Coty made a US$71.1m loss from its stake in Kim Kardashian’s beauty brand SKKN by Kim.
The revelation came in Coty’s third quarter financial performance update, in which it has cut its profit forecast for the year due to economic uncertainty.
Coty and Kardashian announced in March that the reality television star and businesswoman’s shapewear company Skims had bought the beauty giant’s minority stake in her cosmetics line.
Coty invested $200m taking a 20% share of SKKN by Kim back in 2021.
Kardashian’s 80% majority stake was also bought by Skims, meaning the star’s clothing, cosmetics, skin care and fragrance businesses all now sit under one umbrella.
The sale contributed to a total operating loss for the Cover Girl owner of $280.4m in the third quarter, compared to operating income of $77.8m in the prior year.
This was also down to a $212.8m asset impairment charge primarily in its Consumer Beauty colour cosmetics business, “reflecting the more challenged category trends in the US and Europe,” read a statement from Coty.
A further $75.7m went on restructuring costs.
The Kylie Cosmetics and Rimmel owner announced at the end of April it is cutting 700 jobs as part of its strategic overhaul.
Net revenue at the US beauty giant fell 6% to $1.29bn in the three months to 31 March due to “an uncertain market backdrop” and a 3% headwind from foreign exchange costs.
Consumer beauty, where it has seen diverging market trends between cosmetics and fragrance, declined 9% to $469.7m.
Coty’s Prestige division, which includes brands such as Lancaster and Philosophy, saw sales fall 4% to $829.4m as it absorbs a “tripleheadwind” of a slowing fragrance market, “blockbuster innovation” last year and “depleting elevated retailer inventory”, especially in the US.
Prestige fragrance sales continued to grow, but moderated to a mid-single digit pace.
Revenue in the Americas dropped 10% while Asia Pacific was down 5% and Europe 3%.
"Across economic cycles, beauty has remained resilient for decades,” said Sue Nabi, Coty's CEO.
“Even in this challenging landscape, we have significantly strengthened our strategic, operational and financial fundamentals, driving margin expansion, stronger cash flow generation and substantial deleveraging over the past four years.
“While we are not satisfied with our net revenue performance, Coty’s strong fundamentals, coupled with our multi-pronged attack plan for accelerating innovation, distribution and efficiencies, gives us confidence for the years ahead.”
Nabi added that Coty was “strongly positioned” to navigate the current backdrop of tariffs and economic uncertainty due to its ongoing ‘All to Win’ transformation efforts.
She predicted a gradual improvement to business trends over the course of the 2026 financial year.
Nabi said: “First, beauty has always been a resilient category across economic cycles, precisely because of its aspirational nature and its affordability for consumers looking for a personal indulgence during more difficult times.
“We expect this economic cycle will be no different, with fragrances – both prestige and mass – now positioned to be one of the better performing beauty categories as the ‘fragrance index’ remains at play.
“In fact, even as the US beauty market is now in a moderate decline, the fragrance category continues to grow solidly across price points.”
In its Prestige growth plans, Nabi noted two blockbuster launches, one coming in the first half of 2026 and another in the second half, as well as the extension of one of its major brands into the US.
It also “plans to capture many scenting opportunities, including ultra premium fragrances, body mists and pen sprays”.
Commenting on the Consumer Beauty division, Nabi said 2026 will include “new innovations under key mass fragrance brands, building on the exceptionally strong Adidas Vibes collection launched this year”.
Growth will also focus on “launching new fragrance lines co-developed with key retailers, expanding into body mists and other adjacencies, introducing several new technologies under our cosmetics brands”, as well as focusing on its e-commerce channels and TikTok Shop.
As part of Coty’s ‘All to Win’ strategic overhaul it plans $370m of cost savings over the next two financial years.
This, along with pricing power, will allow it to offset the impact of tariffs, which it also expects to weather thanks to its geographically diverse sales base, manufacturing and sourcing.
However, Coty is predicting a high single-digit decline in like-for-like sales in the fourth quarter of 2025 and a 2% decline for the full year.
Coty is now expecting per share profit for the year of between 49 cents and 50 cents, compared to previous forecasts of between 50 cents and 52 cents.