Why Coty Inc. Stock Dove 19% in August

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What happened

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Coty (NYSE: COTY) stock shed 19% last month, according to data from S&P Global Market Intelligence.

The decline added to recent losses for the beauty product giant's investors. Coty shares are down 10% since the start of the year, compared with a 10% boost for the broader market.

So what

The August slump was sparked by a quarterly earnings report that, while showing strong revenue gains, came up short on the bottom line. In fact, Coty posted an almost $300 million operating loss.

The good news is all of that red ink was due to temporary factors, including acquisition and restructuring charges. Still, accounting for those items left adjusted operating income at $90 million, which corresponds to a significant dip in profitability.

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Now what

CEO Camillo Pane blamed elevated costs for the earnings underperformance and said the company is doing all it can to get the problem under control. "Our cost base is not where it should be," he said in a press release, "and we are highly focused on this issue."

As a result, investors can expect to hear more about Coty's restructuring plans as the new fiscal year progresses, and as Coty makes strides toward integrating all of its latest acquisitions -- including the massive beauty-brand portfolio it bought from Procter & Gamble, into its business. Purchases like these are often complex and can produce unwelcome financial surprises on the way to full integration.

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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.