Coty Inc. Under Investigation: Did They Mislead Retailers About Inventory Problems?

Investigation of Coty Inc. for Potential Misleading Practices

Coty Inc. (NYSE: COTY), a significant player in the beauty industry, is currently facing scrutiny from Hagens Berman, a notable shareholder rights law firm. The investigation has emerged following a sharp 21% decline in Coty's stock price on August 21, 2025, attributed to what the company referred to as “retailer inventory destocking issues.” This alarming terminology, coupled with the company's disappointing Q4 and annual financial results, has raised many questions and concerns among investors and stakeholders alike.

Background of the Situation

Since August 2024, Coty has boasted that their digital transition strategy, specifically their SAP S/4HANA implementation, was progressing smoothly. However, the recent disclosure about retailers reducing their excess inventories strongly opposes these earlier optimistic statements. This raises the critical question: did Coty engage in practices aimed at concealing an accumulation of inventory to meet earnings expectations? Such actions could be considered misleading to investors and detrimental to transparency in corporate governance.

Following the earnings report on August 21, investors were dismayed to discover a significant year-over-year decline in revenue across both the Prestige and Consumer Beauty segments of the company—segments contributing substantially to Coty’s overall revenue framework. Coty attributed their poor performance not only to market conditions but specifically highlighted inventory troubles among their retail partners—raising alarm bells about the credibility of their previously delivered messages regarding performance and growth.

Hagens Berman’s Investigation Efforts

Hagens Berman is examining potential misrepresentation by Coty and its executives, particularly focusing on whether management intentionally downplayed the severity of inventory issues to provide a misleadingly optimistic outlook to the financial community. Reed Kathrein, the partner from Hagens Berman leading the investigation, emphasized that the core of their inquiry is whether such misstatements were made to obscure Coty's actual financial health from investors.

Given the magnitude of the stock drop, the law firm is advocating that those who have sustained substantial financial losses as a result of Coty’s disclosures come forward to participate in the investigation. Furthermore, the firm is open to hearing from individuals with insider knowledge that could aid in their research into Coty’s practices surrounding inventory and investor communications.

Whistleblower Opportunities

For individuals who possess confidential information pertaining to Coty's operations, there are avenues available to contribute to the investigation under the SEC Whistleblower Program. This program incentivizes whistleblowers by offering financial rewards amounting to 30% of any successful recovery achieved by the SEC based on the information they provide. Transparency is vital for maintaining corporate responsibility, and such programs encourage individuals to step forward without fear of retribution. Interested parties can reach out to Hagens Berman via phone or email to discuss options for assistance or to report their insights into Coty’s business practices.

About Hagens Berman

Established as a principal firm representing plaintiffs’ rights, Hagens Berman has dedicated its practice to corporate accountability, successfully advocating for investors, consumers, workers, and whistleblowers against various corporate wrongdoings. The firm has amassed over $2.9 billion in settlements and judgments on behalf of its clients. By following their updates on social media or subscribing to their newsletter updates, investors and stakeholders can remain informed about the ongoing developments in cases that could affect their interests.

For additional information and FAQs regarding the investigation into Coty, interested parties are encouraged to visit the Hagens Berman website or directly contact them to submit their experiences or losses related to Coty.

In these turbulent times for Coty Inc., the unfolding investigation may provide crucial insights and, ideally, justice for investors affected by what appears to be significant corporate mismanagement. Stay tuned as both the legal landscape and Coty’s corporate strategies evolve in the weeks and months ahead.