Coty Faces Securities Class Action Amid Operational Woes, CEO Departure

Hagens Berman investigating claims of misleading investor disclosures about business trends

Apr. 6, 2026 at 1:16pm by Ben Kaplan

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Coty Inc. (NYSE: COTY) faces a securities class action lawsuit following the company's Q2 2026 earnings report that depicted serious operational issues, including a plunge in Consumer Beauty operating income and the abrupt departure of its CEO Sue Y. Nabi. The developments have prompted national shareholders rights firm Hagens Berman to investigate claims that Coty violated federal securities laws by allegedly making false and misleading statements about its business trends.

Why it matters

The lawsuit alleges Coty misled investors about the performance of its key business segments, which could have significant financial and reputational consequences for the global beauty company. The case also raises questions about corporate governance and transparency, as it examines the circumstances surrounding the CEO's sudden exit.

The details

The lawsuit focuses on Coty's disclosures about business trends within its Prestige and Consumer Beauty segments. In November 2025, Coty assured investors that it expected improvement in sales trends over fiscal 2026, reaffirming its $1 billion adjusted EBITDA target. However, the complaint alleges 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 in February 2026 when the company reported a plunge in Consumer Beauty operating income and withdrew its fiscal 2026 guidance.

  • On November 5, 2025, Coty assured investors of improving business trends and reaffirmed its $1 billion adjusted EBITDA target for fiscal 2026.
  • On December 12, 2025, Coty announced the departure of CEO Sue Y. Nabi without explanation, driving the stock price lower.
  • On February 5, 2026, Coty reported its Q2 2026 results, revealing a over 70% plunge in Consumer Beauty operating income and an over 18% decline in Prestige operating income. The company also withdrew its fiscal 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 Inc. who departed the company abruptly in December 2025.

Hagens Berman

A national shareholders rights firm investigating claims that Coty violated federal securities laws.

Reed Kathrein

The Hagens Berman partner leading the investigation into Coty.

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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 judge in the case will decide on whether to certify the class action lawsuit in the coming months.

The takeaway

This case highlights the importance of transparency and accurate disclosures for public companies, as well as the potential consequences of alleged misleading statements to investors. The abrupt CEO departure and operational issues at Coty raise questions about the company's governance and risk management practices.