment. In fiscal 2026, we incurred $362.8 of asset impairment charges of which $237.1 related to goodwill within the Consumer Beauty segment, and $50.6, $48.5, $22.5, $4.1 related to the CoverGirl, Sally Hansen, Max Factor, and Bourjois trademarks, respectively, within the Consumer Beauty Segment. It is possible that material changes in our business, market conditions, or market assumptions could occur over time. Any future impairment of our goodwill or other intangible assets could have an adverse effect on our financial condition and results of operations, as well as the trading price of our securities. For a further discussion of our impairment testing, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Financial Condition-Liquidity and Capital Resources-Goodwill, Other Intangible Assets and Long-Lived Assets.”

A disruption in our manufacturing, distribution, logistics or other operations could adversely affect our business.

As a company engaged in manufacturing and distribution on a global scale, we are subject to the risks inherent in such activities, including industrial accidents, environmental events, strikes and other labor disputes (including as to works councilscouncil-related matters), disruptions in supply chain or information systems, loss or impairment of key manufacturing sites or distribution centers, product quality control, safety, licensing requirements and other regulatory issues, as well as natural disasters, pandemics or outbreaks of contagious diseases, border disputes, acts of terrorism, armed conflicts such as the war in Ukraine and the war in the Middle East and other geopolitical tensions, possible dawn raids, and other external factors over which we have no control. For example, in fiscal 2022, limited driver capacity andcapacity, transportation delays impactedor other logistics disruptions have impacted, and may impact in the future, our U.S. distribution centers resultingand result in increased costs, including penalty payments to retailers for delayed product delivery. As we continue our implementation of our global business strategies (including our cost discipline activities and sustainability initiatives) and other restructuring activities, any additional or ongoing supply chain disruptions or delay in securing applicable approvals or consultations for such activities may impact our quarterly results. The loss of, or damage or disruption to, any of our manufacturing facilities or distribution centers could have a material adverse effect on our business, prospects, results of operations, financial condition, results of operations, cash flows, as well as the trading price of our securities.

We manufacture and package a majority of our products. Raw materials, consisting chiefly of essential oils, alcohols, chemicals, containers and packaging components, are purchased from various third-party suppliers. The loss of multiple suppliers or a significant disruption or interruption in the supply chain, or our relationships with key suppliers due to our payment terms or otherwise, could have a material adverse effect on the manufacturing and packaging of our products. In fiscal 2023, inflationaryInflationary pressures as well as global supply chain disruptions and geopolitical events have caused and may continue to cause significant volatility in the cost and availability of the raw materials and services (such as transportation) that we need to manufacture and distribute our products. In particular, increases in energy costs due to global geopolitical conditions,conditions particularly in Europe,have impacted the cost and availability of raw materials, including glass and glass components and certain resins. Although inflationary pressures have eased, future increases in the costs of raw materials or other commodities and transportation services may adversely affect our profit margins if we are unable to pass along any higher costs in the form of price increases or otherwise achieve cost efficiencies in manufacturing and distribution. In addition, failure by our third-party suppliers to comply with ethical, social, product, labor and environmental laws, regulations or standards, or their engagement in politically or socially controversial conduct, such as animal testing, could negatively impact our reputations and lead to various adverse consequences, including decreased sales and consumer boycotts.

We have outsourced and may continue to outsource certain functions, including outsourcing of distribution functions, outsourcing of business processes (including certain finance and accounting functions), and third-party manufacturers, logistics and supply chain suppliers, and other suppliers, including third-party software providers, web-hosting and e‑commerce providers, and we are dependent on the entities performing those functions. As we evaluate our operations to adjust our scope and size for our future business, we may outsource additional functions, such as certain research and development, and we may increasingly rely on third party manufacturers. The failure of one or more such providers to provide the expected services, provide them on a timely basis or provide them at the prices we expect, the failure of one or more of such providers to meet our performance standards and expectations, including with respect to data security, compliance with data protection and privacy laws, disruptions arising from the transition of functions to an outsourcing provider, or the costs incurred in returning these outsourced functions to being performed under our management and direct control, may have a material adverse effect on our results of operations or financial condition.

Our e-commerce operations are important to our business, and our digital marketing strategies rely on the use of online and mobile applications, including third-party social media platforms. Due to the importance of our e-commerce operations, we are vulnerable to website or application downtime and other technical failures, as well as disruptions beyond our control. For example, recent and future regulatory measures restricting or otherwise impacting the use of the web sites, mobile applications or social media platforms that we use in connection with our digital marketing and e-commerce activities could impact the development of our digital advocacy strategy. Our failure to successfully respond to these risks in a timely manner could reduce e-commerce sales, damage our brands’ reputations or reduce the impact of our digital marketing strategies.

The risks described here are heightened due to the increaseprevalence inof remote working and the challenges associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate and home networks. If a natural disaster, power outage, connectivity issue, or other event occurs that impacts our employees’ ability to work remotely, it may be difficult or, in certain cases, impossible, for us to continue our business for a substantial period of time. The increase in remote working may also result in heightened consumer privacy, IT security and fraud concerns, potentially disrupting our operations for a prolonged period of time.

We use AI in our business, and challenges with properly governing, managing or monitoring its use could result in harm to our brands, reputation, businessbusiness, operations or customers.

Our success depends, in part, on our ability to identify, hire, train and retain our employees, including our key personnel, such as our executive officers and senior management team and our research and development and marketing personnel. Over the past few years, we have experienced several changes to senior management and the composition of our board of directors, as well as the separation of the Wella Business, and we are still in the process of refining and implementing our global business strategies, including cost reduction activities.activities and right-sizing the organization for our future business. Transition periods accompanying changes in leadership and changes due to business reorganization may result in uncertainty, impact business performance and strategies and retention of personnel. The unexpected loss of one or more of our key employees could adversely affect our business. Competition for highly qualified individuals can be intense, and although many of our key personnel have signed non-compete agreements, it is possible that these agreements would be unenforceable, in whole or in part, in some jurisdictions, permitting employees in those jurisdictions to transfer their skills and knowledge to the benefit of our competitors with little or no restriction. We may not be able to attract, assimilate or retain qualified personnel in the future, and our failure to do so could adversely affect our business. Further, other companies may attempt to recruit our key personnel and we may attempt to recruit their key personnel, even if bound by non-competes, which could result in diversion of management attention and our resources to litigation related to such recruitment. These risks may be exacerbated by the stresses associated with changes in our global business strategy, the implementation of our restructuring activities, any continued changes in our senior management team and other key personnel, and other initiatives. During fiscal 2024,2026, we continued to experience an increasingly competitive labor market, increased employee turnover, and labor shortages in our extended supply chain. These challenges have resulted in, and could continue to result in, increased costs and could impact our ability to meet consumer demand, each of which may adversely affect our business and financial results.

As we continue to restructure our workforce from time to time (including with respect to our global business strategies and other business restructuring initiatives, as well as acquisitionschanges andto our overallbrand growth strategyportfolio) and work with more brand partners and licensors, the risk of potential employment-related claims and disputes will also increase. As such, we or our partners may be subject to claims, allegations or legal proceedings related to employment matters including discrimination, harassment (sexual or otherwise), wrongful termination or retaliation, local, state, federal and non-U.S. labor law violations, injury, and wage violations. In addition, our employees in certain countries in Europe are subject to works council arrangements, exposing us to associated delays, works council claims and associated litigation. In the event we or our partners are subject to one or more employment-related claims, allegations or legal proceedings, we or our partners may incur substantial costs, losses or other liabilities in the defense, investigation, settlement, delays associated with, or other disposition of such claims. In addition to the economic impact, we or our partners may also suffer reputational harm as a result of such claims, allegations and legal proceedings and the investigation, defense and prosecution of such claims, allegations and legal proceedings could cause substantial disruption in our or our partners’ business and operations, including delaying and reducing the expected benefits of any associated restructuring activities. We have policies and procedures in place to reduce our exposure to these risks, but such policies and procedures may not be effective and we may be exposed to such claims, allegations or legal proceedings.

We arecontinue currentlyto implementingimplement initiatives to improve control over our product demand planning and inventories. We have identified, and may continue to identify, inventories that are not saleable in the ordinary course, but our existing program or any future inventory management program may not be successful in improving our inventory control. Our ability to manage our inventory levels to meet demand for our products is important for our business. If we overestimate or underestimate demand for any of our products, we may not maintain appropriate inventory levels, we could have excess inventory that we may need to hold for a long period of time, write down, sell at prices lower than expected or discard, which could negatively impact our reputation, net sales, working capital or cash flows from working capital, or cause us to incur excess and obsolete inventory charges. We also could have inadequate inventories which could hinder our ability to meet demand. In addition, due to changes in our strategy, including the Coty.Curated initiatives aimed at reducing portfolio complexity and focusing investment on core activations, we have incurred and will continue to incur excess and obsolete inventory charges. We have sought and continue to seek to improve our payable terms, which could adversely affect our relations with our suppliers.

The U.S. and the other countries in which our products are manufactured or sold have imposed and may impose additional quotas, duties, tariffs, retaliatory or trade protection measures, or other restrictions or regulations, or may adversely adjust prevailing quota, duty or tariff levels, which can affect both the materials that we use to manufacture or package our products and the sale of finished products. For example, in 2018, the E.U. imposed tariffs on certain prestige category products imported from the U.S., whichwhich, impactwhile in effect, impacted the sale in the E.U. of certain of our products that are manufactured in the U.S. Similarly, the tariffs imposed by the U.S. on goods and materials from China since 2019 have impacted materials we import for use in manufacturing or packaging in the U.S. In addition, since early 2025, the U.S. administrationadministration, under various authorities, has announcedannounced, aimposed, seriesmodified, ofexpanded additionaland in certain cases replaced tariffs on productsimported goods from countries worldwide, including products manufactured in the E.U. and in China.China, while other countries have implemented or may implement responsive trade measures. Although some of these tariffs have been pausedpaused, reduced or reduced,invalidated, there is significant uncertainty as trade negotiations are ongoing and outcomes are unpredictable. Measures to reduce the impact of tariff increases or trade restrictions, including shifts of production among countries and manufacturers, geographical diversification of our sources of supply, adjustments in product or packaging design and fabrication, or increased prices, could increase our costs and delay our time to market or decrease sales. In addition, uncertainty regarding future trade policies may make it more difficult for us, our customers and our suppliers to plan and execute business activities and investments, forecast costs, manage inventory, and plan pricing strategies. For a further discussion of our estimated impact of tariffs, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Overview-Global Economic Landscape and Business Impact”.

We are subject to taxation in the U.S. and numerous foreign jurisdictions. From time to time, changes in tax laws or regulations may be enacted that could significantly affect our overall tax liabilities and our effective tax rate. For example, in the United States the Tax Cuts and Jobs Act of 2017 made broad and complex changes to the U.S. tax laws that affect businesses operating internationally, and in July 2025, the U.S. government enacted further tax reforms that extended or made permanent many of the corporate tax changes arising under the Tax Cuts and Jobs Act passed in 2017. Additional significant changes in tax laws and regulations could be enacted in the future. U.S. and foreign governmental agencies maintain focus on the taxation of multinational companies, including statutory tax rates, digital taxes, global minimum taxes (such as the Pillar Two framework agreed to by members of the Organization for Economic Cooperation and Development which has been adopted in many jurisdictions), country-by-country reporting, and transactions between affiliated companies. Such changes may negatively impact our effective tax rate and have increased and may continue to increase tax compliance and reporting costs, and our future income tax provisions could increase or be adversely affected by changes in the mix of income earned or losses incurred in jurisdictions with differing statutory rates, changes in the valuation of our deferred tax assets or liabilities, successful challenges to our tax positionspositions, changes to the location of our tax principal or by other factors.

Prevailing economic conditions and financial, business and other factors, many of which are beyond our control, may affect our ability to make payments on our debt and comply with other requirements under the 2018 Coty Credit Agreement and to meet our deleveraging objectives. In particular, due to the seasonal nature of the beauty industry, with the highest levels of consumer demand generally occurring during the holiday buying season in our second fiscal quarter, our subsidiaries’ cash flow in the second half of the fiscal year may be less than in the first half of the fiscal year, which may affect our ability to satisfy our debt service obligations, including to service our senior secured notes and the 2018 Coty Credit Agreement, and to meet our deleveraging objectives. If we do not generate sufficient cash flow to satisfy our covenants and debt service obligations, including payments on our senior secured notes and under the 2018 Coty Credit Agreement, we may have to undertake additional cost reduction measures or alternative financing plans, such as refinancing or restructuring our debt; selling assets; reducing or delaying capital investments; modifying terms of agreements, including timing of payments, with vendors, customers, and other third parties; or seeking to raise additional capital. The terms of the indentures governing our senior secured notes, the 2018 Coty Credit Agreement or any existing debt instruments or future debt instruments that we may enter into may restrict us from adopting some of these alternatives. Our ability to restructure or refinance our debt, including our senior secured notes maturing in AprilMay 2026,2027 and our 2023 Coty Revolving Credit Facility maturing in July 2028, will depend on the capital markets and other macroeconomic conditions and our financial condition at such time. Recent refinancings of our debt have resulted, and future refinancings or modifications of our debt, could result in higher interest rates and may require us to comply with more onerous covenants or reduce our borrowing capacity, which could further restrict our business operations. For example, the refinancing of certain portions of our debt in 2021 resulted in higher interest rates applicable to the newly issued senior secured notes, in part due to prevailing macroeconomic conditions and a decline in our credit ratings since our previous refinancing transactions in 2018. In addition, the ratings downgrade in July 2026 resulted in the reinstatement of certain covenants and collateral provisions for applicable outstanding senior secured notes. The inability of our subsidiaries to generate sufficient cash flow to satisfy our covenants and debt service obligations, including the inability to service our senior secured notes and the 2018 Coty Credit Agreement, or to refinance our obligations on commercially reasonable terms, could have a material adverse effect on our business, financial condition, results of operations, profitability, cash flows or liquidity, as well as the trading price of our securities, and may impact our ability to satisfy our obligations in respect of our senior secured notes and the 2018 Coty Credit Agreement.

Our products are marketed, sold and distributed in approximately 123122 countries and territories. As a geographically diverse company we are susceptible to global economic trends, geopolitical conflicts, domestic and foreign governmental policies, and changes in foreign exchange rates. In particular, challenging economic conditions in China have had, and are expected to continue to have, an impact on our strategic initiatives including our growth agenda in the region for Prestige products and our skincare growth priorities. We remain attentive to economic and geopolitical conditions that may materially impact our business. We also continue to monitor and take actions to address the impact to our Consumer Beauty brands in China.

Tariffs: 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. In response, we have evaluated more diversified sourcing strategies, strategic pricing adjustments and cost-reduction initiatives to help offset these pressures and protect our profitability. We are optimizing our supply chain to enhance resilience and agility in response to changing tariff environments. We have successfully transitioned mass fragrance production, production—including keyfor brandscertain suchentry-level asprestige Adidas,fragrance Origen,products, and Nautica—as well as fragrance mists to our U.S. manufacturing site. Additional transfers of entry-level prestige fragrance products are planned for early in the third quarter of fiscal 2026, further optimizing U.S. capacity.

In the short term, we are accelerating dual sourcing for allcertain entry-level prestige products by leveraging regional input materials, and future launches will be developed with dual production capabilities. We expect that any increases in our cost of goods sold will be balanced with minimal price adjustments to ensure competitiveness. On a longer-term basis, we are evaluating expanded regionalization strategies, including potential additional U.S. investments. We will also continue to collaborate with external partners to strengthen our domestic manufacturing capabilities, supporting our goal of a robust, U.S.-based supply chain.

We estimatehave additionalincurred $29.3 in costs related to tariff increasesincreases, to be around approximately $70.0 before anyafter mitigating actionsactions, takenin byfiscal the Company.2026. We expect thatto certainincur non-price$3.4 relatedin costs, after mitigating actionsactions, willin offsetthe $15.0-$20.0first quarter of the impact from tariffs. The vast majority of these costs are expected to be incurred in fiscal 2026, based on analyses of announcements made by the U.S. administration including those on April 2, 2025 and on August 1, 2025, as well as announcements by U.S. trade partners.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.

Changing market trends continue to impact sales of our products across and within product categories and geographic regions. Consumer demand for beauty remains resilient, with continued growth in fragrances and cosmetics, although consumers are increasingly selective in their purchasing decisions.

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.

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 adjustedAdjusted 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.

•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 adjustedAdjusted operating income (loss) and adjustedAdjusted 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.

•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,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.

•Tax: This adjustment represents the impact of the tax effect of the pretax items excluded from Adjusted net income.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.

Basis of Presentation of Acquisitions, Divestitures, Terminations and Market Exit from RussiaExits

In fiscal 2025, net revenues decreased 4%, or $225.1, to $5,892.9 from $6,118.0 in fiscal 2024. Excluding net revenue from the first half of the prior period from Lacoste, net revenues decreased 3% or $196.5 to $5,892.9 from $6,089.4, reflecting a decrease in unit volume of 2%, and a negative foreign currency exchange translation impact of 1%. The overall decrease in net revenues reflects declines within color cosmetics across both our Prestige and Consumer Beauty segments— primarily due to negative market trends in the United States, China, and across several European markets— and as a result of a decline in the Travel Retail Asia channel due to regulations impacting surrogate shopping purchases. The decline can also be attributed to mass body care in Brazil— primarily due to competitive pricing action in the Brazilian deodorant market— and from prestige skincare due to negative performance from certain brands. These declines were partially offset by growth in our prestige and mass fragrance categories due to the positive, but decelerating, market trends in most major markets and geographical expansion of certain brands. Net revenues declined in the Americas and Asia Pacific but grew within Europe, the Middle East and Africa (EMEA) region. Digital and e-commerce channel sales declines also contributed to the decrease in net revenues.

In fiscal 2025,2026, net revenues in the Prestige segment decreased 1%, or $37.1$14.4 to $3,820.2$3,805.8 from $3,857.3$3,820.2 in fiscal 2024. Excluding net revenue from the first half of the prior period from Lacoste, net revenues remained relatively flat or decreased $8.5 to $3,820.2 from $3,828.7,2025, reflecting a positivenegative price and mix impact of 3%2% (primarily due to positiveprestige pricing impact as a result of prior year period price increasesfragrance) and in line with overall premiumization strategy), partially offset by a decrease in unit volume of 3%2% (primarily due to negative performance for prestige cosmeticsfragrance brands), partially offset by a positive foreign currency translation impact of 3% (primarily driven by the weakening of the U.S. dollar versus the Euro). The decrease in net revenues primarily reflects:

•Prestige cosmeticcosmetics sales declines of $55.3, primarily due to declines in sales volumes in the Asia Travel Retail channel from Gucci makeup and as a result of regulations impacting the surrogate shopping purchases, and declines in sales from Kylie makeup as a result of less innovations and negative market trends in the category; and

Certain statements in this Form 10-Q are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, strategic planning, targets and outlook for future reporting periods (including the extent and timing of revenue, expense and profit trends and changes in operating cash flows and cash flows from operating activities and investing activities), the Company’s future operations and strategy (including the expected implementation and related impact of its strategic priorities), ongoing and future cost efficiency, optimization and restructuring initiatives and programs, expectations of the impact of inflationary pressures and the timing, magnitude and impact of pricing actions to offset inflationary costs, strategic transactions (including their expected timing and impact), the strategic review of the Company’s consumer beauty business, including its mass color cosmetics business and associated brands and the Company’s distinct Brazil business comprised of local Brazilian brands, and any transactions related thereto, use of proceeds from any transaction and the timing and outcome of the strategic review, expectations and/or plans with respect to joint ventures, the timing and size of any future distribution related to the Wella Distribution Rights (as defined below), the Company’s capital allocation strategy and payment of dividends (including suspension of dividend payments and the duration thereof and any plans to resume cash dividends on common stock or to continue to pay dividends in cash on preferred stock) and expectations for stock repurchases, investments, plans and expectations with respect to licenses and/or portfolio changes, product launches, relaunches or rebranding (including the expected timing or impact thereof), plans for growth in certain categories, markets, channels and other white spaces, synergies, savings, performance, cost, timing and integration of acquisitions, future cash flows, liquidity and borrowing capacity (including any refinancing or deleveraging activities), timing and size of cash outflows and debt deleveraging, the timing and magnitude of any “true-up” payments in connection with our forward repurchase contracts and plans for settlement of such contracts, the timing and extent of any future impairments, and synergies, savings, impact, cost, timing and implementation of the Company’s ongoing strategic transformation agenda (including operational and organizational structure changes, operational execution and simplification initiatives, fixed cost reductions (including our recent fixed cost reduction plan),plans, continued process improvements and supply chain changes), the impact, cost, timing and implementation of e-commerce and digital initiatives, the expected impact, cost, timing and implementation of sustainability initiatives (including progress, plans, goals and our ability to achieve sustainability targets), the expected impact of geopolitical risks including the ongoing war in Ukraine and/or the armedongoing conflictwar in the Middle East on our business operations, sales outlook and strategy, expectations regarding the impact of tariffs (including magnitude, scope and timing) and plans to manage such impact, expectations regarding economic recovery in Asia, consumer purchasing trends and the related impact on our plans for growth in China, the expected impact of global supply chain challenges and/or inflationary pressures (including as a result of the war in Ukraine and/or armedthe conflictongoing war in the Middle East, or due to a change in tariffs or trade policy impacting raw materials) and expectations regarding future service levels, inventory levels and inventoryexcess levels,and obsolescence trends, expectations regarding the expanded use of artificial intelligence (“AI”) and advanced analytics in our operations and the timing and impact thereof, and the priorities of senior management. These forward-looking statements are generally identified by words or phrases, such as “anticipate”, “are going to”, “estimate”, “plan”, “project”, “expect”, “believe”, “intend”, “foresee”, “forecast”, “will”, “may”, “should”, “outlook”, “continue”, “temporary”, “target”, “aim”, “potential”, “goal” and similar words or phrases. These statements are based on certain assumptions and estimates that we consider reasonable, but are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual events or results (including our financial condition, results of operations, cash flows and prospects) to differ materially from such statements, including risks and uncertainties relating to:

•global political and/or economic uncertainties, disruptions or major regulatory or policy changes, and/or the enforcement thereof that affect our business, financial performance, operations or products, including the impact of the war in Ukraine and any escalation or expansion thereof, armed conflictwar in the Middle East,East and any escalation or expansion thereof, the current administration in the U.S. and related changes to regulatory and trade policies, changes in the U.S. tax code and/or tax regulations in other jurisdictions where we operate (including recent and pending implementation of the global minimum corporate tax (part of the “Pillar Two Model Rules”) that may impact our tax liability in the European Union (“EU”)), and recent changes and future changes in tariffs, retaliatory or trade protection measures, trade policies and other international trade regulations in the U.S., the EU, and Asia and in other regions where we operate (and our ability to manage the impact of such changes), potential regulatory limits on payment terms in the EU, future changes in sanctions regulations, recent and future changes in regulations impacting the beauty industry, including regulatory measures addressing products, formulations, raw materials and packaging, and recent and future regulatory measures restricting or otherwise impacting the use of web sites, mobile applications or social media platforms that we use in connection with our digital marketing and e-commerce activities;

•currency exchange rate volatility and currency devaluation and/or inflationinflation, including the impact of elevated oil prices;

•disruptions in operations, sales and in other areas, including due to disruptions in our supply chain, restructurings and other business alignment activities, manufacturing or information technology systems, labor disputes, extreme weather and natural disasters, impact from public health events, the outbreak of war or hostilities (including the war in Ukraine and armed conflictwar in the Middle East and any escalation or expansion thereof), the impact of global supply chain challenges or other disruptions in the international flow of goods (including disruptions arising from futurethe closure of strategic airspaces or critical maritime routes or from changing tariff scenarios), and the impact of such disruptions on our ability to generate profits, stabilize or grow revenues or cash flows, comply with our contractual obligations and accurately forecast demand and supply needs and/or future results;

•increasing dependency on information technology, including as a result of expanded use of AI and advanced analytics in our operations as well as remote working practices, and our ability or the ability of any of the third-party service providers we use to support our business, to protect against service interruptions, data corruption, cyber-based attacks or network security breaches, including ransomware attacks, costs and timing of implementation and effectiveness of any upgrades or other changes to information technology systems, and the cost of compliance or our failure to comply with any privacy or data security laws (including the European Union General Data Protection Regulation (the “GDPR”), the California Consumer Privacy Act and similar state laws, the Brazil General Data Protection Law, and the China Data Security Law and Personal Information Protection Law) or to protect against theft of customer, employee and corporate sensitive information;

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. While ourOur long-term objectives remain focused on value creation, profitability, and growth,growth. While no material changes to our strategy, capital allocation framework, or operational priorities have been finalized or approved, the Interim CEO iscontinues undertakingto conduct a comprehensive review of the business to assess opportunities to enhance performance, strengthen competitive positioning, and improve execution across key areas. As a result, no material changes to our strategy, capital allocation framework, or operational priorities have been finalized or approved. We expect to provide updates regarding any material strategic developments, initiatives, or changes, if and when they are determined, through future filings, earnings communications, or other public disclosures, as appropriate.

Our products are sold in approximately 123 countries and territories. As a geographically diverse companycompany, we are susceptible to global economic trends, geopolitical conflicts, domestic and foreign governmental policies, and changes in foreign exchange rates. We remain attentive to economic and geopolitical conditions that may materially impact our business.

Tariffs: 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. In response, we have evaluated more diversified sourcing strategies, strategic pricing adjustments and cost-reduction initiatives to help offset these pressures and protect our profitability. We are optimizing our supply chain to enhance resilience and agility in response to changing tariff environments. We have successfully transitioned mass fragrance production, asproduction wellfor ascertain entry-level prestige fragrance mists,products, and fragrance mists to our U.S. manufacturing site. Additional entry-level prestige fragrance products may be transferred to further optimize U.S. capacity.

In the short term, we are accelerating dual sourcing for allcertain entry-level prestige products by leveraging regional input materials, and future launches will be developed with dual production capabilities. We expect that any increases in our cost of goods sold will be balanced with minimal price adjustments to ensure competitiveness. On a longer-term basis, we are evaluating expanded regionalization strategies, including potential additional U.S. investments. We will also continue to collaborate with external partners to strengthen our domestic manufacturing capabilities, supporting our goal of a robust, U.S.-basedNorth America-based supply chain.

We currently estimate that our operating results will be impacted by approximately $33.0$32.0 in costs related to tariff increases, after mitigating actions, through the first quarter of fiscal 2027. Of this amount, approximately $28.0$30.0 is expected to be reflected in our fiscal 2026 operating results, with the remaining amount of approximately $5.0$2.0 expected to be reflected in the first quarter of fiscal 2027. In the first halfnine months of fiscal 2026, approximately $14.0$23.0 of net tariff costs are reflected in our operating results. 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.

Fragrances: In the first half of fiscal 2026, netNet revenues from fragrances decreased by a low single-digitlow-single-digit percentage compared to the prior-year period, reflecting a more competitive and promotional marketplace. Prestige fragrance trends improved; however, elevated promotional intensity during the holiday season and moderating category growth continued to weigh on net revenue performance. We continue to plan to leverage innovations and new launches, like the Boss Bottled Beyond launch,launches to unlock value in key markets like the U.S. market. Within our Consumer Beauty segment, we plan to streamline smaller lifestyle fragrance initiatives while amplifying key franchises. We also remain focused on strengthening sell-out and improving market share across priority markets.

Color Cosmetics: In the first half of fiscal 2026, netNet revenues from color cosmetics declined by a mid single-digitmid-single-digit percentage versus the prior-year period. We have begun implementing a performance improvement plan designed to narrow the sell-out gap over time through sharper strategic priorities and more focused investment behind core brands and franchises. PrestigeOur makeupmarket declined by low single digitsshare in the firstmass half,color reflectingcosmetics softersegment categoryhas trends.improved, although, our share gains still lag overall growth within the category. Prestige makeup sales improved by high-single-digits compared to the prior year period. We remain committed to strengthening execution across both mass and prestige, supported by targeted initiatives aimed at improving competitiveness and driving sustainable growth.

Skin and Body Care: In the first half of fiscal 2026, netNet revenues from skin and body care declined by a low single-digitlow-single-digit percentage compared to the prior-year period, as competitive pricing actions and broader category dynamics in the Brazil body care market impacted net sales. We will focus on scalable and structurally profitable opportunities within skincare, while optimizing our mass body care exposure.

Geographic Regions: In the first half of fiscal 2026, compared to the prior-year period, netNet revenue in the Americas declined by a mid single-digitmid-single-digit percentage, driven primarily by weakour demandbusiness performance in the U.S. color cosmetics market. During the same period, net revenue in EMEA and Asia Pacific decreased by a low single-digit percentage, reflecting negative market trends across many European markets, and netAsian revenue in Asia Pacific declined by a mid single-digit percentage.markets.

We expect that our reported net revenue for the thirdfourth quarter of fiscal 2026 will decline by a mid-single-digit percentage compared to the prior year,year which includes an estimated low to mid-single digit percentage benefit from foreign exchange.period. We anticipate that our thirdfourth quarter fiscal 2026 gross margin will be pressured as a result of lower net salessales, as well as the net impact from tariffs.tariffs, and elevated excess and obsolescence. We are re-accelerating our cost reduction efforts to deliver savings of approximately $80.0 in fiscal 2026.

THREE MONTHS ENDED DECEMBERMARCH 31, 20252026 AS COMPARED TO THREE MONTHS ENDED DECEMBERMARCH 31, 20242025

In the three months ended DecemberMarch 31, 2025,2026, net revenues increaseddecreased 1%, or $8.7,$17.5, to $1,678.6$1,281.6 from $1,669.9$1,299.1 in the three months ended DecemberMarch 31, 2024,2025, reflecting a increasedecrease in unit volume of 1%8% (primarily driven by body care brands — mainly in Brazil — whichand color cosmetics), partially offset volume declines across other categories) andby a positive foreign currency exchange translation impact of 4%6% (primarily driven by the weakening of the U.S. dollar versus the Euro), partiallyand offseta by negativepositive price and mix impact of 4%1% (primarily driven by lower sales of lower-priced body care products in Brazil, partially offset by increased trade incentives related to prestige fragrances and greater sales of lower-priced body care products in Brazil). The overall increasedecrease in net revenues reflects sales growthdeclines in the Prestige segment. Withinwithin Consumer Beauty, sales declined primarilylargely due to lower mass fragrance sales across regions and lower color cosmetics— sales primarily as a result of the negative performance of our brands in the United States market — and due to a deceleration of the overall mass fragrance market. Net revenues increased in EMEA, and decreased in the Americas and EMEA, partially offset by an increase in the Asia Pacific regions.region.

In the three months ended DecemberMarch 31, 2025,2026, net revenues from the Prestige segment increased 2%, or $17.5$1.5 to $1,133.6$830.9 compared to $1,116.1$829.4 in the three months ended DecemberMarch 31, 2024,2025, reflecting a decrease in unit volume of 2% (primarily due to lower sales volume in prestige fragrances) and positive foreign currency exchange translation impact of 4%5% (primarily driven by the weakening of the U.S. dollar versus the Euro) partially offset by a decrease in unit volume of 3% (primarily due to lower sales volume in prestige fragrances) and a negative price and mix impact of 3% (primarily due to increased trade incentives related to prestige fragrances). The increase in net revenues primarily reflects:

These decreasesincreases were partially offset by:

•MassPrestige skincare sales increasesdecline of $5.3; and$1.3.

•Mass body care sales increasesdeclines of $1.1.$4.9.

In the three months ended DecemberMarch 31, 2025,2026, cost of sales increased 9%,5%, or $52.3,$23.0, to $608.0$489.7 from $555.7$466.7 in the three months ended DecemberMarch 31, 2024.2025. Cost of sales as a percentage of net revenues increased to 36.2%38.2% in the three months ended DecemberMarch 31, 20252026 from 33.3%35.9% in the three months ended DecemberMarch 31, 2024,2025, resulting in a gross margin decrease of approximately 290230 basis points, primarily reflecting:

(iiiii)approximately 4080 basis points related to increased designerfreight license feescosts as a percentage of net revenuesrevenues, primarily driven by the impact of tariffs; and (iviii)approximately 3070 basis points increase related to excess and obsolescence costs as a percentage of net revenues.

Gross margin was negatively impacted by higher discounts and promotions in the current period, which counterbalanced improvements in pricing, manufacturing efficiency, productivity, and procurement cost optimization. Tariffs also negatively impacted our gross margin during the current period.

In the three months ended DecemberMarch 31, 2025,2026, selling, general and administrative expenses increaseddecreased 6%, or $45.2,$50.5, to $842.5$727.0 from $797.3$777.5 in the three months ended DecemberMarch 31, 2024.2025. Selling, general and administrative expenses as a percentage of net revenues increaseddecreased to 50.2%56.7% in the three months ended DecemberMarch 31, 20252026 from 47.7%59.8% in the three months ended DecemberMarch 31, 2024,2025, or approximately 250310 basis points. This increasedecrease primarily reflects:

(ivi)20550 basis points due to anthe increaseloss on the termination of the KKW Collaboration Agreement in fixedthe costsprior as a percentage of net revenuesperiod; and (vii)2080 basis points due to unfavorablefavorable transactional impact from our exposure to foreign currency as a percentage of net revenues.

In the three months ended DecemberMarch 31, 2025,2026, operating incomeloss was $148.2$372.0 compared to incomeloss of $268.2$280.4 in the three months ended DecemberMarch 31, 2024.2025. Operating incomeloss margin decreasedworsened to 8.8%29.0% in the three months ended DecemberMarch 31, 20252026 as compared to an operating incomeloss margin of 16.1%21.6% in the three months ended DecemberMarch 31, 2024.2025. The decrease in operating margin is primarily driven by an increase in costasset ofimpairment goods soldcharges (approximately 2901,190 basis points), an increase in amortization expense as a percentage of net revenues (approximately 160 basis points), an unfavorable impact due to an early license termination as a percentage of net revenue (approximately 80230 basis points), an increase in incost advertisingof goods sold (approximately 230 basis points), and consumeran promotionalincrease in fixed costs as a percentage of net revenues (approximately 50180 basis points), andpartially anoffset increaseby inlower operationalrestructuring accruals as a percentage of net revenuescosts (approximately 50590 basis points) and the loss on the termination of the KKW Collaboration Agreement in the prior period (approximately 550 basis points).

In the three months ended DecemberMarch 31, 2025,2026, operating income for Prestige was $181.9$58.4 compared to income of $222.3$78.7 in the three months ended DecemberMarch 31, 2024.2025. Operating margin decreased to 16.0%7.0% of net revenues in the three months ended DecemberMarch 31, 20252026 as compared to 19.9%9.5% in the three months ended DecemberMarch 31, 2024,2025, driven by an increase in amortization expense as a percentage of net revenues (approximately 240340 basis points),; an increase in fixed costs as percentage of net revenue (approximately 210 basis points); and an increase in cost of goods sold as a percentage of net revenues (approximately 150160 basis points), driven by an increase in manufacturing and freight expenses as a percentage of net revenue and negatively impacted by higher discounts and promotions in the current period. These factors were partially offset by a decrease in fixedasset costsimpairment as percentage of net revenuecharges (approximately 60520 basis points).

In the three months ended DecemberMarch 31, 2025,2026, operating incomeloss for Consumer Beauty was $18.3$423.3 compared to incomeloss of $64.1$189.5 in the three months ended DecemberMarch 31, 2024.2025. Operating incomeloss margin decreasedworsened to 3.4%93.9% of net revenues in the three months ended DecemberMarch 31, 20252026 as compared to an operating incomeloss margin of 11.6%40.3% in the three months ended DecemberMarch 31, 2024,2025, driven by an increase in asset impairment charges (approximately 4,430 basis points); an increase in cost of goods sold as a percentage of net revenues (approximately 540460 basis points) driven by increased sales in Brazil of lower margin products, an increase in operationalmaterial, accrualsexcess and obsolete and freight expenses as a percentage of net revenuesrevenue and negatively impacted by higher discounts and promotions in the current year period; an increase in fixed costs as percentage of net revenue (approximately 130240 basis points),; and an increase in advertisingother andoperating consumer promotional costsincome as a percentage of net revenuessales (approximately 90190 basis points).

In the three months ended DecemberMarch 31, 2025,2026, the operating loss for Corporate was $52.0$7.1 compared to a loss of $18.2$169.6 in the three months ended DecemberMarch 31, 2024,2025, as described under “Adjusted Operating Income for Coty Inc.” below. The increasedecrease in the operating loss for Corporate was primarily driven by costsa $86.7 decrease in restructuring and other business realignment costs, a loss on the termination of $19.7the relatedKKW toCollaboration anAgreement earlyin licensethe termination.prior period of $71.0, and a $5.2 decrease in stock-based compensation.

We believe that adjusted operating income by segment further enhances an investor’s understanding of our performance. See “Overview—Non-GAAP Financial Measures.” A reconciliation of reported operating income (loss) to adjusted operating income (loss) is presented below, by segment:

Net (Loss) Income,Loss, Adjusted Operating Income and Adjusted EBITDA for Coty Inc.

We believe that adjusted operating income further enhances an investor’s understanding of our performance. See “Overview—Non-GAAP Financial Measures.” Reconciliation of reported net incomeloss to adjusted operating income and adjusted EBITDA is presented below:

In the three months ended DecemberMarch 31, 2025,2026, adjusted operating income decreased $59.4$75.5 to $274.3$72.4 from $333.7$147.9 in the three months ended DecemberMarch 31, 2024.2025. Adjusted operating margin decreased to 16.3%5.6% of net revenues in the three months ended DecemberMarch 31, 20252026 from 20.0%11.4% in the three months ended DecemberMarch 31, 2024.2025. In the three months ended DecemberMarch 31, 2025,2026, adjusted EBITDA decreased $60.5$77.2 to $330.2$127.0 from $390.7$204.2 in the three months ended DecemberMarch 31, 2024.2025. Adjusted EBITDA margin decreased to 19.7%9.9% of net revenues in the three months ended DecemberMarch 31, 20252026 from 23.4%15.7% in the three months ended DecemberMarch 31, 2024.2025.

Operating (Loss) Income,Loss, Adjusted Operating IncomeLoss and Adjusted EBITDA - Consumer Beauty Segment

In the three months ended DecemberMarch 31, 2025,2026, amortization expense increased to $74.1$74.5 from $47.3$45.9 in the three months ended DecemberMarch 31, 2024.2025. The increase was primarily driven by accelerated amortization related to a brand license. In the three months ended DecemberMarch 31, 2025,2026, amortization expense of $65.0$65.3 and $9.1$9.2 was reported in the Prestige and Consumer Beauty segments, respectively. In the three months ended DecemberMarch 31, 2024,2025, amortization expense of $37.7$37.2 and $9.6$8.7 was reported in the Prestige and Consumer Beauty segments, respectively.

We incurred approximately $15.0$23.0 of cash costs life-to-date related to our previously announced Fixed Cost Reduction Plan as of DecemberMarch 31, 2025,2026, which have been recorded in Corporate.

In the three months ended DecemberMarch 31, 2025,2026, we incurred restructuring and other business structure realignment costs of $14.3$0.5 as follows:

•We incurred a credit in Restructuring costs of $5.8,$0.4, which is included in the Condensed Consolidated Statements of Operations; and