COTY (COTY) risk factors, FY2025 10-K

Risks related to our Business and Industry

1. 01The beauty industry is highly competitive, and if we are unable to compete effectively, our business, prospects, financial condition and results of operations could suffer
2. 02Further consolidation in the retail industry and shifting preferences in how and where consumers shop, including to e‑commerce, may adversely affect our business, prospects, financial condition and results of operations
3. 03Changes in industry trends and consumer preferences could adversely affect our business, prospects, financial condition and results of operations
4. 04Our success depends, in part, on the quality, efficacy and safety of our products
5. 05Our failure to protect our reputation, or the failure of our brand partners or licensors to protect their reputations, could have a material adverse effect on our brand images
6. 06Our brand licenses may be terminated if specified conditions are not met, and we may not be able to renew expiring licenses on favorable terms or at all
7. 07Our success depends on our ability to operate our business without infringing, misappropriating or otherwise violating the intellectual property of third parties
8. 08Our business is subject to seasonal variability

Risks Related to our Business Strategy and Organization

1. 09Our success depends on our ability to achieve our global business strategies
2. 10We have incurred significant costs in connection with the integration of acquisitions and simplifying our business, and expect to incur costs in connection with the implementation of our global business strategies, that could affect our period-to-period operating results
3. 11Our new product introductions may not be as successful as we anticipate, which could have a material adverse effect on our business, prospects, financial condition and results of operations
4. 12We may not be able to identify suitable acquisition targets and our acquisition activities and other strategic transactions may present managerial, integration, operational and financial risks, which may prevent us from realizing the full intended benefit of the acquisitions we undertake
5. 13We face risks associated with our joint ventures and strategic partnership investments
6. 14In certain cases, joint ventures and strategic partnership investments may present us with a lack of ability to fully control all aspects of their operations, including due to veto rights, and we may not have full visibility with respect to all operations, customer relations and compliance practices, among others
7. 15Our goodwill and other assets have been subject to impairment and may continue to be subject to impairment in the future

Risks related to our Business Operations

1. 16A disruption in operations could adversely affect our business
2. 17We outsource a number of functions to third-party service providers, and any failure to perform or other disruptions or delays at our third-party service providers could adversely impact our business, our results of operations or our financial condition
3. 18We are increasingly dependent on information technology, and if we are unable to protect against service interruptions, corruption of our data and privacy protections, cyber-based attacks or network security breaches, our operations could be disrupted
4. 19We must continue to maintain and make requisite or critical upgrades to our information technology systems, and our failure to do so could have a material adverse effect on our business, financial condition and results of operations
5. 20Failure to protect sensitive information of our consumers and information technology systems against security breaches could damage our reputation and substantially harm our business, financial condition and results of operations
6. 21Failure of or disruption to one or more of our information technology platforms could affect our ability to execute our operating strategy
7. 22We use AI in our business, and challenges with properly managing its use could result in harm to our brands, reputation, business or customers
8. 23Our success depends, in part, on our employees, including our key personnel
9. 24If we underestimate or overestimate demand for our products and do not maintain appropriate inventory levels, our net revenues or working capital could be negatively impacted
10. 25We are subject to risks related to our international operations
11. 26Additional tariffs or other restrictions placed on imports, retaliatory trade measures taken by other countries and resulting trade wars may have a material adverse impact on our financial condition and results of operations
12. 27Changes in tax laws or regulations, or challenges to our tax positions, could significantly increase our tax liabilities

Risks related to our Indebtedness

1. 28We have taken on significant debt, and the agreements that govern such debt contain various covenants that impose significant operating and financial restrictions on us, which may adversely affect our business
2. 29We have a substantial amount of indebtedness, which may have adverse consequences on our business and impair our ability to be certain that additional financing will be available on reasonable terms when required
3. 30the covenants thereunder, as well as the indentures governing our senior secured notes, please refer to Note 12, “Debt” in the notes to our Consolidated Financial Statements
4. 31Our ability to service and repay our indebtedness will be dependent on the cash flow generated by our subsidiaries and events beyond our control
5. 32Our variable rate indebtedness subjects us to interest rate risk, which could cause certain debt service obligations to increase

Risks related to Macroeconomic Conditions and Market Risks

1. 33Price inflation for labor, materials and services, further exacerbated by volatility in energy and commodity markets by geopolitical events, could adversely affect our business, results of operations and financial condition
2. 34Volatility in the financial markets could have a material adverse effect on our business, prospects, financial condition, results of operations, cash flows, as well as the trading price of our securities
3. 35Fluctuations in currency exchange rates may negatively impact our financial condition and results of operations

Legal and Regulatory Risks

1. 36We are subject to legal proceedings and legal compliance risks, including talc-related litigation alleging bodily injury
2. 37Changes in laws, regulations and policies that affect our business or products could adversely affect our business, financial condition, results of operations, cash flows, as well as the trading price of our securities
3. 38Our operations and acquisitions in certain foreign areas expose us to political, regulatory, economic and reputational risks
4. 39Our employees or others may engage in misconduct or other improper activities including noncompliance with regulatory standards and regulatory requirements
5. 40Violations of our prohibition on harassment, sexual or otherwise, could result in liabilities and/or litigation

Risks Related to Ownership of Our Common Stock

1. 41We are subject to risks related to our common stock and our stock repurchase program
2. 42JAB Beauty B.V. (“JAB”) and its affiliates beneficially own approximately 54% of the fully diluted shares of our Class A Common Stock and, as such, have the ability to effect certain decisions requiring stockholder approval, which may be inconsistent with the interests of our other stockholders
3. 43The dual-listing of our Class A Common Stock on the NYSE and on Euronext Paris’s Professional Segment may adversely affect the liquidity and value of our Class A Common Stock