Coty (COTY) told investors growth was back. Strong fragrance demand. Profits set to rebound. But the underlying trends told a different story.
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A federal securities complaint filed March 23, 2026, in the United States District Court for the Southern District of New York names Coty Inc. and two of its senior executives as defendants, alleging they made materially false and misleading statements about the company’s financial trajectory during a period when its Consumer Beauty segment was underperforming and growth in its Prestige fragrance business was slowing. The complaint covers a class period from November 5, 2025, to February 4, 2026.
According to the complaint, Coty’s stock declined approximately 8% following the company’s prepared remarks released after market close on February 4, 2026, falling from $3.43 to $3.15 per share. The following day, after the full quarterly results were published, the stock dropped an additional 16%, from $3.15 to $2.66 per share. Combined, the two-day decline amounted to approximately 22%.
The complaint traces both declines to corrective disclosures in which Coty acknowledged underperformance, withdrew its fiscal year 2026 EBITDA guidance, and referenced the company’s recent transition of chief executive. The class period runs from November 5, 2025, to February 4, 2026, inclusive.
Investors who purchased Coty common stock between November 5, 2025, and February 4, 2026, may wish to review their potential eligibility to participate in this proceeding.
Coty Inc.: A Global Beauty Conglomerate Operating Across Two Segments
According to the complaint, Coty Inc. is a Delaware corporation headquartered at 350 Fifth Avenue in New York. The company manufactures, markets, distributes, and sells branded beauty products worldwide. It operates through two segments: Prestige and Consumer Beauty.
Coty’s Prestige segment sells fragrance, color cosmetics, and skincare products through upscale retailers, including perfumeries, department stores, e-retailers, direct-to-consumer websites, and duty-free shops. During the class period, Coty’s common stock traded on the New York Stock Exchange under the ticker symbol COTY.
The Core Allegations: Optimistic Guidance While Internal Challenges Were Allegedly Known
The complaint alleges that Coty’s then-Chief Executive Officer, Sue Nabi, and Chief Financial Officer, Laurent Mercier, made a series of public statements during the class period expressing strong confidence in the company’s growth trajectory for fiscal year 2026. Those statements, the lawsuit claims, created a materially false impression about the state of the business.
Specifically, the complaint alleges that while defendants publicly highlighted improving business trends, a strong innovation pipeline, operational improvements in the Consumer Beauty segment, and expanded AI implementation across the business, Coty’s Consumer Beauty segment was actually underperforming, margins were being pressured by increased marketing spending, and growth in the Prestige fragrance segment was slowing. The lawsuit characterizes this as a scheme that artificially inflated the price of Coty’s common stock during the class period.
The alleged misconduct centers on whether executives presented an accurate picture of the company’s internal conditions while issuing guidance for $1 billion in adjusted EBITDA for fiscal year 2026, which was later withdrawn entirely.
Shareholders who purchased Coty stock during the relevant period can review their potential eligibility and learn more about their legal options.
What Executives Said During the Class Period
The complaint details statements made by both individual defendants during Coty’s first quarter fiscal year 2026 earnings release and accompanying call on November 5 and 6, 2025. In the earnings release, Defendant Nabi said Coty’s business trends were improving, particularly in Prestige, and that the company expected a return to sales and profit growth in the second half of fiscal year 2026. She also pointed to upcoming launches and innovation as support for that outlook.
During the accompanying earnings call, Nabi said Coty was moving quickly to address challenges in Consumer Beauty while remaining focused on profitability and the balance sheet. She also said the company was seeing encouraging developments in U.S. Prestige fragrance sell-out and described those results as evidence of Coty’s progress in its largest market. Nabi further highlighted broader AI implementation across the business as a potential source of efficiency gains and cost savings. Defendant Mercier similarly said Coty expected adjusted EBITDA growth to return in the second half and reaffirmed the company’s approximately $1 billion adjusted EBITDA target for fiscal year 2026.
During the question-and-answer portion of the November call, Nabi described the U.S. fragrance market as still showing healthy growth and reiterated that Coty expected to return to growth in the second half. Mercier also expressed confidence in the Prestige fragrance category and Coty’s position within it.
How the Alleged Truth Emerged: Two Disclosures, Two Stock Drops
On February 4, 2026, after market close, Coty released prepared remarks for its second quarter fiscal year 2026 earnings. The remarks, attributed in part to newly appointed Interim CEO Markus Strobel, acknowledged that the company’s financial results over the prior 18 months had been disappointing and that in the second quarter, Coty’s Prestige fragrance sell-out was flat and underperforming the market by several points in what he described as the critical fragrance category. He also noted an ongoing large gap in Consumer Beauty sell-out performance relative to the U.S. mass cosmetics category. Coty’s stock declined approximately 8% following that release, from $3.43 to $3.15 per share.
The following day, February 5, 2026, Coty published its full second-quarter results. The company reported that net revenue for the six months ended December 31, 2025, decreased 6% on a like-for-like basis, adjusted EBITDA declined 17% year-over-year, and adjusted operating margin fell by 330 basis points. Coty formally withdrew its prior fiscal year 2026 guidance for EBITDA and free cash flow, citing the company’s leadership transition and a complex beauty market backdrop. For the third quarter, Coty guided for a mid-single-digit decline in like-for-like revenues and adjusted EBITDA of only $100 million to $110 million. That disclosure triggered an additional decline of approximately 16% in the stock price, from $3.15 to $2.66 per share.
Why the Complaint May Matter to Shareholders
The complaint alleges that throughout the class period, investors purchased Coty shares at prices that were artificially inflated because of the defendants’ allegedly false and misleading statements. When the company’s actual financial condition became public, the complaint argues, the stock price corrected sharply, causing measurable losses for shareholders who had purchased shares based on the picture management had presented.
The complaint notes that multiple analysts who had followed Coty lowered their price targets following the February disclosures. Analysts from Citigroup were quoted as citing limited visibility into outstanding questions regarding the magnitude of reinvestment and the timeline for operational changes to be reflected in the company’s financial results. Analysts at RBC Capital Markets pointed to what they described as misjudged innovation timing and trade inventory management as contributing to the underwhelming results. J.P. Morgan noted what it characterized as an arduous stabilization task against a challenging operating environment.
For investors who acquired Coty shares during the class period from November 5, 2025, through February 4, 2026, the central question in this proceeding is whether executives had access to information that contradicted the optimistic public statements they made and whether their failure to disclose that information caused shareholder harm.
Legal Claims: Fraud, Misleading Statements, and Control Person Liability
The complaint asserts two counts under federal securities law. The first count, against all defendants, alleges violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the Securities and Exchange Commission. This provision prohibits the use of deceptive devices or omissions of material fact in connection with the purchase or sale of securities. The complaint alleges that defendants engaged in a course of conduct designed to deceive the investing public and artificially inflate Coty’s stock price.
The second count, directed at defendants Nabi and Mercier individually, alleges violations of Section 20(a) of the Exchange Act, which imposes liability on individuals who exercise control over a company that has itself violated the securities laws. The complaint alleges that, as senior officers with authority over the content of Coty’s public disclosures, both individual defendants are liable as controlling persons for the alleged underlying violations.
Investors who held Coty shares during the class period may wish to consult legal counsel to understand their rights and options in connection with this proceeding.
About Levi & Korsinsky, LLP
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