Beauty and fragrance retailer Coty continued to report declines in both sales and profit for the first quarter, but management expects ongoing restructuring to drive growth in the second half of this year.

For the quarter ended September 30, the company’s net revenues fell 6 per cent year-on-year to $1.57 billion, with like-for-like (LFL) sales down 8 per cent.

The prestige segment, which accounts for 68 per cent of sales, saw revenue declines 4 per cent on a reported basis and 6 per cent on a LFL basis, despite a positive sell-out.

Consumer beauty net revenue fell 9 per cent on a reported basis and 11 per cent on a LFL basis.

On the bottom line, operating income slid 22 per cent to $185 million and attributable net income dropped 19 per cent to $65 million.

During the quarter, Coty announced plans to integrate its prestige beauty and mass fragrance businesses, as part of a restructuring designed to drive sustainable and profitable growth. The company also mulled strategic options for its mass color cosmetics business and Brazil business, which include a potential spinoff or divestiture.

“Following recent changes, Coty’s underlying business trends are already improving, in line with or slightly ahead of our expectations, particularly in prestige,” said Sue Nabi, CEO of Coty. 

“We see tremendous potential to accelerate this momentum, driven by a pipeline of new brand launches and innovations, market-leading e-commerce, and globally scaled brick & mortar presence.”

Nabi expects second-quarter sales to be at the more favorable end of the previous guidance of a 3-5 per cent decline. She also expects a return to sales and profit growth in the second half of FY26.