Coty Inc. Experiences Major Stock Drop Following Supply Chain Concerns

Coty Inc. Faces Share Price Plunge Amid Retailer Inventory Challenges

On August 21, 2025, Coty Inc. (NYSE: COTY) reported a steep decline in share price, falling $1.05, equating to a substantial 21% drop. This sudden downturn came after the company disclosed its financial results for FY 2025 and Q4, revealing ongoing issues concerning inventory destocking among retailers.

The notable share price plummet has prompted national shareholder rights firm Hagens Berman to launch an investigation. The focus of the inquiry is whether Coty misled its investors regarding its growth outlook. The firm is reaching out specifically to those who have suffered significant losses due to the company's actions, encouraging them to come forward.

Coty Inc. is recognized as one of the foremost beauty companies globally, showcasing a diverse range of brands spanning across fragrance, cosmetics, and skin and body care categories. Its revenue streams are broken down into two major segments: Prestige, contributing around 65%, and Consumer Beauty, bringing in the remaining 35%.

Investigation Details

The crux of Hagens Berman's investigation revolves around the accuracy of Coty’s disclosures relating to its growth trajectory and the effective execution of its digital inventory management strategy, known as SAP S/4HANA. Coty had maintained since August 2024 that the transition to this system proceeded smoothly; however, the reality now appears to contradict that narrative, as reports indicate an 'inventory buildup' has occurred within the company.

The dramatic news broke when Coty announced a staggering decline in year-over-year revenue for both its Prestige and Consumer Beauty segments in the latest earnings call. The company attributed part of this disappointing financial performance to a significant reduction in inventory by its retailers, a situation it had previously downplayed since implementing the new inventory system, which was once touted as successful.

Shareholder Reactions and Moving Forward

As a consequence of the concerning disclosures, Coty's share price dropped sharply, a reflection of investor apprehension regarding the company’s future growth and stability. Hagens Berman's partner, Reed Kathrein, expressed that the investigation is aimed at determining whether Coty misled its investors about the risks associated with overloading its retail partners with excessive inventory, possibly to meet earnings benchmarks.

The investment community is urged to remain vigilant as this situation unfolds. Investors in Coty who have experienced notable losses are encouraged to submit their information, which may aid in the ongoing investigation. Furthermore, individuals who possess non-public insights related to Coty are advised to consider their options for involvement in the inquiry and may benefit from the SEC Whistleblower program, which offers financial incentives for original information leading to recoveries.

The legal landscape surrounding Coty Inc. remains precarious as stakeholders await developments from the ongoing investigation. With a significant sum exceeding $2.9 billion secured by Hagens Berman for investors and whistleblowers in similar scenarios, the potential for substantial outcomes looms large over Coty’s current predicament.

In conclusion, Coty Inc.'s situation emphasizes the fragile nature of investor confidence following unexpected financial disclosures associated with inventory management strategies. Stakeholders remain hopeful for transparency and accountability as the investigation continues to unfold.