Key Takeaways
Coty Inc. (NYSE: COTY) is facing a class-action lawsuit filed by Levi & Korsinsky, LLP, alleging executives concealed slowing growth trends, leading to significant investor losses.
"This case presents important questions about growth and profitability disclosure obligations," Joseph E. Levi, Esq. of Levi & Korsinsky, said in a statement.
The lawsuit follows a 22 percent drop in Coty's share price, from $3.43 to $2.66, after the company withdrew its fiscal year 2026 guidance. The action covers investors who purchased stock between November 5, 2025, and February 4, 2026.
The legal action seeks to recover damages for investors who allegedly suffered losses due to misleading statements. The deadline for an investor to move the Court to serve as a lead plaintiff is May 22, 2026.
The lawsuit contends that Coty's management projected a return to sales growth and targeted approximately $1 billion in adjusted EBITDA for fiscal 2026, obscuring a deteriorating reality. According to the complaint, these projections were made while the company's Consumer Beauty segment was significantly underperforming the U.S. mass cosmetics market and its Prestige fragrance sell-out had gone flattish, underperforming the category by several percentage points.
The complaint alleges that for the six months ending December 31, 2025, Coty's adjusted EBITDA fell 17 percent to $626.3 million. Gross margins reportedly fell 200 basis points year-over-year, which the lawsuit ties to undisclosed cost increases. After months of positive forward-looking statements, the company ultimately withdrew its full-year guidance and slashed its Q3 adjusted EBITDA estimate, which the lawsuit claims caused investors to suffer damages.
The lawsuit introduces significant uncertainty around Coty's previously reported growth metrics and management credibility, potentially affecting its stock performance. Investors will watch for the court's decision on class certification and any potential settlement figures.
This article is for informational purposes only and does not constitute investment advice.
