Q2 2023 Coty Inc Earnings Call
Sure well said John we do appreciate your patience and please continue to stand.
Your program will begin shortly.
[music].
Good morning, and good afternoon, everyone. My name is Gretchen and I'll be your conference operator today at this time I would like to welcome everyone to <unk> second quarter fiscal 2023 question and answer conference call.
As a reminder, this conference call is being recorded today February eight 2023. Please note that earlier. This morning, Cody issued a press release and prepared remarks webcast, which can be found on its investor Relations website on today's call are student Hobey, Chief Executive Officer, and the rock Mercy, a chief financial Officer, I would now like to remind you that many.
The comments today may contain forward looking statements. Please refer to coatings, earning release and the reports filed with the SEC, where the company lists factors that could cause actual results to differ materially from these forward looking statements. In addition, except where noted the discussion of <unk> financial results and cause expectations reflect certain adjustments as specified.
And non-GAAP financial measures.
Section of the company's released with that we would now open the line for questions if you'd like to ask a question. Please press the star key followed by the one key on your Touchtone phone if at any time, you would like to remove yourself from the questioning queue Press star two.
And our first question comes from Nik Modi from RBC capital markets.
Hi, good morning, everyone.
I guess two questions first on the glass in the fragrance situation.
How is this impacting the innovation agenda in terms of the pipeline and the launch calendar. If you could just provide any context and I apologize I missed some of the earlier remarks that some other companies reporting.
Did you provide a timeline in the prepared commentary on when do you feel like you'll be fully kind of back to normal from a from a component standpoint and then the second question is just would love your thoughts on what Youre seeing on the ground in China currently has suggested and improvement.
Curious on you know some details behind some of those comments.
Yes. Good morning. This is Joe speaking.
So again for the question.
When it comes to the first part of the question which is around.
Fragrance scripted just specifically focus on the gas components again that this is indeed, the paths of the components that have been the most affected and this is what I would say an industry wide issue and not just a good deal of course.
This is improving are ready at the moment, where we are talking down hence the.
You know the communication around the sequential acceleration of ourselves as a country and John .
It is clearly something that's a very very good news coupled as you can imagine with the robust beauty demand specifically on the fragrance side. So I would say there's two elements altogether gives us a lot of confidence that we'll have this shortage is slowly but surely.
Fixed into the industry widely and that's good to hear of course, so that's I would say the way I would describe the story did it impact the innovation pipeline the answer is no.
If you look at the way our innovations have been performing on the markets. The results have being I have to say outstanding beat on the <unk> I can start with this brand because you know what's happening for example in a market like the U S behind Burberry is unprecedented.
We've done last year the launch of <unk> also tried it and then we continued this year, meaning September calendar 'twenty, two with the buildup of the buffer.
All in all the peso for the first time surpassed.
Sales, which by the way it says a lot about the premium edition of this market traditionally.
Innovation that said line extension moving from other today towards the buffer is performing at 20% to 30% roughly so in this case, it's the bigger which is a really big sign so.
This one is doing fantastically well burberry her in the U S is you know try and being the rankings incredibly.
You know a lot of brands to become a top 10 fragrance brands in the very competitive U S market, which is a jump of 90 <unk>. If you think about you know what we have seen behind Hugo boss in the rest of the world because of the brand is not as big as it is in the rest of the world in the U S. So if you think about Europe and the rest of the World Hugo boss.
Success behind fashion now trends, taking into the fragrance business, our lowest to have a top two fragrance launch with the bus, but that's the parcel.
Think about Gucci again with no adjustment that's the contingency of last years ago, just gardenia again, it's a top to top five innovation so in a way.
The shorter just didn't prevent us from pursuing.
Innovation there in calendar 'twenty two for key launches last but not least clearly specifically behind I'd tell you the floor.
If not it is really booming.
All the PMI markets. If you think about the even once the Chinese one hopefully that is restocking now. This is clearly another leg of growth for us So no impact on innovation from what we have seen is again.
Going into China.
We read again like Oh, that's you know the headlines of gen being better than expected for the economy in general in this country. We've also seen some pictures that we posted during earnings call today.
We see consumers back to stores, which is really a fantastic news for the beauty industry and our businesses as you can imagine having the most important white space in terms of the whole industry in terms of companies in this country. So there is a confirmation if not I would say a strengthening slash acceleration.
Two things we have seen.
So I would say the.
Post lockdowns of last year, and including some recent studies because we continue to study the consumer's mindset in the country almost on a monthly basis, and we see the premium musician trends.
Celebrating and becoming more radical if I may say and building into all categories on one side and we see on the other side of the high specification trend stronger than ever which is great for both you know.
Our business is premium I isn't going to be coming more and more skewed.
In the country and last but not least something very important we are seeing in the country too is that the shift from I would say heritage brands by words, new brands auditing of the Chinese market is stronger than ever you know what the highest and consumers are now more open than ever to try new brands, new innovation versus the true.
Additionally, I would say loyalty that we have seen in the past that works more classical and traditional brands.
Okay.
Our next question comes from Ashley Hogan from Jefferies.
Hi, This is Sidney answer Ashley My first question is just on China. So I'm curious if you guys are seeing or expect.
Any category next rebalancing in China.
Just following that reopening and a return to socialization.
Yes, that's a very good question actually thank you.
Correct, yes.
Yeah, Yeah and by the way.
92, two for the first time, so in a way.
What I can tell you is that again confirming what I just commented on in terms of.
Look categories immunization has application moving towards new brands, new offering the kind of speed in terms of transformation of the how the Chinese market is looking more into more and more in terms of brands I can tell you that there is a you know a rebar.
Rebalancing, probably that will know all categories to grow in a way skincare is the most traditionally fastest growing category the biggest category by far the trigger and says on one side. The makeup on the other side of course as you mentioned because there is a more systemic Jason people are getting.
Outside their homes going back to stores travelling to Hainan by the way the traveled to Hainan has been that you know are higher than last Gen. If you compare between Gen. This year in general last year. So we start to see this.
Which is really a great I would say our information for us as Gucci as a company because it would mean that we will be able to really run on our <unk> in China of course fragrance makeup and skincare with the upcoming launch of <unk> 17 per share in March.
Thank you and then just one more on the comment on the deal. So you called out Covergirl and Remo I have seen a little bit of a benefit from consumers trading down from.
From the prestige is that something that we should understand there's evidence of trade down is that something youre seeing more broadly.
Or is it more brand specific season.
It's not a trade down from first year I told you. In fact this has existed since many years. It's been accelerating recently of course as you can imagine because we have more and more consumers specifically the Gen Z.
Stepping on feedstock and all these kinds of social media or at least making their opinions that is or shopping online and these I would say consumers in a way what they are looking for is a high quality affordable price, which is the reason why we are really working all our brands to become Kuhn.
Efficient clean because this is what people are looking for speed up and that's what people price versus you know what is happening in India.
And the rest of the industry when it comes to prestige, we don't see any sign of slowdown on the fragrance business as you can imagine.
The importance in fragrances of the brand name is very very important people are also shopping our brand name and this is where it makes the fragrance category probably the most immune when it comes to any kind of trade down or phenomenon and of course on makeup and skin care I would say the growth of this bid.
<unk> is big enough to a low end you want to continue to thrive.
Our next question comes from Anna <unk> from Bank of America.
Hi, Thank you so much for the question just curious what the momentum you saw in prestige fragrance in fiscal Q2, we're seeing a nice acceleration in volumes in the Nielsen data since the quarter and then I was wondering if you can comment on the momentum Youre seeing post the quarter and to what extent the supply constraints are affecting us as well.
Yes.
I haven't heard Suri.
Your second part of the question.
Just wondering if you can comment on the momentum that youre seeing post the coker with salaries and got it.
So why do you go to that debt by constraints that are affecting it.
Yeah got it. Thank you so much for the question again, the momentum in the momentum serene prestige fragrances in Q2 again.
In a way explainable first by the very healthy.
Demand for this category and what we love to call. The fragrance index is at food effect again, whatever the region again and this despite again.
That's tough to do that all the industry had been facing the innovation that we've been putting on the market again I was quoting you. They will go to you go both are clearly having.
Our role in this momentum that we are seeing in the company's opinion mutation of the mosque, yet again I'd love to give again and again. The example.
Thus far in that setting it higher than that which is a first in the history of line extensions and they stay which says a lot about the upgrading another down trading that this market. So this is I would say for me kind of extend nature of what's happening and this is again as you can imagine during the quarter without having.
Any you know.
Besides coming from the Chinese market, where the penetration is very low and is expected to grow in the coming quarters and years as you can imagine when it comes to the momentum that we started to see in Gen is I may say, because that would really be a link it to three elements.
The first one is of course, improving service levels and we are improving.
This element quite fast and we will continue to improve on this element in the coming quarters and of course, the contributed strong beauty demand, which is driving this sequential growth acceleration that we have seen there is also a phenomenon.
No big innovations that are priced in at the moment, we're speaking by cutting them down in the U S market again, we referred to this during the presentation.
The contingency of the clean lines with give me blood with the clean theorems getting into serum screen eye Shadows.
But not least and I guess this will be a question at the moment or another.
This.
Improvement, that's a very strong improvement in covergirl sellout in the U S market with the latest four weeks that show a 17% growth of the sales, which is the best performance since a year behind these brands. So if you put all these together with a little bit of restocking from our re tenders I remember our sales in Q2.
We're in line with the sellouts, meaning that we start the year with very lean inventories and therefore, there is a bit of restocking. So this I would say is the vendor of element that explain the start of the year that's accelerating sequentially.
Okay.
Our next question comes from Rob <unk> from Evercore ISI.
Great.
A little bit of I think a follow up on some of the other questions and that is as clay.
Start off clearly you know significant demand for fragrances supply chain issues.
Is there any way to guesstimate, how much those supply chain issues impacted our sales in the quarter.
No I'm going to take the question I wrote about it.
Very difficult to estimate who may.
Is that in.
I mean, we we.
The component shortage of BT.
Nicky immediately we have very tight workers.
Supply chain procurement.
We need to adjust to that.
Concretely what to what.
Was explaining is that in fact, we are ending as of Q2 with a lean inventory now is we are improving service level combined with.
And a great strategic moves like we have seen really some.
Rebuilding inventory and great software.
So no way okay.
But clearly enough to call out and material.
No again so.
So that's.
I will not call it material again, so this was what.
What we need and what we monitor COVID-19 even in the.
Smart way again was a conference we made sure that we put the key the accumulations. We made sure that we put a team in our key Peter So Thats release was that you know we are protecting these are the building blocks of the business and to be consistent in our strategy. So not material and again, we are seeing some acceleration beginning of Q3.
Our next question comes from Steve powers from Deutsche Bank.
Yes. Thank you good morning.
Two questions if I could the first one is just around the.
The price increase.
Our plan for the end of <unk>.
Any any further commentary you could offer in terms of where that's targeted how widespread versus how nuance the implementation of that pricing will be.
Number one and number two you mentioned a couple of times this morning.
<unk>.
The.
The notion that this year's launch pipeline specifically in prestige.
Fragrances.
Primarily composed of brand extensions and I'm, just I'm curious as we look out to fiscal 'twenty four.
And early early peek into the innovation pipeline.
<unk> is expected to continue or if next year will be.
More of.
On innovation here that has.
More kind of hero products bigger innovations that kind of thing.
You very much.
Hello, Hi, Stephen so.
Increased let me, let me remind you that even when we implement even mid single digit price increase.
In summary calendar 'twenty two.
It went very smoothly.
We explained several times, we did we have a dedicated pricing youll seats.
We started working with like two three years ago. So we are working very granular manner.
Unit <unk>, making sure we combined.
<unk> media to port all the strategic initiatives. So it went very smoothly.
Fleet was again in terms of strength of the brands and the professional work we are doing.
This was absolutely need as you saw.
Because it was really as a way to mitigate inflation of course smell gene.
The <unk> driver of our gross margin expansion in Q1 and Q2.
And indeed, we shared that we are implementing them.
<unk> price increase.
Q3.
Fiscal 'twenty suite.
This quarter.
Again, so this is what's been announced.
No.
Again, because some semi approach granular granular work and again, making sure that we are.
So completely consistent.
Into consumer needs and we are also working a lot on the mix management. So it's really because we have seen recently.
Appetite for premium position.
And this is what we are doing in booths prestige.
Cushman and duty so perfectly on track detailed world granular and again, all the way to what we see that we are matching consumer needs and expectations.
Yes. Good morning. This is sue so on the second part of the question, which is around the launch pipeline that was mainly brand extension. Thank you first of all reminding everyone about this and the performance of our prestige business is indeed.
In the comparative with the big Big launches, we have made last year he towards building.
He wrote it was Gucci flora and of course, Calvin Klein CK decide so this year of course it was lying extension. This is traditional in our business, but again for the first time line extensions that towards more premium offerings or the Purcell vulgarly, 30% above in order <unk> has made in a way this.
<unk> year, a year of continuing growth, but youre right. The question is how about fiscal 'twenty, four and hopefully we'll be back to blockbusters.
Okay.
Our next question comes from recurring with Meyer from Piper Sandler.
Hey, good morning, all and thanks for taking the question. So first can you just touch a little bit about how youre thinking about China growth for the rest of the year and how much.
Much improvement are you baking into guidance and then as we look into 2024, how are you thinking about expectations for China there.
Okay.
So first of all you either.
First of all we are confirming the guidance, 6% to 8%. So this season and as you can see with each one results we are perfectly on track definitely.
China was a headwind in Q2 due to lockdown. So we are making on acceleration and the <unk> in Q3 in Q4. So this is a <unk>, 3% and this is of course supported by all the initiatives that suits.
As explained in BCP that all these initiatives.
<unk> 24, so China will become either.
Acceleration for growth.
<unk> 2004, and again all of this is it.
It will be included in our midterm algorithm of 6% to 8%.
Very helpful. Thank you and then can you just touch a bit on that.
The broader fragrance market, it's been growing really well the past couple of years.
And then the fragrance segment for Cody I think are even better can you just touch on how.
Sustainable you think that's market growth. If you think it will come up against some tough comps at some point and then as we think about the segment for Coty, how sustainable do you think that strength. Thank you.
Yes. Thank you Corey this is Joe speaking I'm going to take the second part so again when it comes to the fragrance market Slash described rents index. Indeed, the fragrance market is 25, 20% to 30% higher than the levels of 2019 and in markets like the U S. Again and you May know this is the prestige fragrance market is over 50% higher.
Then compared to pre Covid levels again, it's hard to see how this would just be driven to some one time factors I have to say, how sometimes I hear this and I do believe it's not the right explanation. Historically this has been the big gifting category, but what we are now seeing consumers using fragrance as part of their daily routine.
I mean this business has become really helped the business mental health business I would say fragrance.
Fragrance is being seen as new boosters, allowing people to see better in the daily day to day life in particular during the last couple of years, we have seen increased usage by new categories, where the premise penetration has increased structurally I'm thinking about Gen Z I'm thinking about men and I'm thinking.
About Hispanic consumers is of course, a focus on the American market. We are also seeing at the same time, the rise of fragrance Influencers and social media specifically to talk but also on Youtube, which is also helping to drive sustainable growth for this category.
Driving discovery of different fragrances that providing authentic ways for consumers to engage with the product we actually default of changing which is a really new it's a new kind of sampling if I may say that youre sampling. We're also noticing.
With the younger consumers that they are using fragrances more and more so the penetration in the U S to conclude with is in the high <unk> level, which is still well below that of Europe , which is closer to 50% not speaking about the Chinese penetration, which is around 3%. So these give you.
I'd say zoom out of what is coming soon with this fragrance category globally.
Yeah.
Our next question comes from Olivia Tong from Raymond James.
Great. Thanks, Good morning, first wanted to talk about China and the reopening.
And now that we opening is happening what what can go into place that wasn't.
Over the last couple of years end and could you talk a little bit about how much opportunity. There is for you to grow shelf space and the conversations that youre, having with your folks on the ground are with retailers, particularly in travel retail.
Yeah. Good morning, Thank you for discretion, which is indeed, a very important question again just to refer to our daily lives last week in Amsterdam, We had people from all around the world spending a week for the first time since many many many I would say a month and customers altogether, including the Chinese general managers to APAC in general.
Just everyone was in the same room in the same place spending five day discovering all the new innovation for fiscal 'twenty, four and the Bose and I can tell you that the level of confidence I have seen on the faces specifically the Chinese the Chinese general managers and teams and marketing director was you know a.
Very very strong sign of how they see could see in these markets where the opportunities are almost.
For a company like ours, what do we do better again in a way.
If I may say I love to give this image of you know sometimes that desperately needs to help you and in a way we had two years in the house to strengthen to prepare to strengthen our fragrance business to strengthen our makeup business specific on the prestige side to put ideas intelligence and marketing behind the brands like Adidas for Max.
But our two big brands in the Chinese market and last but not least to fully prepare for first skincare launch in China, which is happening next month as we are speaking so in a way. This is what's different you know it's absolutely not the same cookie that we starting doing beauty business in China in March than the one that.
It was a you know doing business just two years ago.
Our next question comes from Andrea Teixeira from Jpmorgan.
Thank you my question.
I was just hoping to see if you can talk about it a little bit of the prestige side in terms of like how you parse out scan and and I know a length of stay out was the big launch.
Vis vis fragrances of course, I mean fragrances are the main motor of that but I was wondering the exit of the quarter, we did see not to take.
Credit for it but we did see the deceleration.
For the quarter, and even adding back Russia, it's probably coming in below expectations and off question understanding all of the.
The supply chain issues, but if you can.
Help us understand how scan vis vis fragrances and the exit of the quarter. Thank you.
Yes.
Thank you for the question if I understood well you were referring to the Costa deceleration in fragrances and again I do believe that this is not the way.
You should read the figures if I may say again I'll refrain the story around our Q2, saying that this performance given the shortages given the boom of the demand given the type of innovation last year, which are which were unprecedented in the history of <unk> is a very very strong performance I have to say so that's really the way I see it.
I really see skincare, specifically on the Chinese market as an additional layer and thats something thats supposed to compensate anything guys skincare is really for us an additional I would say growth driver.
A new journey for the company, that's very very important as you can imagine if we want to become a beauty giants in Asia, So really continuous settlements on our fragrance business strong performance on our prestige business specifically in the U S without China as you can imagine that was under lockdown during the food cost up.
And last but not least adding a new leg, which is the ski legs, starting with long cast there of course, not referring but again you gave me the opportunity to refer to this these figures with you. We launched that is going to happen also in the coming months.
Last but not least the extension with the high premium ultra behind all that is happening in the coming quarters.
Our next question comes from Chris Carey from Wells Fargo Securities.
Hi, good morning.
Good morning, Good morning, Craig.
So.
Just a follow up on <unk>.
Andreas question just around.
Individual ekati category growth.
I appreciate it last quarter.
The body care launch.
<unk> had some impact that was that was favorable I think if I heard you correctly in the prepared remarks, you said that growth was more balanced across your.
Cross your categories between fragrance.
Our body care and it.
Makeup, but can you maybe just contextualize.
How category delivery was for you in the quarter.
Like for like sales basis.
And maybe what your expectations are for the full year in the context of your full year like for like sales guidance. Thanks, So much.
Yes indeed.
I mean, what youre, highlighting <unk> strengths for equity needs that we have a balanced portfolio.
Indeed that we are in both.
Both divisions, no we have I would say.
Sub categories, which are performing really well.
Yes.
Prestige I really want to.
Besides again that of course, we are front runs right. Now we are seeing prestige makeup and skincare, which are accelerating and will be strong growth drivers on consumer beauty. So.
This nuclear Suez in case of consumer beauty no. We are seeing them in the strong acceleration in beauty care.
So I did us a successful innovations.
In Q2, so we really unique price up so he's really you know high <unk> mix in terms of value for the consumers and we're seeing some.
Great traction on suites coming in on top of color cosmetic.
That's 0.1, so in this disease.
I want to highlight also that.
So there must be performance in Brazil, okay.
<unk>, we have very strong brands and also we can absorb some.
Some cost synergy synergies with the rest of the business. So.
This EBIT clear strength was things for the company so.
This unique deal.
Skincare.
This is definitely what we generate in HD and beyond of course in fiscal 2014 fiscal 2000 tons.
Our next question comes from Linda Bolton Weiser from D. A Davidson.
Yes, hi, good morning.
I was curious as you increase your spending on advertising and promotion over time can you talk about where youre seeing the best Rois and as you spend more are your rois actually improving over time. Thanks.
Yeah. Good morning does that that's a very important question I would say is I would say, even the daily focus of <unk>.
The organization.
Stepping back a little as he sees what you're highlighting is no.
Any possible all into women, great Uh huh.
We started to focus on fixed cost than the cost of goods and now we are really embracing.
The agent CP, we are investing in.
We are building methodology.
Of course, combined with marketing team digital teams and commercial teams.
We are getting fully equipped.
Leisure and to optimize it so the number one focus.
And also we are improving because as we ship just before we all know you can still grow in different categories and give Nikki the way you spend money in skincare is different this is a way to spend money in flood runs. So these are really new capabilities that we have beat.
Is it right to say that we use it was the last two years at this time to build these capabilities. So Hawaii is the keyword.
Making sure that each dollar we are spending on either on innovations on base business EBIT guidance.
Based on the Hawaii and is reviewed by <unk> and by myself and of course with the team.
In our recurring <unk>, so thats, absolutely pizza that we make sure we're making the best.
Of our money in <unk>.
Right.
The convenience of coming quarters.
Our next question comes from Mark <unk> from Stifel.
Yes, thanks, and good morning afternoon, everyone.
Two questions for me one just first on the consumer beauty, so still gaining share there.
<unk> of increased narrowed a little bit in the quarter I guess, what would be your expectations going forward for that and then maybe sort of related to that.
I'm curious about your views on the length of the current beauty cycle, which has obviously been a couple of years now coming out of kind of the teeth of the pandemic.
Mask wearing et cetera to fragrance and makeup had been drivers of the beauty category is it reasonable continues and kind of what would be your expectations for the length of the current cycle. Thank you.
Executing on the Max so thank you for these two questions switching so again when it comes to consumer beauty Youre right to point out that the fact that consumer beauty is entering a new cycle. In fact, the first cycle that started somewhere around June 'twenty, one was really to re invent the <unk>.
Equity, sometimes coming back to historical brand equities strengthening these modernizing these creating great advertising with the highest LOI as just mentioned by the Hall and this was really what explains that back to market share gains, which happened now for the full year. This is the first time since 2015 that this division is gaining market share.
For a full year.
This was stage one stage two.
I love to say that stage, one was fixing the surface. If I may say and then stage two is really getting deeper and you start to see real I would say disruptive best.
In class in terms of efficacy in the market innovation. This takes time it takes one year in the hard to create a fantastic Mascara Fantastic Foundation or a long lasting color. So this is now the moment of these so you can imagine that consumer beauty businesses, specifically behind the makeup are going to continue to put on the market.
Big innovation supported by excellent advertising, having the best <unk> in the company and on top of this we have the Adidas bets.
Talk to you about Adidas last quarter, we started in western Eastern Europe , sorry, with very very strong results, specifically on the Hyatt <unk> and <unk>.
We are implementing this innovation in the western World and as you can imagine this has a big potential also this brand in China, where the brand is cooler than ever and it's already the number one show up Jetblue for Chinese men in this country. So you can imagine that's building this brand into wellbeing and what's being brand.
In Europe in China, and hopefully in the rest of the world as you can imagine.
Now to answer the second part of your question about the beauty cycles again, I'm a strong believer that the main thing that has changed since a few years now is what I call. The health litigation of the beauty industry. This industry is about things that make people look better of debenture and this becomes.
Something that's a non negotiable for consumers.
The limit is on the us in terms of ability to innovate to tell you stories to bring new brands and new technologies to continue to make the consumer interested in our category. Because this is a deep need and not something that is nice to have.
Our last question comes from Carla Casella from JP Morgan.
Hi, Thank you.
You talked about prestige.
The school digit growth in mass and mid single digit can you talk about how much of that was.
New doors or is that mostly just pure sell through of kind of the new products you've been talking about.
Yes, hi.
Basically I mean visa.
Model, we are using for prestige in consumer beauty so.
Most of the organic growth.
<unk> is a pre season continued beauty.
Definitely.
It is a case of consumer beauty.
Now step by step we are seeing that.
Getting shelf space significantly.
Let's say sort of innovation.
Ration of irritation.
All these elements step by step.
We are regaining traction trust with consumers and retailers and <unk> no absolutely all the ammunition now to gain to gain shelf space. So that's really we aren't building.
<unk> right now.
So thats really you know backward ways, we talked about discipline.
We're doing this meeting.
Marketing teams either consumer beauty.
Sure.
So Steve we are really focusing on productivity per door.
Again, we're talking about the oil productivity per door is the absolute <unk>.
Once we optimize productivity corridor then of course, we are working on new doors, which with very selective criteria that were entering new doors and equally.
We are guaranteeing a productivity is really a target level.
Okay.
And we've reached our allotted time for question and answer session. I will now turn the program back over to our speakers for any additional or closing remarks.
Yes. Thank you everyone for your questions. If you allow me a few closing remarks. The first one is about the category beauty is and will continue to be the Darling category with consumers around the world for all the regions. We have mentioned during this earnings call. Please see Gucci imagery reinvention stage two phase.
Entering into you know lead innovation.
Syntactic Hawaii behind advertising new.
White spaces in terms of regions categories, including skincare.
We're getting leverage was three times at the end of this calendar.
I would say that given cookies not in its maturity phase as you can imagine we will continue to grow given all of the white spaces that we're having and the luxury market is that it's very important that the long term vision and view is really the one that is at play at Gucci and we are building. This company for the coming I would say decades to become.
I'm a true beauty powerhouse. Thank you very much.
Thank you ladies and gentlemen. This concludes today's teleconference. You may now disconnect.
Okay.
Yes.
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