Time-Sensitive: Allegations Focus on Compressed Margins and Operational Discipline Failures

NEW YORK, April 29, 2026 /PRNewswire/ -- Levi & Korsinsky, LLP alerts investors in Coty Inc. (NYSE: COTY) of a pending securities class action. Class Period: November 5, 2025 through February 4, 2026. Check if you can recover your investment losses or contact Joseph E. Levi, Esq. at jlevi@levikorsinsky.com | (212) 363-7500.

Coty shares fell from $3.43 to $2.66, a loss of $0.77 per share (22%), after the Company withdrew fiscal year 2026 EBITDA guidance and admitted that operational discipline had eroded across the organization. The Court has set May 22, 2026 as the deadline to apply for lead plaintiff appointment.

How Increased Marketing Spend and SKU Proliferation Allegedly Eroded Profitability

While management projected confidence in reaching $1 billion in adjusted EBITDA for fiscal year 2026, the lawsuit asserts that margins were already under severe pressure from factors known internally but not disclosed to shareholders. Adjusted operating margin contracted 330 basis points. Adjusted EBITDA fell 17% year-over-year to $626.3 million for the six months ended December 31, 2025. Reported gross margin declined 200 basis points.

The action claims these declines were driven by undisclosed cost escalation tied to marketing investment increases and a breakdown in cost controls, particularly within the Consumer Beauty segment.

The CoverGirl SKU Problem and What It Signals

As alleged in the complaint, the scope of the operational failures became apparent only when new interim leadership took over:

• The number of SKUs in the annual CoverGirl innovation bundle had nearly doubled in recent years, significantly increasing costs
• Adjusted operating income fell 19% to $514.8 million as margin pressure intensified
• Net revenue declined 3% (6% on a like-for-like basis) while the Company continued to project a return to growth
• Variable compensation reversals created additional mechanical drag on fixed cost ratios
• Q3 adjusted EBITDA guidance was slashed to just $100 million to $110 million, far below prior trajectory
• The Company simultaneously withdrew full-year EBITDA and free cash flow guidance entirely

These revelations, the lawsuit contends, stood in stark contrast to prior assurances about operational improvements and profit growth in the second half of fiscal 2026.

"Investors deserve transparency about material risks that could affect their investments. When a company projects confidence in profitability targets while internal cost controls are deteriorating, shareholders are deprived of the information they need to make informed decisions." -- Joseph E. Levi, Esq.

Speak with an attorney about recovering damages or call (212) 363-7500.

WHY LEVI & KORSINSKY -- Ranked in ISS Securities Class Action Services' Top 50 Report for seven consecutive years, Levi & Korsinsky, LLP is a nationally recognized leader in shareholder rights litigation. With a team of over 70 professionals, the firm has recovered hundreds of millions of dollars for investors.

CONTACT:

Levi & Korsinsky, LLP

Joseph E. Levi, Esq.

Ed Korsinsky, Esq.

33 Whitehall Street, 27th Floor

New York, NY 10004

jlevi@levikorsinsky.com

Tel: (212) 363-7500

Fax: (212) 363-7171

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