Coty (COTY)

Risks

• The beauty industry is highly competitive, and if we are unable to compete effectively, our business, prospects, financial condition and results of operations could suffer.
• Further 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.
• Changes in industry trends and consumer preferences could adversely affect our business, prospects, financial condition and results of operations.
• Our success depends, in part, on the quality, efficacy and safety of our products.
• Our 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.
• Our 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.
• If we are unable to obtain, maintain and protect our intellectual property rights, in particular trademarks, patents and copyrights, or if our brand partners and licensors are unable to maintain and protect their intellectual property rights that we use in connection with our products, our ability to compete could be negatively impacted.
• Our success depends on our ability to operate our business without infringing, misappropriating or otherwise violating the intellectual property of third parties.
• Our business is subject to seasonal variability.
• Our success depends on our ability to implement our Transformation Plan and achieve our global business strategies.
• We 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 Transformation Plan, that could affect our period-to-period operating results.
• Our 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.
• We 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.
• We face risks associated with our joint ventures and strategic partnership investments.
• Our goodwill and other assets have been subject to impairment and may continue to be subject to impairment in the future.
• A disruption in operations could adversely affect our business.
• We outsource a number of functions to third-party service providers, and any failure to perform or other disruptions or delays at out third-party service providers could adversely impact our business, our results of operations or our financial condition.
• Our success depends, in part, on our employees, including our key personnel.
• If 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.
• We are subject to risks related to our international operations.
• We 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.
• Our ability to service and repay our indebtedness will be dependent on the cash flow generated by our subsidiaries and events beyond our control.
• Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase.
• A general economic downturn, credit constriction, uncertainty in global economic or political conditions or other global events or a sudden disruption in business conditions may affect consumer spending, which could adversely affect our financial results.
• Volatility 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.
• Fluctuations in currency exchange rates may negatively impact our financial condition and results of operations.
• We are subject to legal proceedings and legal compliance risks.
• Changes 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.
• Our operations and acquisitions in certain foreign areas expose us to political, regulatory, economic and reputational risks.
• Our employees or others may engage in misconduct or other improper activities including noncompliance with regulatory standards and regulatory requirements.
• Violations of our prohibition on harassment, sexual or otherwise, could result in liabilities and/or litigation.
• If the Distribution (as defined below) or the acquisition of the P&G Beauty Business does not qualify for its intended tax treatment, in certain circumstances we are required to indemnity P&G for resulting tax-related losses under the tax matters agreement entered into in connection with the acquisition of the P&G Beauty Business dated October 1, 2016 (the “Tax Matters Agreement”).
• We are subject to risks related to our common stock, our stock repurchase program and our Stock Dividend Reinvestment Program.