Q1 2025 Coty Inc Earnings Call - Pre-Recorded
Today November seven 2024 at approximately 10 30, a M eastern time or 430 P. M. Central European time, we will hold a separate live Q&A session on our results, which you can access via our Investor Relations website.
Hello everyone, this is Olga Lovinson, Cody Senior Vice President of Investor Relations.
Thank you for joining us today for the prepare remarks portion of Cody's first quarter fiscal 2025 earnings.
Joining me for our presentation, our Soo Nabil Cody CEO and Laura Mercy, a quote <unk> CFO before I hand, the call over to Sue I would like to remind you that many of the comments today may contain forward looking statements. Please refer to <unk> earnings release, and the reports filed with the SEC.
On Thursday, November 7, 2024, at approximately 10 30 AM Eastern Time, or 430 PM Central European Time, we will hold a separate live Q&A session on our results, which we can access VRR Investor Relations website.
Join me for our presentation, our su nabi, Cody CEO, and Laura Mercier, Cody CFO. Before I hand the call over to su, I would like to remind you that
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 <unk> expectations reflect certain adjustments as specified in the non-GAAP financial measures section of the company's release. Thank you.
I will now hand, it over to our CEO Sue Nabil.
Sue Nabil: Thank you Youre welcome everyone.
Sue Nabil: [laughter], California fires.
Sue Nabil: <unk> economic environment remains complex as ever.
Sue Nabil: Far as growth of the last few years is now entering the normalization phase.
Sue Nabil: One thing is very clear consumers continue to prioritize beauty and their spending or tunes.
Sue Nabil: And then there's the pushback on many other consumer segments within the broader beauty backdrop fragrances remain a top performing category.
Sue Nabil: And the beauty leader and increasingly as a beauty Trump center Coty remains at the forefront of fueling consumer desire and driving category growth through disruptive long shows new and improved formulations and engaging activations and campaigns.
Sue Nabil: Let me summarize the four key messages, we want to leave you with today.
Sue Nabil: First we continue to deliver sustained like for likes as growth in.
Sue Nabil: In fact, we are further building on our multiyear cockpit girl of outperforming the leading global beauty players second the fragrance market remains robust with more consumers entering the category using fragrances in more often and exploring with a variety of concentrations and formats.
Sue Nabil: Third we are step changing our efforts to adapt cookie for future success.
Sue Nabil: The ever more dynamic market environment.
Sue Nabil: Not only will these efforts enabled the company to lead in the beauty market is tomorrow, but they are also bringing additional savings in fiscal 'twenty, five and beyond supporting our ability to deliver our fiscal 25, adjusted EBITDA target of close to 10% growth and fine.
Sue Nabil: Finally, we will continue to play across the full range of our brands and categories to capture growth opportunities and support sustained out performance.
Sue Nabil: Despite moderately lower than expected growth in Q1 Cookie continued to outperform.
Speaker Change: Adding global beauty companies now in nine out of the last 13 quarters. We have delivered like for like growth, which is ahead of global peers like L'oreal Este Lauder, She say do an edge image perfumes and cosmetics Division our continued outperformance is clear.
Speaker Change: Here on the slide shown here in a complex microeconomic environment cookies consistent outperformance of our peers confirms that our growth is a result of our clear strategic vision strong execution and our ability to seize on and develop.
Speaker Change: Duty trends in each of our core categories.
Speaker Change: The beauty market continues to grow at a healthy pace as you can see it particularly in the categories in which we compete on this slide the prestige fragrance category remains robust even as growth has moderated a little exiting Q1.
Speaker Change: Both in fiscal 'twenty, four and entering Q1 fiscal 'twenty five prestige fragrances grew approximately 12% across North America and Europe wide in September the combined market moderated by a couple of percentage points.
Speaker Change: This reinforces our view that the prestige fragrance category continues to be supported by structural growth drivers, which will allow it to continue to grow in line to ahead of the underlying beauty market in the coming quarters and years for Coty, our prestige fragrance portfolio.
Speaker Change: Continues to perform strongly particularly in EMEA, while in the U S. Both our set out and selling growth is impacted by the very elevated compare regions of the prior year, which included the blockbuster launch of Burberry goodness.
Sue Nabil: On the consumer beauty side, the global market has slowed from fiscal 'twenty four levels, but continues to grow at a low single digit pace in recent months is consistent with pre COVID-19 levels within this backdrop, we see outperformance in the mass fragrances and boutique.
Sue Nabil: You have categories, which are both growing strongly in the high single digits.
Sue Nabil: At the same time mass color cosmetics has moderated to flattish to slightly negative performance with the weakness concentrated in the U S. We continue to see two main factors at play in the flattish mass cosmetics market first unit demand growth remains positive.
Sue Nabil: Has moderated to a low single digit level as consumer demand normalizes. Following the post COVID-19 surge second pricing is no longer the strong positive building block of the last few years.
Sue Nabil: It is important to highlight that mass cosmetics sales growth in the E. Comm channel remains robust and we continue to gain share in this critical channel.
Sue Nabil: Against this broadly healthy market backdrop with continue with the normalizing beauty growth, we have clearly seen much more cautious and risk adverse behavior by retailers in certain areas.
Sue Nabil: In our U S consumer beauty business, which accounts for a little more than 10% of our sales. We tenders have been actively managing their orders inventory and net working capital. This was exacerbated further by the significant channel shifts in the market with drugstores embarking on door closure.
Sue Nabil: Errors and overall balance sheet management as a result, our Q1 revenue trends in the U S consumer beauty were significantly below our sellout.
Sue Nabil: It's important to contextualize that our exposure to the U S. Drugstore channel is fairly small accounting for a low to mid single digit percentage of cookies annual sales.
In the U S consumer beauty were significantly below our sellout itching.
Sue Nabil: On the prestige side, our selling tracked well below set out in China, and Asia travel retail each of which account for a low single digit percentage of sales as demand remained sluggish with tenders adjusted orders further and new regulations were enacted in the EU.
It's important to contextualize that our exposure to the U S. Drugstore channel is fairly small.
Speaker Change: Travel retail coffee, though.
Speaker Change: At the same time in Australia, which also accounts for a low single digit percentage of our sales our prestige business shipments were also impacted by substantial working capital reduction at a key retailer. The net results of these factors was a couple of percentage points of headwind to our sell in Q1.
Speaker Change: And we expect the same dynamics to extend into Q2.
Speaker Change: Combining the sell in sell out dynamics with some normalization in beauty market growth and the earlier shipment of fragrance gift sets, which benefited Q1 altogether. This is driving our outlook for Q2 like for like sales to be slightly positive however, with a gap between.
Speaker Change: Selling and sellout, suggesting limited further runway for further inventory cuts, we expect this inventory reduction impact to abate entering the second half.
Speaker Change: Our foreign half like for like growth in the first quarter was reflective of the overall market dynamics in prestige, we reported 7% like for like growth in the quarter fueled by prestige fragrances growing strongly at 9% like for like.
Sue Nabil: With some benefit in the quarter from earlier shipments of gift sets or prestige division delivered expansion in volumes estimated price an estimated mix in consumer beauty our growth was flat as we experienced slightly negative volumes impacted by the <unk>.
Sue Nabil: Our market as well as the inventory reductions in the U S mass channel.
Sue Nabil: And by region, we saw high single digit growth in EMEA mid single digit growth in Americas, and mid single digit decline in APAC, which was the result of the ongoing pressure in China and the regional travel retail channel.
Sue Nabil: Our growth engine markets, including Brazil, Mexico, the rest of Latam, India, China, South East Asia Africa, and Middle East Altogether. These growth engine markets account for approximately 21% of our Q1 sales and grew strongly at 15%.
Sue Nabil: Like for like in Q1, including approximately 5% contribution from the hyper inflationary environment in Argentina.
Sue Nabil: In addition to this growth engine markets, our travel retail channel, which accounts for roughly 9% of our Q1 sales grew 4% like for like in Q1, driven by growth in the Americas and EMEA, while our results in travel retail Asia were challenged by tight inventory management.
Sue Nabil: Local retailers our sales in mature markets grew 1% like for like weighed down by the sell in sell out dynamics described earlier in the U S and in Australia.
Speaker Change: Let me now hand, the call over to the wall to take you through our financial results and guidance.
Speaker Change: Thank you Sue.
Sue Nabil: First quarter net revenues grew to four 5% like for like supported by solid growth in prestige fragrance mass fragrance and mass skin care needs.
Speaker Change: This mid single digit percentage growth is commendable as it comes on top of the incredibly strong 18% like for like growth in the first quarter of last year.
Speaker Change: We also delivered a very strong gross margin expansion in Q1.
Speaker Change: Q1, adjusted gross margin grew by 200 basis points to 65, 5% driven by the benefit from premium amortization pricing actions negligible inflation excess and obsolescence reduction and continued supply chain productivity.
Speaker Change: We also maintained our strong and unwavering marketing support behind our brands in Q1, MCP investments, representing approximately 25% of sales increasing by 40 basis points from the prior year as we continued to invest behind icons and innovation.
Speaker Change: We continue to expect our A&P.
Speaker Change: It's meant to be in the high twenties percentage level.
Sue Nabil: In fiscal year 'twenty five.
Sue Nabil: Our Q1, adjusted EBITDA was roughly flat year over year at $360 million driven by a combination of low, whereas an anticipated order patterns in the second half of Q1.
Sue Nabil: <unk> investment in our strategic initiatives.
Sue Nabil: Timing of certain operating expenses and the profit impact from the divestiture of the <unk> license.
Sue Nabil: Adjusted diluted EPS, excluding equity swap was 18 cents in Q1 growing 20% year over year.
Sue Nabil: This growth reflected a discrete one time noncash tax impact of <unk> last year.
Sue Nabil: As a reminder, we expect certain drivers of our adjusted EPS in fiscal 'twenty five.
Sue Nabil: First we expect depreciation to be in the low to mid 200 million level.
Sue Nabil: Second we anticipate net interest expense for the year, two beams of low to mid $200 million.
Sue Nabil: Third we anticipate the adjusted effective tax rate for fiscal 'twenty four to be in the 28% to 29% range. Finally on share count we remain committed to reducing our share count to 800 million by fiscal year 2007.
Sue Nabil: While we have two equity swaps in place for future share buybacks deleveraging towards our targeted levels remains a key priority for organic cash flow generation.
Sue Nabil: Of course, the eventual divestiture of Villa will provide flexibility for more active share buyback activity, which will be further amplified in the medium term by your ongoing cash flow generation once we reach our target leverage.
Sue Nabil: In the quarter, our free cash flow was slightly negative compared to over 100 million of free cash flow generation in Q1 of last year.
Sue Nabil: This reflects the tight order and inventory management by retailers in several markets as highlighted earlier in the call, resulting in orders placed at the end of the quarter and therefore higher receivables year on year as well as the phasing of payables as a REIT.
Sue Nabil: We ended the first quarter with net debt of approximately $3 7 billion and leverage of three four times.
Sue Nabil: Slightly from the end of fiscal 'twenty, four but down a significant <unk> four turns from the leverage a year ago.
Sue Nabil: These leverage levels exclude our vela stake valued at approximately $1 1 billion.
Sue Nabil: And he is very dynamic beauty market environment, we are future proofing coatings organization and processes to better capture new opportunities respond to changes in the market with more agility and solidify <unk> position as the beauty leader over the long term.
Sue Nabil: Some of these work streams are newly initiated while orders were already underway as part of our all in to win program, which has already delivered around slip below the median of savings life to date, and we are simply accelerating the timeline of delivery.
Sue Nabil: Through the combination of these efforts, we now anticipate fiscal 'twenty five savings of over $120 million, an increase of over $45 million versus our initial target.
Sue Nabil: And importantly, these projects should continue to deliver savings in fiscal 2015 and beyond.
Sue Nabil: Let me take a minute to review the concrete action plans as we future proof the organization and accelerate our agility, which fall under five Peters.
Sue Nabil: The first pillar is establishing centers of excellence for key processes.
Sue Nabil: As an example, we are implementing a state of the art demand planning solution supporting by standardized data across our global multi category business.
Sue Nabil: In conjunction we are consolidating two planning hubs into one global planning hub in Barcelona.
Sue Nabil: We are continuing to ramp up the use of external business process vendors for various support functions.
Sue Nabil: We are also assessing further opportunities to streamline functional capability into centers of excellence.
Sue Nabil: The second pillar focuses on adapting our commercial organization to the increasingly omnichannel work.
Sue Nabil: With the shifting channel landscape around the world.
Sue Nabil: <unk> retailer centralization, multi category and multi price point offerings and the blurring of offline and online we are assessing the changes to our structure that are needed.
Sue Nabil: The third pillar is centered on speed to market, where you did to the default on the last earnings call. When we discussed the launch of our <unk> beauty Multifunctional organization.
Sue Nabil: Such an agile approach aimed at reducing our time to market for certain initiatives to a matter of months is fully applicable for each of our core categories.
Sue Nabil: The fourth pillar is maximizing the benefits of emerging tech and AI.
Sue Nabil: As we discussed on the last earnings call.
Sue Nabil: Similar we successfully completed our migration to Westport, honor, which was executed seamlessly and with no interruption to the business.
Sue Nabil: The migration now complete we expect as far enough to support better efficiency and the right savings.
Sue Nabil: Automation standardization better controls and global efficient processes.
Sue Nabil: Additionally, we are in the process of deploying AI across a number of functions, including robotics process automation and testing vendor invoices procurement and content creation and deterioration for marketing functions all of which are also contribution contributing to efficiencies.
Sue Nabil: The fifth and final pillar is our regional footprint redesign as we continue to fine tune, our end to end capabilities and assess the markets and channels, where we have the biggest and most profitable opportunities for growth with a focus on allocating resources from the least to the most attractive.
Sue Nabil: Opportunities.
Sue Nabil: All of these action plans.
Sue Nabil: Already underway with approximately $20 million of savings delivered in Q1, and further step up expected in Q2, and second half of the year and beyond.
Sue Nabil: We will continue to share more details on these key transformation pillars in the coming months and quarters.
Sue Nabil: Let me now share some context on our outlook for the first half and beyond.
Speaker Change: Sue discussed although the last several months the beauty market has maintained solid momentum vault growth has moderated from the outsized double digit growth over the last few years.
Speaker Change: Prestige fragrance remain on outperforming category with recent category growth around 10%.
Sue Nabil: Mass beauty is now growing in the low single digits with flattish performance in the mass cosmetics category.
Speaker Change: Within this backdrop.
Speaker Change: Lower end demand and significant channel shift in U S mass beauty and in Asia, We are continuing to weigh on all dose levels into Q2, we sell in tracking well below sellout.
Speaker Change: As a result of these factors in the first half of fiscal 'twenty, we expect like for like growth of 3% to 4% with moderate like for like sales growth in Q2 of 1% to 2%, reflecting the continued gap between sell in and sell out and the phasing of fragrance is achieved.
Speaker Change: Between Q1 and Q2.
Speaker Change: On a reported revenue basis.
Speaker Change: Cause divestiture and Forex should each represent a slight headwind of less than 1%.
Speaker Change: The combination of continued gross margin expansion and accelerated savings is expected to EBITDA growth in the low to mid single digit level in the first half.
Speaker Change: Including mid single digit growth in Q2.
Speaker Change: EPS is expected to be 38 to 40 cents, reflecting low to mid teens percentage goes.
Speaker Change: With a tight inventory management by retailers, adding some variability on cash inflow timing, where we've been.
Speaker Change: Main on track to exit calendar year 'twenty four.
Speaker Change: Leverage below three times, and we continue to target leverage close to two five times exiting calendar year of 2012.
Speaker Change: Looking to the second half the pace of category growth and consumer demand during the critical holiday period remains so some towards factor influencing the outlook for the second half, including retailer inventory levels and pace of Reorders.
Speaker Change: And we anticipate like for like growth in the second half to be relatively consistent with the first half of <unk>.
Speaker Change: <unk>, 3% to 4%, reflecting easier prior year comparisons.
Speaker Change: And so the prestige fragrance performance on the one hand and continued pressure in China Asia travel retail and U S mass cosmetics on Joseph.
Speaker Change: We expect gross margins to be flattish year on year of the quite elevated level last year and.
Speaker Change: Reflecting over 150 basis points of expansion versus two years ago.
Speaker Change: So a combination of sales growth healthy.
Speaker Change: Gross margin sustained strong HCP support and significant savings delivery should support steady EBITDA growth acceleration in Q3 and in Q4.
Speaker Change: He is expected to translate to EPS.
Speaker Change: Second half of 14 to 16 cents.
Speaker Change: Altogether this translates to fiscal year 'twenty five like for like sales growth of 3% to 4%.
Speaker Change: So it was a combination of continued sales growth continued gross margin expansion and increased cost savings for fiscal year, 'twenty and beyond while maintaining agency in the high 20 percentage, we expect fiscal year 'twenty five adjusted EBITDA to grow near the lower end.
Speaker Change: Of our prior guidance of 9% to 11% year on year.
Speaker Change: These adjusted EBITDA growth target in conjunction with continued with more moderate revenue growth reflects an even stronger adjusted EBITDA margin expansion in fiscal year 2005 of close to 100 basis points. Following the 30 basis points adjusted EBITDA margin expansion in fish.
Speaker Change: <unk> 2004.
Speaker Change: We expect fiscal year 'twenty five adjusted EPS, excluding the equity swap to be at the low end of our prior guidance range of 54 to 57.
Speaker Change: Reflecting mid teens percentage growth from last year.
Speaker Change: We continue to target fiscal year 'twenty five free cash flow in the low to mid $400 million driven by a combination of higher profit and lower cash taxes, partially offset by certain cash benefits recognized in fiscal year, 'twenty, four which will not reoccur.
Speaker Change: And as we continue to deliver strong free cash flow in fiscal year, 'twenty and beyond we will deploy this cash to shareholder returns further deleveraging and amplifying cookies growth trajectory.
Speaker Change: Now ill turn it back to <unk> to discuss our continued strategic momentum and significant growth opportunities ahead.
Speaker Change: Thanks, Joe Let me take a few minutes to delve deeper into the continued momentum we are seeing in our strategic initiatives as well as the new growth opportunities we are unlocking.
Speaker Change: There are four key takeaways I would like to share first as an industry leader in fragrances, we are cementing our fragrance leadership across all price points second we are continuing to shoot our cosmetics brands through strong momentum in social media advocacy and now beginning to be complemented by.
Speaker Change: Our agile innovation strategy.
Speaker Change: Third we are continuing to capture growth opportunities across categories channels and of course geographies.
Speaker Change: And finally, we are setting and attaining new milestones in ESG as we pursue our goal of becoming a leader in sustainability.
Speaker Change: Starting now with the first point is Coty leverages its best in class.
Speaker Change: And two and fragrance expertise and setting the trends in the industry. We continue to reinforce our leadership in prestige fragrances.
Speaker Change: While at the same time and looking more opportunities across the food price spectrum, ranging from mass and Masstige fragrances.
Speaker Change: The way up to premium and niche fragrances.
Speaker Change: Starting with Burberry after our blockbuster launch last year of Burberry goodness kick starting the industry trend of exclusive quantity vanilla base fragrances. We are now 17 goodness into a lasting fragrance franchise.
Speaker Change: Through the four zones are very very good and also the buffer the activations and marketing.
Speaker Change: Is boosting the overall franchise with a combined sales of the original goddess and goodness intense growing 17% like for like in the quarter.
Speaker Change: Importantly, our order iconic burberry franchises like hero in the mass side and her on the female side are also continuing their momentum.
Speaker Change: Something in the Burger King brand growing double digits in the quarter.
Speaker Change: Expanding on the key strategic imperative to build lasting fragrance franchises. The launch of Gucci floor orchid is off to a great start not only is performing well in itself, but as the fourth installment in the Gucci saw a universe.
Speaker Change: <unk> is helping to propel the overall Gucci saw a franchise to the top 10 ranking globally as we continue to shoot continuous growth.
Speaker Change: Next and Marc Jacobs, Daisy Wild, which was the top fragrance launch in the U S. When we launched it in spring.
Speaker Change: We've been expanding the launch into additional markets and in the last few months as Daisy Wild has become a top three female launch in both the UK and Germany.
Speaker Change: We also continue to build out the iconic boss bottled franchise with this fall's successful launch of boss bottled absolute the total Hugo boss brand sales grew at a double digit pace in Q1.
Speaker Change: In the ultra premium fragrance market, which represents a multibillion dollar opportunity our collections like clarity.
Speaker Change: Gucci ALCHEMIST garden, and Burberry signatures are resonating and this is complemented by our recently launched niche fragrance brands and seeing them Oncotype, IV, which I hope you've had the chance to experience in our newly opened boutiques.
Speaker Change: In Manhattan in total while still relatively small as a percentage of <unk> total portfolio, although ultra premium fragrance business grew 17% in <unk>.
Speaker Change: Q1.
Speaker Change: Of course, our leadership in fragrances also extends to more mass and Masstige price points and we are capitalizing on this opportunity as well, particularly as consumers continue to shop fragrances.
Speaker Change: Price points channels and formats for Coty mass fragrances accounts for a mid to high single digit percentage of our sales and have continued to boom growing by 15% in fiscal 'twenty four and by over 20% this past quarter importantly.
Speaker Change: This is a nicely accretive part of the business contributing to the expansion of the consumer beauty operating margin.
Speaker Change: Further fueling our strong and profitable mass fragrance business is a key objective for us in fiscal 'twenty, five and beyond and this will be driven by both the current portfolio, but also new additions our early signals for the Adidas Vibes fragrance collection launch.
Speaker Change: The positive sales in the Adidas fragrance business or one and a half times higher than a year ago and driving a strong halo on our Adidas business online.
Speaker Change: In terms of new brands. This past spring, we signed a license agreement with German television presenter and model then I guess.
Speaker Change: The first fragrance nausea launched over the summer with an amazing juice.
Speaker Change: Distinctive bottle and a price point below 20 euros I'm very happy to share that the fragrance has quickly become the number one fragrance skew on the German mass fragrance market, reaching one 5% of market share to address the SKU unknown.
Speaker Change: The final example of cookie, reaching fragrance consumers across price points is our recently launched Red fragrance collection under the name.
Speaker Change: The brand has been dominant in our portfolio for many years. However, as we aim to bringing consumers into the fragrance category with accessible price points of less than $10. We have launched the collection of our fragrances under the brand and we see these resonating both in developed markets like <unk>.
Speaker Change: Pain and in emerging markets like South Africa, where the brand has become the number one see mass fragrance at the leading pharmacy chain.
Speaker Change: Moving to our second point shooting cosmetics brands through advocacy and agile innovation as.
Speaker Change: As we've been discussing for several quarters now and important phase of our consumer beauty acceleration plan has been on step changing our influencer marketing and social media efforts, which includes our dedicated content creators studios across major markets, which is a point of differentiation.
Speaker Change: For Curtis brands.
Speaker Change: The focus on this strategy is paying us reman earned media value link it to the Influencers activity in the U K is now 40% higher than last year and the brand's E. N Z Slash <unk> ranked number four remained consistent costa of Costa.
Speaker Change: Even in the very competitive environment, the <unk> momentum and Venus, leading innovations, including thrill seeker extreme mascara.
Speaker Change: Better than Sisters Foundation has supported remains stable omni channel market share.
Speaker Change: Similarly cover girls earned media value linkage to the Influencers activity in the U S grew 80% year over year and the brand maintained an E&P ranked number five costa avocado.
Speaker Change: This continued strength in social media advocacy, coupled with our most on trend innovations, including I enhancer, <unk> Mascara and ubiquitous tamper resulted in Krakow gals omnichannel market share remaining stable in the past quarter.
Speaker Change: And while our work is not completely done in terms of 319, covergirl, making the brand resonate as strongly with the Gen Z consumer as with millennials and Gen X consumers.
Speaker Change: Important to highlight that this playbook has indeed been resonating as Congress continues to perform the best amongst legacy mass cosmetics brands in the U S.
Speaker Change: The next step for our growth playbook is our consumer beauty agile innovation model aimed at capitalizing on viral beauty trends risk time, and bringing them to market in a much shorter time frame than traditional R&D.
Speaker Change: We've launched several innovations under this strategy across our categories, including Greenville, III, CCAR Mascara, and Sally Hansen, the streets and had several exciting launches slated for the second half of the year of course in addition to our core categories and initiatives. We also.
Speaker Change: We continue to capture additional growth opportunities across channels categories and markets.
Speaker Change: Ecommerce now accounts for around 20% of our business with mid Twenty's penetration in prestige.
Speaker Change: Low double digit percentage in consumer beauty and importantly, we continue to gain market share in E comm across both divisions with particular market share momentum in February and Marc Jacobs, and prestige and Covergirl Rimmel, Sally Hansen, Logica and added us in consumer beauty.
Speaker Change: Shifting now to our skincare business in September we relaunched noncash that across Europe, including the new Golden lift skincare line, which reverses the three photo aging signs dark spots wrinkles and slagging. The early signs on the relaunch are strong.
Speaker Change: With long cast ourselves in Europe, which is the brand score region growing double digits in Q1 with particular strength in the core skincare range.
Speaker Change: Our social media Activations behind the brands are also bearing fruit as we've seen the brands in the growing by five times year on year and ranking at number seven spot amongst its competitive set which is an increase of four ranks versus a year ago.
Speaker Change: Shifting to <unk>, we have continued to fuel brand awareness among high net worth individuals through a variety of Activations. This has resulted in sales at existing doors growing close to 30% in Q1, confirming the brand is resonating with consumers.
Speaker Change: As a next step in September we opened our first of at Amazon in Manhattans Upper East side District, which will allow us to further build awareness and elevate the brand equity through this distinct and luxurious spot environment.
Speaker Change: And we will be expanding <unk> distribution in the U S. This year as we enter nonstop and cross bar to help expand the brand's consumer which with this target audience.
Speaker Change: Finally from a regional standpoint performance in our growth engine markets remains very strong as you can see this market accounts for 21% of our sales and grew 15% in the quarter.
Speaker Change: We achieved this momentum despite the continued sluggishness in the China market, highlighting our balanced approach and regional diversification strategy.
Speaker Change: Finally, as part of our ambition to be a leader in sustainability. Let me now highlight some of the key ESG milestones we have reached.
Speaker Change: As you May know, we issued our fiscal 2000 and for sustainability report earlier this week and I'm incredibly proud of the progress we made over the last year.
Speaker Change: While we reached several milestones this year many of which you can see highlighted on this side I would like to highlight a few of them.
Speaker Change: Beginning with our planet pillar. We have we are ahead of plan on our 2030 scope, one and two emissions reduction targets and also achieved a significant 65 redemption, 65% reduction in scope III airfreight emissions compared to 2019 in <unk>.
Speaker Change: Addition, we established a new target to reduce water withdrawals by 25% by 2030, we also established ambitious new targets for sustainable packaging, while also rejoining the Ellen Macarthur Foundation as a network member.
Speaker Change: Within our people pillar, we achieved our gender balance and leadership target ahead of our 2025 commitment 75% of our executive Committee and half of our board of directors and wider leadership out women.
Speaker Change: Our last report contains these updates and more.
Speaker Change: As you can see Gucci made strong progress towards our ESG goals in fiscal 'twenty for further advancing our beauty that class sustainability framework.
Speaker Change: Before I conclude I want to take a few minutes to frame fiscal 'twenty side within proteins grow their progress in the last few years and our trajectory for the coming years.
Speaker Change: When we first laid out our detailed strategy and mid term targets three years ago in the fall of 2021, some questioned our ability to meet these targets.
Speaker Change: Three years later with our fiscal 'twenty for results, we have met or surpassed each of our financial goals.
Speaker Change: Our revenues and EBITDA in fiscal 'twenty four are broadly in line with the targets, we set at the time and significantly higher than those targets when taking into account our divestiture of that cost and our exit from the Russian market.
Speaker Change: In fact, our gross margin has expanded by over 400 basis points and our EBITDA margins have expanded by approximately 130 basis points from fiscal 'twenty one levels as we have both expanded profitability.
Speaker Change: And at the same time, we invested in future growth engines.
Speaker Change: Same time, our fiscal 'twenty for EPS is approximately 20% higher than what we had targeted and our leverage has declined by over three turns over this same period.
Speaker Change: Our strong financial progress in our P&L and balance sheet has been recognized by the rating agencies as we have achieved 11 consecutive financial upgrades from rating agencies in 2021, putting us within one notch of an investment grade rating.
Speaker Change: This underlying outperformance is partially due to a much stronger beauty market than we initially anticipated, but also due to our very very strong execution. This year. The beauty market growth is normalizing to a steadier growth level, which is broadly consistent with what we had.
Speaker Change: Estimated several years ago of low to mid single digit growth.
Speaker Change: However for us as for many other beauty players who were outperforming this year is poised to be a transition year as the normalizing growth is exacerbated by pockets of disruption in several markets, which we described on this call.
Speaker Change: As long as the U S market is disrupted the mass side by drug store closures and on the prestige side by Department store closures and stiffer competition, among retailers and as long as consumer caution in China disruptions are significantly pressuring, both China and Asia travel retail we aren't.
Speaker Change: Dissipate, a global beauty market, which grows in the 3% to 4% range and could keep performing in line with this level.
Speaker Change: While these dislocations are impacting near term results, we remain very confident in both the beauty industry growth and Curtis ability to outperform in the coming years led by several key drivers.
Speaker Change: First a robust fragrance category with penetration and usage, increasing across many markets and price points.
Speaker Change: Second <unk>, expanding our offering in fragrances spanning from mass to have premium fragrances third.
Speaker Change: Third expanding our business in categories, where we are currently under indexed such as skincare and prestige cosmetics and fourth strongly growing our business and growth engine markets, which already accounts for a low twenties percentage of our sales.
Speaker Change: So in sum as we organize the company to succeed and win in the beauty market of Tomorrow, and as we lean into our category channel and market growth engines, we expect to return to a healthy growth algorithm in fiscal 2016 to young at or above mid single digit growth.
Speaker Change: To sum up beauty remains healthy and growing category, even if the peak growth levels. We saw in recent years are now normalizing to a more sustainable range consistent with our medium term expectations for 3% to 5% beauty market growth within.
Speaker Change: This framework, we are continuing to outperform our global peers.
Speaker Change: Our confidence in delivering another year of like for like growth margin expansion and deleveraging progress.
Speaker Change: As we strengthen our position as a global beauty powerhouse.
Speaker Change: With the agility of smaller brands, but also creating the beauty trends of today and tomorrow Coty remains one of if not the most compelling investment opportunity in our industry.
Speaker Change: Thank you very much.
Speaker Change: Yeah.