A class action lawsuit was filed against beauty products maker Coty (COTY) on March 23, 2026.
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Plaintiffs in the federal securities lawsuit allege that they acquired Coty stock at artificially inflated prices between November 5, 2025, and February 4, 2026, known as the Class Period. They are now seeking compensation for financial losses incurred upon public revelation of the company’s alleged misconduct during that time. To learn whether you may be eligible for a recovery under this securities lawsuit, click here.
What Does COTY Do?
Coty together with its subsidiaries, manufactures, markets, distributes, and sells branded beauty products worldwide. The company operates through two segments-Prestige and Consumer Beauty-providing fragrance, color cosmetics, and skin and body care products through prestige retailers, including perfumeries, department stores, e-retailers, direct-to-consumer websites, and duty-free shops.
Why are Shareholders Suing COTY?
Investors allege that the company misrepresented its growth potential for fiscal year 2026, including forward-looking guidance on like-for-like revenue and adjusted profitability, claiming business trends were improving and projecting a return to sales and profit growth in the second half of the year.
In reality, the complaint alleges, defendants issued materially misleading business information in violation of federal securities laws, Coty’s Consumer Beauty segment was underperforming, margins were compressed by increased marketing investments, and its Prestige fragrance segment was experiencing slowing growth. These alleged misstatements caused investors to purchase Coty securities at artificially inflated prices before the truth emerged in early February 2026, following disappointing second quarter fiscal 2026 results and the withdrawal of prior fiscal 2026 EBITDA guidance.
Taking a Closer Look
The complaint targets Coty Inc., Chief Executive Officer Sue Nabi, and Chief Financial Officer Laurent Mercier for allegedly misleading investors about the company’s growth prospects during fiscal year 2026 through optimistic forward-looking guidance. On November 5, 2025, CEO Sue Nabi announced that Coty’s underlying business trends were already improving, in line to slightly ahead of expectations, particularly in Prestige. She stated the company saw tremendous potential to accelerate momentum through new brand launches, innovations, market-leading e-commerce, and globally scaled brick-and-mortar presence, and expected second quarter sales at the more favorable end of previous guidance, reinforcing the company’s forward-looking guidance narrative with a return to sales and profit growth in the second half of fiscal year 2026.
The following day, on November 6, 2025, CFO Laurent Mercier reinforced this optimism during an earnings call, stating that the company continued to expect sales (like-for-like revenue) to return to growth in the second half as sell-in and sell-out reached alignment, supported by key launches in Prestige and more favorable comparisons. He also projected adjusted EBITDA, a non-GAAP profitability metric, to return to growth in the second half, targeting around $1 billion for the year.
According to the complaint, these statements concealed material adverse facts about the true state of Coty’s business. Investors allege that the Consumer Beauty segment was actually underperforming, margins were being compressed by increased marketing investments, and the Prestige fragrance segment was experiencing slowing growth rather than the improvement executives publicly described, amounting to materially misleading disclosures under federal securities laws.
The Truth Emerges
The alleged deception began to unravel on February 4, 2026, when newly appointed Interim CEO Markus Strobel delivered prepared remarks acknowledging that Coty’s financial results in the past 18 months had been disappointing. He admitted that the company’s performance versus the market had been inconsistent, and in the second quarter, sell-out was flat, underperforming the market by several points in the critical fragrance category. Strobel conceded that while Coty had outstanding assets and capabilities, the company had not been delivering at the level it should.
The next day, on February 5, 2026, Coty announced its second quarter results revealing disappointing earnings and a like-for-like revenue decline of approximately 3% in the quarter with worsening performance in the Consumer Beauty segment. The company withdrew its prior fiscal year 2026 guidance for EBITDA and free cash flow and provided guidance solely for Q3 due to what CFO Laurent Mercier described as operational discipline that had slipped across the organization over the past two years.
Its share price is down 35% in the year-to-date – see below:
The Next Steps
If you have purchased the company’s stock during the Class Period, you may join the securities lawsuit as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole. To learn more about your options, click here.
The deadline to file for lead plaintiff in this securities lawsuit is May 22, 2026.