Coty Faces Securities Class Action After Surprise Earnings Decline, CEO Departure

Lawsuit alleges Coty misled investors about business trends in its Prestige and Consumer Beauty segments

Apr. 2, 2026 at 11:20pm by Ben Kaplan

Got story updates? Submit your updates here. ›

A photorealistic studio still life featuring a shattered glass perfume bottle, a crumpled financial report, and a single red rose, symbolizing the corporate challenges and reputational damage facing Coty.The shattered remnants of Coty's once-promising financial outlook, as the beauty conglomerate faces a securities lawsuit over alleged misleading disclosures.San Francisco Today

Coty Inc. (NYSE: COTY) is facing a securities class action lawsuit following the company's February 5, 2026 Q2 2026 earnings report, which depicted serious operational issues and the abrupt departure of its CEO Sue Y. Nabi. The lawsuit alleges Coty made false and misleading statements about its business trends and failed to disclose underperformance in its Consumer Beauty segment and slowing growth in its Prestige fragrance business.

Why it matters

The lawsuit highlights growing concerns about corporate transparency and accountability, especially for major consumer brands facing operational challenges. Coty's case raises questions about the propriety of its disclosures to investors and the circumstances surrounding its CEO's sudden exit.

The details

The lawsuit alleges that on November 5, 2025, in connection with Coty's Q1 2026 results, the company assured investors that it expected improvement in sales trends and reaffirmed its FY 2026 adjusted EBITDA target of $1 billion. However, the complaint claims Coty failed to disclose that the Consumer Beauty market was underperforming, margins were compressed by increased marketing investments, and Prestige fragrance growth was slowing. Investors began to learn the truth in December 2025 when Coty announced the departure of CEO Nabi without explanation, and on February 5, 2026 when the company reported a over 70% plunge in Consumer Beauty's operating income and an over 18% decline in Prestige's operating income, while also withdrawing its FY 2026 guidance.

  • On November 5, 2025, Coty reported Q1 2026 results and reaffirmed its FY 2026 EBITDA target.
  • On December 12, 2025, Coty announced the departure of CEO Sue Y. Nabi without explanation.
  • On February 5, 2026, Coty reported Q2 2026 results, revealing a steep decline in Consumer Beauty and Prestige segment performance, and withdrew its FY 2026 guidance.

The players

Coty Inc.

One of the world's largest beauty companies, with brands across fragrance, color cosmetics, and skin and body care. The company operates through two segments - Prestige and Consumer Beauty.

Sue Y. Nabi

Former CEO of Coty who departed the company abruptly in December 2025.

Hagens Berman

A global plaintiffs' rights complex litigation firm representing investors in the securities class action lawsuit against Coty.

Reed Kathrein

The Hagens Berman partner leading the investigation into Coty.

Got photos? Submit your photos here. ›

What they’re saying

“We're investigating whether Coty may have intentionally misled investors about its segment business trends and, if so, whether the year-over-year softness might be related to earlier reported destocking issues. We're also looking at the circumstances surrounding Ms. Nabi's abrupt and unexplained departure.”

— Reed Kathrein, Hagens Berman partner

What’s next

The lead plaintiff deadline for the securities class action lawsuit against Coty is May 22, 2026. Hagens Berman is urging investors who suffered significant losses to submit their claims.

The takeaway

Coty's case highlights the importance of corporate transparency, especially for consumer brands facing operational challenges. The lawsuit raises questions about the company's disclosures to investors and the circumstances surrounding its CEO's sudden departure, underscoring the need for greater accountability in the beauty industry.