Q4 2025 The Estée Lauder Companies Inc Earnings Call

For opening remarks, and introductions I would like to turn the call over to the senior Vice President of Investor Relations Ms Rainey Mancini.

Hello on today's webcast, our Stephane Bello Fabry, President and Chief Executive Officer, and <unk>, <unk> Executive Vice President and Chief Financial Officer.

Since many of our remarks today contain forward looking statements. Let me refer you to our press release and our reports filed with the SEC, where you'll find factors that could cause actual results to differ materially from these forward looking statements.

To facilitate the discussion of our underlying business the commentary on our financial results and expectations is before restructuring and other charges and adjustments disclosed in our press release.

Unless otherwise stated references to net sales refer to organic net sales, which excludes the non comparable impact of acquisitions divestitures brand closures and the impact of foreign currency translation.

You can find reconciliations between GAAP and non-GAAP measures in our press release and on the investors section of our website.

As a reminder, our references to online sales include sales, we make directly to our consumers through our brand dotcom sites and through third party platforms.

It also includes estimated sales of our products to retailers websites.

Throughout our discussion our profit recovery in Brooklyn will be referred to as our P. R. G P.

During the Q&A session. We ask that you. Please limit yourself to one question. So we can respond to all of you within the time scheduled for this webcast and now ill turn the webcast over to Stephane.

Thank you Rudy and Hello to everyone before we discuss our results for fiscal 'twenty five 'twenty six ambition, let me begin with a moment of remembrance of our beloved Chairman Emeritus Leonard Lauder robust in June.

On behalf of myself, our keel executive team board of directors and a logo for IBD, we extend our gratitude for this impacted sure.

We were profoundly moved by the outpouring of combustion and employees consumers retailers.

Speaker #1: Good day, everyone, and welcome to the ESTEE LAUDER COMPANIES Q4 2025 fourth quarter and full year conference call. Today's webcast is being recorded. For opening remarks and introductions, I would like to turn the call over to the Senior Vice President of Investor Relations, Ms. Rainee Mancini.

Rainey Mancini: Good day, everyone, and welcome to The Estée Lauder Companies Inc. Q3 Fiscal 2024 Quarter and Full Year Conference Call. Today's webcast is being recorded. For opening remarks and introductions, I would like to turn the call over to the Senior Vice President of Investor Relations, Ms. Rainey Mancini.

Retailers suppliers midyear analyst and investors Youll condo to Amc's celebrated a life beauty fully leased and the legacy deeply felt recognizing our leno uniquely shaped and the regulation is not just our company, but also the beauty industry.

Speaker #2: Hello, on today's webcast are Stéphane Faverie, President and Chief Executive Officer, and Akhil Shrivastava, Executive Vice President and Chief Financial Officer. Since many of our remarks today contain forward-looking statements, let me refer you to our press release and our reports filed with the SEC, where you'll find factors that could cause actual results to differ materially from these forward-looking statements.

Akhil Shrivastava: Hello. On today's webcast are Stéphane de La Faverie, President and Chief Executive Officer, and Akhil Shrivastava, Executive Vice President and Chief Financial Officer. Since many of our remarks today contain forward-looking statements, let me refer you to our press release and our reports filed with the SEC, where you'll find factors that could cause actual results to differ materially from these forward-looking statements. To facilitate the discussion of our underlying business, the commentary on our financial results and expectations is before restructuring and other charges and adjustments disclosed in our press release. Unless otherwise stated, references to net sales refer to organic net sales, which exclude the non-comparable impacts of acquisitions, divestitures, brand closures, and the impact of foreign currency translation. You can find reconciliations between GAAP and non-GAAP measures in our press release and on the Investor section of our website.

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Lenovo is a mentor to me and as he was to so many of us.

He was a strong advocate for beauty reemerging when the on trusted us to lead.

We are more committed than ever to regaining prestige beauty leadership in these owner and upholding the company's values each subject.

Speaker #2: To facilitate the discussion of our underlying business, the commentary on our financial results and expectations is before we structure and other charges and adjustments, disclosed in our press release.

Turning to our fiscal 'twenty five full year performance. Our results were in line with the revised outlook. We provided in May and the expectation <unk> set in our first earnings call in February.

Speaker #2: Unless otherwise stated, references to net sales refer to organic net sales, which excludes the non-comparable impacts of acquisitions, divestitures, brand closures, and the impact of foreign currency translation.

Nearly two third of our <unk>.

8% organic sales decline came from travel retail as it decreased 28% driven by strategic decision and prolonged weak conversion in.

Speaker #2: You can find reconciliations between gap and non-gap measures in our press release and on the investor section of our website. As a reminder, references to online sales, include sales we make directly to our consumers through our brand.com sites and through third-party platforms.

Both thirdly, we ended fiscal 'twenty five much better position than fiscal 'twenty, four with healthier trade inventory, especially in travel retail Asia four currently forecasted demand.

Akhil Shrivastava: As a reminder, references to online sales include sales we make directly to our consumers through our brand.com sites and through third-party platforms. It also includes estimated sales of our products through retailers' websites. Throughout our discussion, our Profit Recovery and Growth Plan will be referred to as our PRGP. During the Q&A session, we ask that you please limit yourself to one question so we can respond to all of you within the time scheduled for this webcast. Now I'll turn the webcast over to Stéphane.

Speaker #2: It also includes estimated sales of our products through retailers' websites. Throughout our discussion, our profit recovery and growth plan will be referred to as our PRGP.

Travel retail represented approximately 15% of reported sales down four percentage points from fiscal 'twenty, four and 14 person touch points below its fiscal 'twenty. One peak reached during the pandemic, making it more similar to the channel global price.

Speaker #2: During the Q&A session that we ask that we you please limit yourself to one question so we can respond to all of you within the time scheduled for this webcast.

Speaker #2: And now, I'll turn the webcast over to Stephane.

Speaker #1: Thank you, Rainee,

Stéphane de La Faverie: Thank you, Rainey, and hello to everyone. Before we discuss our results for fiscal 2025 and 2026 on vision, let me begin with a moment of remembrance of our beloved Chairman Emeritus Leonard A. Lauder, who passed in June. On behalf of myself, Akhil, the executive team, Board of Directors, and the Lauder family, we extend our heartfelt gratitude for the sympathy shared. We were profoundly moved by the outpouring of compassion from employees, consumers, peers, retailers, suppliers, media, analysts, and investors. Your condolences celebrated a life beautifully lived and a legacy deeply felt, recognizing how Leonard uniquely shaped and revolutionized not just our company, but also the beauty industry. Leonard was a mentor to me, as he was to so many others. He was a strong advocate for beauty reimagined when he entrusted us to lead.

Speaker #3: and hello to everyone. Before we discuss our results for Q4 2025 and Q6 ambition, let me begin with a moment of remembrance of our beloved Chairman Emeritus, Lennard A.

<unk> beauty share and reducing our exposure to its volatility grew.

Gross margin expanded 240 basis points to 74% driven by <unk> benefits and better by 50 basis points than the outlook given in may despite significant volume deleverage.

Speaker #3: Lauder, who passed in June. On behalf of myself, Akhil, the Executive Team, Board of Directors, and the Lauder family, we extend our heartfelt gratitude for the sympathy shared.

Speaker #3: We were profoundly moved by the outpouring of compassion from employees, consumers, peers, retailers, suppliers, media, analysts, and investors. Your condolences celebrated a life beautifully lived and a legacy deeply felt.

<unk> margin of 8% contracted 220 basis points, driven by sales declines and increased consumer facing investments die.

Diluted EPS decreased 42%.

Since I became CEO, we have acted with urgency to operationalize, our strategic vision of beauty Reemerging, making strong initial progress across all five action plan priorities from January through June.

Speaker #3: Recognizing how Lennard uniquely shaped and revolutionized not just our company, but also the beauty industry. Lennard was a mentor to me, and as he was to so many others.

In the second half of fiscal 'twenty, five we gained prestige beauty share in China, Japan, and the U S demonstrated not only our ability to return quickly to share gain by building on our brands high desirability, but also early wins for.

Speaker #3: He was a strong advocate for beauty reimagined when he entrusted us to lead. We are more committed than ever to regaining prestige beauty leadership in his honor and upholding the company’s values that he championed.

Stéphane de La Faverie: We are more committed than ever to regaining prestige beauty leadership in his honor and upholding The Estée Lauder Companies' values he championed. Turning to our fiscal 2025 full-year performance, our results were in line with the revised outlook we provided in May and the expectation Akhil and I set in our first earning call in February. Nearly two-thirds of our 8% organic sales decline came from travel retail, as it decreased 28% driven by strategic decision and prolonged week conversion. Importantly, we ended fiscal 2025 in a much better position than fiscal 2024, with healthier trade inventory, especially in travel retail Asia for currently forecasted demand.

Speaker #3: Turning to our Q4 2025 full-year performance, our results were in line with the revised outlook we provided in May and the expectation Akhil and I set in our first earnings call in February.

New consumer coverage and uptake of enticing innovation.

Globally, low level and la Mer gained prestige beauty share in the second half confirming the strong desirability and the ordinary accelerated to high single digit retail sales growth in the fourth quarter la.

Speaker #3: Nearly two-thirds of our 8% organic sales decline came from travel retail, as it decreased 28% driven by strategic decision and prolonged week conversion. Importantly, we ended Q4 2025 much better positioned than Q4 2024 with healthier trade inventory, especially in travel retail Asia for currently forecasted demand.

La Mer, Tom Ford and Theres still order fueled our second half share gain in China, while low level Este Lauder la Mer powered jump back in.

In the U S. The ordinary Clinique and Este Lauder drove share gain while Este Lauder, new double where consider ranked number one product launch in prestige makeup by <unk> from January through June.

Speaker #3: Travel retail represented approximately 15% of reported sales, down 4 percentage points from Q4 2024, and 14% below its Q4 2021 peak reached during the pandemic, making it more similar to the channel global prestige beauty share, and reducing our exposure to its volatility.

Stéphane de La Faverie: Travel retail represented approximately 15% of reported sales, down 4 percentage points from fiscal 2024, and 14 percentage points below its fiscal 2021 peak reached during the pandemic, making it more similar to the Chanel Global Prestige Beauty share and reducing our exposure to its volatility. Gross margin expanded 230 basis points to 74%, driven by PRGP benefits and better by 50 basis points than the outlook given in May, despite significant volume deliverance. Operating margin of 8% contracted 220 basis points, driven by sales declines and increased consumer-facing investments. Diluted EPS decreased 42%. Since I became CEO, we have acted with urgency to operationalize our strategic vision of beauty reimagined, making strong initial progress across all five action plan priorities from January through June.

In our first action plan priority accelerate best in class Consumer Congress, we achieved many accomplishments in the second half of fiscal 'twenty five.

Secured early for our online business.

Following the <unk> launch in the U S. Amazon premium beauty store in the fourth quarter origins and Aveda launched in the fourth quarter, while Este Lauder and Avatar open in the Amazon premium beauty store in Canada. We now have 11, Brian store front in the U S.

Speaker #3: Gross margin expanded 230 basis points to 74%, driven by PRGP benefits and better by 50 basis points than the outlook given in May. Despite significant volume deleverage, operating margin of 8% contracted 220 basis points, driven by sales declines and increased consumer-facing investments.

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And in Southeast Asia, we build scales on sharpie, and Tic Toc shop across the third and fourth quarters.

Speaker #3: Diluted EPS decreased 42%. Since I became CEO, we have acted with urgency to operationalize our strategic vision of beauty reimagining, making strong initial progress across all five action plan priorities from January through June.

This action complimented second half growth from our existing presence in fast growing online retailers like Tmall and <unk>.

As a result online organic sales growth accelerated from low single digit in the first half to mid single digit in the second half online reached 31% of reported sales for fiscal 'twenty five.

Speaker #3: In the second half of Q4 2025, we gained prestige beauty share in China and Japan and the US, demonstrated not only our ability to return quickly to share gain by building on our brand's high desirability, but also early wins from new consumer coverage and uptake of enticing innovation.

Stéphane de La Faverie: In the second half of fiscal 25, we gained prestige beauty share in China, Japan, and the US, demonstrating not only our ability to return quickly to share gain by building on our brand's high desirability, but also early wins from new consumer coverage and uptake of enticing innovation. Globally, Le Labo and La Mer gained prestige beauty share in the second half, confirming their strong desirability. The Ordinary accelerated to high single-digit retail sales growth in the fourth quarter. La Mer, Tom Ford, and Estée Lauder fueled our second-half share gain in China, while Le Labo, Estée Lauder, and La Mer powered Japan. In the US, The Ordinary, Clinique, and Estée Lauder drove share gain, while Estée Lauder new Double Wear Concealer ranked number one product launch in prestige makeup by Circana from January through June.

Three percentage points from fiscal 'twenty four to an all time record and we expect online mix to climb higher steel.

We continued our expansion in pharmacy in Europe and began mentoring the pharma channel in Latin America, with Clinique responding to rising demand fall down blocks.

Speaker #3: Globally, Le Labo and Lamer gained prestige beauty share in the second half, confirming their strong desirability and the ordinary accelerated to high single-digit retail sales growth in the fourth quarter.

Moving to our second action priorities create transformative innovation and innovate across prestige price tiers to reach a wider audience.

Speaker #3: La Mer, Tom Ford, and Estée Lauder fueled our second half share gain in China, while Le Labo, Estée Lauder, and La Mer powered Japan. In the U.S., The Ordinary, Clinique, and Estée Lauder drove share gain, while Estée Lauder’s new Double Wear was considered the number one product launch in prestige makeup by Circana from January through June.

Throughout the second half of fiscal 'twenty, five we introduced a robust slate of breakthrough on trend and commercial innovation aimed at new consumer acquisition as you can see on this slide.

We are realigning our innovation portfolio to deliver gross margin accretive product quicker and better capture fast growing industry trial in skincare with ignite longevity under arms as well as across makeup and the steel in demand luxury France segment as.

Speaker #3: In our first action plan priority, "Accelerate Best-in-Class Consumer Coverage," we achieved many accomplishments in the second half of Q4 2025, particularly for our online business.

Stéphane de La Faverie: In our first action plan priority, accelerate best-in-class consumer coverage, we achieved many accomplishments in the second half of fiscal 25, particularly for our online business. Following The Ordinary's launch in the US Amazon Premium Beauty Store in the third quarter, Origins and Aveda launched in the fourth quarter, while Estée Lauder and Aveda opened in the Amazon Premium Beauty Store in Canada. We now have 11 brand stores found in the US and three in Canada. In Southeast Asia, we built sales on Shopee and TikTok Shop across the third and fourth quarters. This action complemented second-half growth from our existing presence in fast-growing online retailers like Temu and Douyin. As a result, online organic sales growth accelerated from low single-digit in the first half to mid-single-digit in the second half.

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Let me share a few highlights from the fourth quarter beginning with skincare.

Speaker #3: Following the ordinary's launch in the US Amazon Premium Beauty Store in the third quarter, Origin and Avida launched in the fourth quarter, while Estée Lauder and Avida opened in the Amazon Premium Beauty Store in Canada.

La Mer build upon the Iconix success of its treatment lotion with the balancing treatment lotion, which along with the brand's first quarter launch of nice recovery concentrate fuel la Mer second consecutive quarter of double digit organic sales growth in mainland China Clinique and the ordinary.

Speaker #3: We now have 11 brand stores front in the U.S. and 3 in Canada. In Southeast Asia, we built scales on Shopee and TikTok Shop across the third and fourth quarters.

Showcase their union Durham, and scientific brand equities at entry prestige pricing for.

For Clinique, the brand launched a superb shelves SPF version of its Reno dermatologist recommended <unk> for the ordinary it's new UV filter SPF 45 serum offered consumers Sun care protection in its signature CRM formats.

Speaker #3: These actions complemented second half growth from our existing presence in fast-growing online retailers like Temu and Douyin. As a result, online organic sales growth accelerated from low single digits in the first half to mid-single digits in the second half.

In makeup clinique build upon its blockbuster almost lipstick franchise, we felt shade new the horny since 2021, Clinique as driven strong sales growth of almost lipstick with volumes over 30 times greater than four years ago demonstrates.

Speaker #3: Online reached 31% of reported sales for Q4 2025, up 3 percentage points from Q4 2024, to an all-time record. And we expect online mix to climb higher still.

Stéphane de La Faverie: Online reached 31% of reported sales for fiscal 25, up 3 percentage points from fiscal 24 to an all-time record. We expect online needs to climb higher still. We continued our expansion in pharmacy in Europe and began entering the pharma channel in Latin America with Clinique, responding to rising demand for their brands. Moving to our second action priorities, create transformative innovation and innovate across prestige price tiers to reach a wider audience. Throughout the second half of fiscal 25, we introduced a robust slate of breakthrough, on-trend, and commercial innovation aimed at new consumer acquisition, as you can see on the slide. We are realigning our innovation portfolio to deliver gross margin accurate products quicker and better capture faster growing industry trends in skin care, within night longevity and derms, as well as across make-up and the still in-demand luxury fine fragrance segment, as well as hair care.

Speaker #3: We continued our expansion in pharmacy in Europe and began entering the pharma channel in Latin America with Clinic, responding to rising demand for Dermbrands.

Our ability to leverage social media viability to further fuel demand and archrock younger consumers.

<unk> bold famous commercial innovation.

With the new lip gloss are contributing to strong share gain in the U S. Prestige makeup lip colo and lip gloss subcategory in the second half.

Speaker #3: Moving to our second action priorities, create transformative innovation and innovate across prestige price tiers to reach a wider audience. Throughout the second half of Q4 2025, we introduced a robust slate of breakthrough on-trend and commercial innovation aimed at new consumer acquisition, as you can see on the slide.

<unk> introduced Miracle is oil, which is significantly outperforming initial sales expectations.

For a field action plan priority boost consumer facing investments to accelerate new consumer acquisition.

Speaker #3: We are realigning our innovation portfolio to deliver gross margin accretive product quicker and better capture faster growing industry trend in skincare within night, longevity, and derms, as well as across makeup, and the still-in-demand luxury fragrance segment as well as haircare.

We increased consumer facing investment at a greater rates of growth in the second half versus the first half to reignite retail growth in mainland China. This contributed to high single digit retail sales growth and share gains in each of the third and fourth quarters solidify.

<unk> share gains for the fiscal year with every category improving share in.

Speaker #3: Let me share a few highlights from the fourth quarter, beginning with skincare. La Mer built upon the iconic success of its Treatment Lotion with the Balancing Treatment Lotion, which, along with the brand's third quarter launch of Night Recovery Concentrate, fueled La Mer's second consecutive quarter of double-digit organic sales growth in mainland China.

Stéphane de La Faverie: Let me share a few highlights from the fourth quarter, beginning with skin care. La Mer built upon the iconic success of its treatment lotion with the Balancing Treatment Lotion, which, along with the brand's third-quarter launch of Night Recovery Concentrate, fueled La Mer's second consecutive quarter of double-digit organic sales growth in mainland China. Clinique and The Ordinary showcased their unique derm and scientific brand equities at entry prestige pricing. For Clinique, the brand launched a supercharged SPF version of its renowned dermatologist-recommended DDML. For The Ordinary, its new UV filter SPF 45 serum offered consumers sun care protection in its signature serum format. In make-up, Clinique built upon its blockbuster Almost Lipstick franchise with a third shade, Nude Honey.

In the fourth quarter 10 rooms grew at retail to fuel share gains in every category and every channel the incremental investment coupled with innovation drove outstanding performance for $6 18 for La Mer, Lauder, and Jo Malone, London across all.

Speaker #3: Clinic and the ordinary showcased their unique derm and scientific brand equities at entry prestige pricing. For Clinic, the brand launched a supercharged SPF version of its renowned dermatologist-recommended DDML, for the ordinary its new UV filter SPF 45 serum offered consumers sun care protection in its signature serum format.

<unk> platform and power the ordinary success launched in China, we saw before.

And we invested in our freestanding store as we strategically drive a more productive fleets.

For the full year, we opened nearly 40 doors for our funds one too much success and close unproductive doors, primarily format avatar and origin for over 10 net new stores globally.

Speaker #3: In makeup, Clinic built upon its blockbuster almost lipstick franchise with a third shade, Nude Honey, since 2021 Clinic has driven strong sales growth of almost lipstick, with volumes over 30 times greater than four years ago, demonstrating our ability to leverage social media virality to further fuel demand and attract younger consumers.

Low level continued its spectacular expansion with new stores, including the Beijing and still experience center, while Jo Malone, London, Uninstall navigation and experience to meet evolving consumer needs.

Stéphane de La Faverie: Since 2021, Clinique has driven strong sales growth of Almost Lipstick, with volumes over 30 times greater than four years ago, demonstrating our ability to leverage social media virality to further fuel demand and attract younger consumers. M·A·C's famous commercial innovation, paired with the new lip glass hair, contributed to strong share gain in the U.S. prestige make-up lip color and lip gloss subcategory in the second half. Aveda introduced Miraculous Oil, which is significantly outperforming initial sales expectations. For our third action plan priority, boost consumer-facing investment to accelerate new consumer acquisition. We increased consumer-facing investment at a greater rate of growth in the second half versus the first half to reignite retail growth. In mainland China, this contributed to high single-digit retail sales growth and share gain in each of the third and fourth quarters, solidifying share gains for the fiscal year with every category improving share.

Next let me share an update on our portfolio review.

We recently engaged external advisor as we consider evolving the portfolio to best align with our strategic vision of beauty re imagine and focus on our highest return opportunities over the medium to long term, we will share updates in due course.

Speaker #3: Max Born's famous commercial innovation, paired with the new Lip Glass Air, contributed to strong share gain in the U.S. prestige makeup lip color and lip gloss subcategory in the second half.

Speaker #3: Aveda introduced Miraculous Oil, which is significantly outperforming initial sales expectations. For our third action plan priority, we aim to boost consumer-facing investment to accelerate new consumer acquisition.

Let me now turn to our fiscal 2006 outlook.

With three fiscal year <unk> sales decline in operating margin erosion behind us we enter fiscal 2006 with signs of momentum and the start of our turnaround and a return to topline growth in fiscal 2006, and the first suite of a solid double digit operating margin in the years ahead.

Speaker #3: We increased consumer-facing investment at a greater rate of growth in the second half versus the first half to reignite retail growth. In mainland China, this contributed to high single-digit retail sales growth and share gain in each of the third and fourth quarters, solidifying share gains for the fiscal year with every category improving share.

For fiscal 2006, we expect to deliver low single digit organic sales growth methane I'll now stronger gross margins. Despite the headwind of incremental dies and expand our operating margin by 165 basis points at the midpoint Ikea will describe the drivers are in.

Speaker #3: In the fourth quarter, 10 brands grew at retail to fuel share gains in every category and every channel. The incremental investment, coupled with innovation, drove outstanding performance for La Mer and Jo Malone London across online platforms, and powered The Ordinary's successful launch in China with Sephora.

Stéphane de La Faverie: In the fourth quarter, 10 brands grew at retail to fuel share gains in every category and every channel. The incremental investment coupled with innovation drove outstanding performance for 618 for La Mer, Estée Lauder, and Jo Malone London across online platforms and powered The Ordinary's successful launch in China with Sephora. We invested in our freestanding store as we strategically drive a more productive fleet. For the full year, we opened nearly 40 doors for our France brand to much success and closed unproductive doors, primarily for M·A·C, Aveda, and Origins, for over 10 net new stores globally. Le Labo continued its spectacular expansion with new stores, including the Beijing and Seoul Experience Center, while Jo Malone London hands-on store navigation and experience to meet evolving consumer needs. Next, let me share an update on our portfolio review.

Detail, but let me share a few overarching themes.

For sales, we intend to significantly reduce discounts we made good progress in this form in fiscal 'twenty five and believe there is much more that we can achieve.

Our sales growth also on base benefit from accelerating best in class consumer coverage, recognizing we still have a lot of work to do in markets with a high penetration of department stores. Finally, we are putting greater emphasis on accelerating in high growth emerging markets given our steel.

Speaker #3: And we invested in our freestanding store as we strategically drive a more productive fleet. For the full year, we opened nearly 40 doors for our fragrance brand to much success, and closed unproductive doors primarily for MAC, Aveda, and Origins for over 10 net new stores globally.

Untapped potential as emerging markets only represent 10% of reported sales.

For operating margin the organization as embraced <unk> and its momentum is very encouraging we achieved much more from <unk> than we expected in fiscal 'twenty, five which gives us confidence that we can deliver meaningful cost savings in fiscal 2006 and fund incremental.

Speaker #3: Le Labo continued its spectacular expansion with new stores, including the Beijing and Seoul Experience Center, while Jo Malone London hand-and-store navigation and experience to meet evolving consumer needs.

Consumer facing investments.

Speaker #3: Next, let me share an update on our portfolio review. We recently engaged external advisor as we consider evolving the portfolio to best align with the strategic vision of beauty reimagining, ing, and focus on our highest return opportunities over the medium to long term.

To fuel our 26 outlook, we are focused on executing with excellence beauty really much at.

Stéphane de La Faverie: We recently engaged an external advisor as we consider evolving the portfolio to best align with the strategic vision of Beauty Reimagined and focus on our highest return opportunities over the medium to long term. We will share updates in due course. Let me now turn to our fiscal 2026 outlook. With three fiscal years of sales decline and operating margin erosion behind us, we enter fiscal 2026 with signs of momentum and the start of our turnaround, a return to top-line growth in fiscal 2026, and the pursuit of a solid double-digit operating margin in the years ahead. For fiscal 2026, we expect to deliver low single-digit organic sales growth, maintain our now stronger gross margin despite the headwind of incremental tariffs, and expand our operating margin by 165 basis points at the midpoint. Akhil Shrivastava will describe the drivers in detail. Let me share a few overarching themes.

Already in the first quarter, we are further accelerating best in class consumer coverage.

Ordinary launch on Tmall in China with a breakthrough service the first AI power flagship stores co develop with T mobile.

Speaker #3: We will share updates in due course. Let me now turn to our Q4 2026 outlook. With three fiscal years of sales decline and operating margin erosion behind us, we enter Q4 2026 with signs of momentum and the start of our turnaround.

And we are excited to be expanding on Amazon premium beauty store success beyond the U S and Canada, starting with the ordinary in Amazon UK, which launched in July as well as Clinique in Amazon Mexico. This months.

Speaker #3: A return to top-line growth in Q4 2026 and the pursuit of a solid double-digit operating margin in the years ahead. For Q4 2026, we expect to deliver low single-digit organic sales growth, maintain our now stronger gross margin despite the headwind of incremental ties, and expand our operating margin by 165 basis points at the midpoint.

In travel retail we are greatly expanding our presence in the Americas through the all new distribution with duty free Americas. This builds on progress in EMEA to expand the presence of our luxury fragrance brands in airports.

Moving to our second action plan priority create transformative innovation. We are we don't see five or external hire for the new leader of R&D and expect to make this announcement in the coming weeks.

Speaker #3: Akhil will describe the drivers in detail. But let me share a few overarching themes. For sales, we intend to significantly reduce discounts. We made good progress on this front in Q4 2025 and believe there is much more that we can achieve.

For fiscal 2006, we are targeting innovation to be back representing over 25% of cells with this pipeline, we are well on our way towards tripling the percentage of innovation launch in less than a year from 10% to 30% in fiscal 'twenty six we are set to us.

Stéphane de La Faverie: For sales, we intend to significantly reduce discounts. We made good progress in this front in fiscal 2025 and believe there is much more that we can achieve. Our sales growth also embraces benefits from accelerating best-in-class consumer coverage, recognizing we still have a lot of work to do in markets with a high penetration of department stores. Finally, we are putting greater emphasis on accelerating in high-growth emerging markets, given our still untapped potential, as emerging markets only represent 10% of reported sales. For operating margin, the organization has embraced PRGP, and its momentum is very encouraging. We achieved much more from PRGP than we expected in fiscal 2025, which gives us confidence that we can deliver meaningful cost savings in fiscal 2026 and fund incremental consumer-facing investments. To fuel our 2026 outlook, we are focused on executing with excellence, Beauty Reimagined.

Speaker #3: Our sales growth also embraced benefits from accelerating best-in-class consumer coverage, recognizing we still have a lot of work to do in markets with a high penetration of department stores.

16% of our innovation that is launched within the year.

Here are few fiscal 2006 innovation already in the hands of consumers.

Speaker #3: Finally, we are putting greater emphasis on accelerating in high-growth emerging markets, given our still untapped potential, as emerging markets only represent 10% of reported sales.

In skincare, reflecting our imperative to innovate from the ultra prestige through luxury tiers, the ordinary launched sofa, 10% powder to cream concentrate a breakthrough formula further up the pricing tier Este Lauder advanced night repair franchise introduced a new ice cream.

Speaker #3: For operating margin, the organization has embraced PRGP. And it's momentum is very encouraging. We achieved much more from PRGP than we expected in Q4 2025, which gives us confidence that we can deliver meaningful cost-saving in Q4 2026 and fund incremental consumer-facing investments.

While renew tree launcher watery lotion powered by longevity science. In makeup we are rebuilding on our gain in leap with Mack <unk> Glazer, glossy liner and Bobby bonds Cashmere Lux matte lipstick.

Speaker #3: To fuel our Q6 outlook, we are focused on executing with excellence beauty reimagining. Already in the first quarter, we are further accelerating best-in-class consumer coverage.

And following Toms false with some success with cushion foundation, the broad launch architecture reagents Hydrating Foundation.

Stéphane de La Faverie: Already in the first quarter, we are further accelerating best-in-class consumer coverage. The Ordinary launched on Temu in China with a breakthrough service, the first AI-powered flagship stores co-developed with Temu. We are excited to be expanding on Amazon Premium Beauty Store success beyond the U.S. and Canada, starting with The Ordinary in Amazon UK, which launched in July, as well as Clinique in Amazon Mexico this month. In travel retail, we are greatly expanding our presence in the Americas through the all-new distribution with Duty Free Americas. This builds on progress in EMEA to expand the presence of our luxury fragrance brands in airports. Moving to our second action plan priority, create transformative innovation. We have identified our external hire for the new leader of R&D and expect to make this announcement in the coming weeks.

In France, the category poised to lead prestige beauty industry globally in fiscal 2006, Jo Malone, London Raspberry repo. This just seasonal limited edition polo is outperforming last year's limited edition the runaway success, Tom Ford extended the Halo of its food collection we've.

Speaker #3: The Ordinary launched on Temu in China with a breakthrough service, the first AI-powered flagship stores co-developed with Temu. We are excited to be expanding on the Amazon Premium Beauty Store success beyond the U.S. and Canada, starting with The Ordinary in Amazon UK, which launched in July, as well as Clinique in Amazon Mexico this month.

Why is there an expanded to its popular black orchid franchise with Black <unk> Reserve. We are also proud to mark the exciting relaunch of the Army's Brian we've intuition, the new fronts fronted by global on bus other NBA all of Famer Dwayne Wade.

Speaker #3: In travel retail, we are greatly expanding our presence in the Americas through the all-new distribution with Duty-Free Americas. This builds on progress in EMEA to expand the presence of our luxury fragrance brand in airports.

For further action plan priority boost consumer facing investments, we are deploying a new major model that puts greater focus on demand generation through broader media tactics, we made significant shifts in the mix of media budget to online consumer acquisition and improved.

Speaker #3: Moving to our second action plan priority, create transformative innovation. We have identified our external hire for the new leader of R&D and expect to make this announcement in the coming weeks.

Speaker #3: For Q4 2026, we are targeting innovation to represent over 25% of sales. With this pipeline, we are well on our way toward tripling the percentage of innovation launched in less than a year, from 10% to 30%.

Stéphane de La Faverie: For fiscal 2026, we are targeting innovation to be back representing over 25% of sales. With this pipeline, we are well on our way towards tripling the percentage of innovation launched in less than a year, from 10% to 30%. In fiscal 2026, we are set to have 16% of our innovation that is launched within a year. Here are a few fiscal 2026 innovations already in the hands of consumers. In skincare, reflecting our imperative to innovate from the entry prestige through luxury tiers, The Ordinary launched Sulfur 10% Powder to Cream Concentrate, a breakthrough formula. Further up the prestige tier, Estée Lauder's Advanced Night Repair franchise introduced a new eye cream, while Re-Nutriv launched a watery lotion powered by longevity science. In make-up, we are rebuilding on our gain in lips with M·A·C Lips Glazer Glossy Liner and Bobbi Brown's Cashmere Luxe Matte Lipstick.

Roy Accountabilities.

Our investment in AI have begun to show meaningful impact transforming how we engage with consumer and operate internally from personalized marketing and media optimization to agile go to market execution.

Speaker #3: In Q4 2026, we are set to have 16% of our innovation that is launched within a year. Here are a few Q4 2026 innovations already in the hands of consumers.

<unk> has driven a 31% increase in ROI from our North America major campaigns, enabling faster decision, making and stronger real time market responsiveness.

Speaker #3: In skincare, reflecting our imperative to innovate from the entry prestige through luxury tiers, The Ordinary launched Self for 10% Powder to Cream Concentrate, a breakthrough formula.

For our fourth action plan priority fuel sustainable growth through bold efficiencies.

Among our newer initiatives when we expanded the <unk> in February 25 is outsourcing our analysis revealed a significant gap versus industry benchmarks and we are rapidly advancing this initiatives.

Speaker #3: Further up the prestige tier, Estée Lauder Advanced Night Repair franchise introduced a new eye cream, while Renutribe launched a watery lotion powered by longevity science.

Speaker #3: In makeup, we are rebuilding on our gain in lip with MAC Lips Glazer Glossy Liner and Bobbi Brown's Cashmere Luxe Matte Lipstick. Following Tom Ford's recent success with cushion foundation, the brand launched Architecture Radiant Hydrating Foundation.

For our final action plant variety Reemerging the way we work as of July 1st Bronze one global strategy innovation and long range planning while region are full responsibility for the P&L, allowing for greater local agility and consumer focus we.

Stéphane de La Faverie: Following Tom Ford's recent success with Cushion Foundation, the brand launched Architecture Radiant Hydrating Foundation. In fragrance, the category poised to lead prestige beauty industry globally in fiscal 2026. Jo Malone London's Raspberry & Rhubarb, this year's seasonal limited edition color, is outperforming last year's limited edition runaway success. Tom Ford extended the halo of its Oud collection with Oud Voyager and expanded to its popular Black Orchid franchise with Black Orchid Reserve. We are also proud to mark the exciting relaunch of the Aramis brand with Intuition, a new fragrance fronted by global ambassador and NBA Hall of Famer Dwyane Wade. For our third action plan priority, boost consumer-facing investment, we are deploying a new media model that puts greater focus on demand generation through broader media tactics. We made significant shifts in the mix of media budget to enhance consumer acquisition and improve ROI accountability.

Speaker #3: In fragrance, the category poised to lead the prestige beauty industry globally in Q4 2026 is Jo Malone London's Raspberry Repo. This year's seasonal limited edition color is outperforming last year's limited edition runaway success.

Introduce new ways of working playbook aligned to this structure to drive Brown region collaboration and we are very encouraged by the elevated engagement so far.

In closing we are now sized as we are transforming our company through beauty re imaging to our employees. Thank you for bringing beauty <unk> to life in six short months through your tremendous passion and commitment together with all of you I am excited for what.

Speaker #3: Tom Ford extended the halo of its Oud collection with Oud Voyageur, and expanded its popular Black Orchid franchise with Black Orchid Reserve. We are also proud to mark the exciting relaunch of the Aramis brand with Intuition, a new fragrance fronted by global ambassador NBA Hall of Famer Dwyane Wade.

What we will accomplish I will now turn the call over to <unk>.

Thank you Stefan and Hello, everyone and thank you for joining us today before discussing the outlook I'll briefly recap our fourth quarter results and highlight progress in key areas of the business.

Speaker #3: For our third action plan priority, boost consumer-facing investment. We are deploying a new media model that puts greater focus on demand generation through broader media tactics.

For more information on our full year and fourth quarter performance. Please refer to our press release issued this morning.

Speaker #3: We made significant shifts in the mix of media budget to enhance consumer acquisition and improve ROI accountability. Our investment in AI has begun to show meaningful impact, transforming how we engage with consumers and operate internally.

Overall, we delivered fourth quarter and second half results at the top end of our implied guidance range.

Stéphane de La Faverie: Our investment in AI has begun to show meaningful impact, transforming how we engage with consumers and operate internally. From personalized marketing and media optimization to agile go-to-market execution, AI has driven a 31% increase in ROI from our North American media campaigns, enabling faster decision-making and stronger real-time market responsiveness. For our fourth action plan priority, fuel sustainable growth through bold efficiencies. Among our newer initiatives, when we expanded the PRGP in February 2025, is outsourcing. Our analysis revealed a significant gap versus industry benchmarks, and we are rapidly advancing these initiatives. For our final action plan priority, reimagine the way we work. As of July 1, brands own global strategy, innovation, and long-range planning, while regions have full responsibility for the P&L, allowing for greater local agility and consumer focus.

Starting with top line organic net sales declined 13% in the fourth quarter, reflecting declines across all product categories, except fragrance as well as across every geographic region, primarily driven by global travel retail as we expected.

Speaker #3: From personalized marketing and media optimization to agile go-to-market execution, AI has driven a 31% increase in ROI from our North America media campaigns, enabling faster decision-making and stronger real-time market responsiveness.

Encouragingly, we are seeing positive results with share gains in some key markets, notably in mainland China and Japan in the U S. We made significant progress in narrowing our share losses during the fiscal year and gained share in the second half.

Speaker #3: For our fourth action plan priority, fuel sustainable growth through bold efficiencies. Among our newer initiatives, when we expanded the PRGP in February 2025, is outsourcing.

Now looking at margins, our gross margin for the fourth quarter was relatively flat, even as we face the steepest sales volume decline of the year for the full year, we delivered 230 basis points of gross margin expansion. Despite the sales deleverage landing at 74%. This meaningful expansion was driven by the relentless.

Speaker #3: Our analysis revealed a significant gap versus the industry benchmark, and we are rapidly advancing this initiative. For our final action plan priority, we will reimagine the way we work.

Execution of our PAGP.

Turning to operating margin for the fourth quarter, we delivered 4% compared to 9% last year. This was driven by a 580 basis points increase in consumer facing investments as a percentage of sales on the full year consumer facing investments increased 400 basis points as we invested in our brand.

Speaker #3: As of July 1st, brands own global strategy innovation and long-range planning, while regions have full responsibility for the P&L, allowing for greater local agility and consumer focus.

Speaker #3: We introduced a new ways of working playbook aligned to the structure to drive brand and region collaboration, and we are very encouraged by the elevated engagement so far.

Stéphane de La Faverie: We introduced a new way of working playbook aligned to the structure to drive brand-region collaboration, and we are very encouraged by the elevated engagement so far. In closing, we are energized as we are transforming our company through Beauty Reimagined. To our employees, thank you for bringing Beauty Reimagined to life in six short months through your tremendous passion and commitment. Together with all of you, I am excited for what we will accomplish. I will now turn the call over to Akhil.

As part of beauty, the imagine to fuel growth and long term value creation. These investments that enabled through our PR GP, which fueled our continued progress in reducing non consumer facing costs in the fourth quarter ending the year with a 6% reduction in the fourth quarter. We also recorded 425.

Speaker #3: In closing, we are energized as we transform our company through beauty reimagining. To our employees, thank you for bringing beauty reimagining to life in six short months through your tremendous passion and commitment.

$5 million of impairment charges relating to <unk> and to face. This reflects challenges in mainland China and Korea for Doctor, John and continued underperformance in key geographies and channels from too faced.

Speaker #3: Together with all of you, I am excited for what we will accomplish. I will now turn the call over to Akhil.

Our effective tax rate for the full year was 38, 8% compared to 31% last year. This reflects a higher effective tax rate on our foreign operations due to our geographical mix of earnings and the unfavorable impact associated with previously issued stock based compensation.

Speaker #2: Thank you, Stephane. Hello, everyone, and thank you for joining us today. Before discussing the outlook, I'll briefly recap our fourth quarter results and highlight progress in key areas of the business.

Akhil Shrivastava: Thank you, Stéphane. Hello, everyone, and thank you for joining us today. Before discussing the outlook, I will briefly recap our Q4 results and highlight progress in key areas of the business. For more information on our full-year and Q4 performance, please refer to a press release issued this morning. Overall, we delivered Q4 and second half results at the top end of our employed guidance range. Starting with top line, organic net sales declined 13% in the Q4, reflecting declines across all product categories except fragrance, as well as across every geographic region, primarily driven by global travel retail as we expected. Encouragingly, we are seeing positive results with share gains in some key markets, notably in mainland China and Japan. In the US, we made significant progress in narrowing our share losses during the fiscal year and gained share in the second half.

Speaker #2: For more information on a full year and fourth quarter performance, please refer to a press release issued this morning. Overall, we delivered fourth quarter and second half results at the top end of our employee guidance range.

Our diluted EPS was <unk> <unk> in the fourth quarter as compared to 64 last year.

Speaker #2: Starting with the top line, organic net sales declined 13% in the fourth quarter, reflecting declines across all product categories except fragrance, as well as across every geographic region, primarily driven by global travel retail, as we expected.

Looking now at or beyond GP restructuring program as of June 30, we recorded $610 million of total cumulative charges primarily in employee related costs.

Moving to our cash generation for the year, we generated $1 3 billion and net cash flow from operating activities compared to $2 4 billion last year. This.

Speaker #2: Encouragingly, we are seeing positive results with share gains in some key markets, notably in mainland China and Japan. In the U.S., we made significant progress in narrowing our share losses during the fiscal year and gained share in the second half.

This decrease is primarily due to lower earnings adjusted for noncash items and an unfavorable change in operating assets and liabilities.

Speaker #2: Now, looking at margins, a gross margin for the fourth quarter was relatively flat, even as we faced the steepest sales volume decline of the year.

Akhil Shrivastava: Looking at margins, our gross margin for the Q4 was relatively flat, even as we faced the steepest sales volume decline of the year. For the full year, we delivered 230 basis points of gross margin expansion despite our sales deleverage, landing at 74%. This meaningful expansion was driven by the relentless execution of our Profit Recovery and Growth Plan. Turning to operating margin for the Q4, we delivered 4% compared to 9% last year. This was driven by a 580 basis points increase in consumer-facing investments as a percentage of sales. On the full year, consumer-facing investments increased 400 basis points as we invested in our brands as part of Beauty Reimagined to fuel growth and long-term value creation. These investments were enabled through our Profit Recovery and Growth Plan, which fueled our continued progress in reducing non-consumer-facing costs in the Q4, ending the year with a 6% reduction.

This also reflected last year, we made a very significant year on year reduction in <unk>.

Mentally which drove very strong <unk> in the base period.

Speaker #2: For the full year, we delivered 230 basis points of gross margin expansion despite our sales deleverage, landing at 74%. This meaningful expansion was driven by the relentless execution of our PRGP.

Additionally, the reductions reflect a significant increase in restructuring payments.

We invested $602 million in capital expenditure down 34% compared to last year.

Speaker #2: Turning to operating margin for the fourth quarter, we delivered 4% compared to 9% last year. This was driven by a 580 basis point increase in consumer-facing investments as a percentage of sales.

Reflected priority of payments relating to the manufacturing facility in Japan.

This level of Capex reflects our strong focus on optimizing capital expenditures and prioritizing consumer facing investments.

Speaker #2: On the full year, consumer-facing investments increased 400 basis points, as we invested in our brands as part of beauty reimagining to fuel growth and long-term value creation.

The cash flow generation remains a strategic priority and we are focused on driving improvements in working capital Capex and operational efficiency for standard free cash flow going forward.

Speaker #2: These investments are enabled through our PRGP, which fueled our continued progress in reducing non-consumer-facing costs in the fourth quarter, ending the year with a 6% reduction.

Now turning to outlook.

Our priority is to execute <unk> plans with excellence. The strategy is designed to drive long term value creation and restore growth improve margins and drive cash.

Speaker #2: In the fourth quarter, we also recorded $425 million of impairment charges relating to Dr. Jart and Too Faced. This reflects challenges in mainland China and Korea for Dr. Jart, and continued underperformance in key geographies and channels from Too Faced.

Akhil Shrivastava: In the Q4, we also recorded $425 million of impairment charges relating to Dr. Jart+ and Too Faced. This reflects challenges in mainland China and Korea for Dr. Jart+ and continued underperformance in key geographies and channels from Too Faced. Our effective tax rate for the full year was 38.8% compared to 31% last year. This reflects a higher effective tax rate on our foreign operations due to our geographical mix of earnings and the unfavorable impact associated with previously issued stock-based compensation. Our diluted EPS was $0.09 in the Q4 as compared to $0.64 last year. Looking now at our Profit Recovery and Growth Plan restructuring program, as of June 30, we recorded $610 million of total cumulative charges, primarily in employee-related costs. Moving to our cash generation, for the year, we generated $1.3 billion in net cash flow from operating activities compared to $2.4 billion last year.

We're focused on driving sustainable sales growth in fiscal 2006, and beyond as well as achieving a solid double digit adjusted operating margin over the next few years beginning.

Beginning with fiscal 2006, we are providing only annual outlook. This approach gives us more agility and flexibility to navigate ongoing volatility while better aligning with our long term value creation and strategic priorities.

Speaker #2: Our effective tax rate for the full year was 38.8%, compared to 31% last year. This reflects a higher effective tax rate on our foreign operations due to our geographical mix of earnings and the unfavorable impact associated with previously issued stock-based compensation.

Also as you may have seen in our press release issued this morning and consistent with prior years, we continue to develop our strategy and allocate resources by product category, beginning with the first quarter, we will be reporting our fiscal 'twenty six and comparable fiscal 'twenty five results by reorganized geographic regions that align with our recent leaders.

Speaker #2: Our diluted EPS was $0.09 in the fourth quarter, compared to $0.64 last year. Looking now at our PRGP restructuring program, as of June 30th, we recorded $610 million of total cumulative charges, primarily in employee-related costs.

<unk> changes.

We plan to share more detailed financial information based on our new regional structures in the coming weeks.

Speaker #2: Moving to our cash generation, for the year we generated $1.3 billion in net cash flow from operating activities, compared to $2.4 billion last year.

Now, let me update you on our assumptions regarding evolving trade policies and enacted tariffs as I mentioned in my our task force has been moving with urgency closely monitoring developments and evaluating various scenarios to mitigate some of the tariff impacts. Since then our teams have acted swiftly to implement mitigation.

Speaker #2: This decrease is primarily due to lower earnings adjusted for non-cash items and an unfavorable change in operating assets and liabilities. This also reflects that last year we made a very significant year-on-year reduction in our inventory, which drove very strong CFFO in the base period.

Akhil Shrivastava: This decrease is primarily due to lower earnings adjusted for non-cash items and an unfavorable change in operating assets and liability. This also reflects that last year we made a very significant year-on-year reduction in our inventory, which drove very strong CFR in the base period. Additionally, the reductions reflect a significant increase in restructuring payments. We invested $602 million in capital expenditure, down 34% compared to last year, which reflected prior year payments relating to the manufacturing facility in Japan. This level of CapEx reflects a strong focus on optimizing capital expenditures and prioritizing consumer-facing investments. Free cash flow generation remains a strategic priority, and we are focused on driving improvements in working capital, CapEx, and operational efficiency to strengthen free cash flow going forward. Now turning to outlook, our priority is to execute our Beauty Reimagined action plans with excellence.

<unk>, including leveraging available trade programs and further optimizing our regional manufacturing footprint to bring production closer to the consumer including through our facility in Japan. These efforts along with the agility, we have built into our supply chain are helping to offset more than half of that.

Speaker #2: Additionally, the reductions reflect a significant increase in restructuring payments. We invested $602 million in capital expenditure, down 34% compared to last year, which reflected prior year payments related to the manufacturing facility in Japan.

Spect that impact and better position us to adapt quickly to address the evolving trade policies.

Speaker #2: This level of CapEx reflects a strong focus on optimizing capital expenditures and prioritizing consumer-facing investments. Pre-cash flow generation remains a strategic priority, and we are focused on driving improvements in working capital, CapEx, and operational efficiency to strengthen pre-cash flow going forward.

Based on what we know today and net of a planned mitigation strategies, we expect guidance related headwinds to impact profitability by approximately $100 million.

We continue to evaluate additional strategies to further mitigate these impacts including more be RGB initiatives and potential pricing actions.

Speaker #2: Now turning to outlook, our priority is to execute our Beauty Reimagined action plans with excellence. The strategy is designed to drive long-term value creation, restore growth, improve margins, and drive cash.

Turning now to our industry expectations for fiscal 2006, we assume modest global prestige beauty growth in the range of 2% to 3%.

Akhil Shrivastava: The strategy is designed to drive long-term value creation and restore growth, improve margins, and drive cash. We are focused on driving sustainable sales growth in fiscal 2026 and beyond, as well as achieving a solid double-digit adjusted operating margin over the next few years. Beginning with fiscal 2026, we are providing only an annual outlook. This approach gives us more agility and flexibility to navigate ongoing volatility while better aligning with the long-term value creation and strategic priorities. As you may have seen in a press release issued this morning and consistent with prior years, we continue to develop our strategy and allocate resources by product category. Beginning with the first quarter, we will be reporting our fiscal 2026 and comparable fiscal 2025 results by reorganized geographic regions that align with our recent leadership changes.

Speaker #2: We are focused on driving sustainable sales growth in Q4 2026 and beyond, as well as achieving a solid double-digit adjusted operating margin over the next few years.

Which is an improvement versus fiscal 'twenty five.

While there are early signs of stabilization in mainland China travel retail conversion continues to be weak and challenges persist in the west including subdued consumer sentiment in the U S and Western Europe.

Speaker #2: Beginning with Q4 2026, we are providing only an annual outlook. This approach gives us more agility and flexibility to navigate ongoing volatility while better aligning with long-term value creation and strategic priorities.

In terms of retail sales are expectations assume retail sales growth in line with or ahead of prestige beauty in key markets. We also remain focused on improving our performance and narrowing the gap between retail and net sales growth globally.

Speaker #2: Also, as you may have seen in a press release issued this morning, and consistent with prior years, we continue to develop our strategy and allocate resources by product category.

Speaker #2: Beginning with the first quarter, we will be reporting our Q4 2026 and comparable Q4 2025 results by reorganized geographic regions that align with our recent leadership changes.

In fiscal 'twenty six we aim to achieve this through tighter monitoring of inventory and trade and a significant reduction in discounts.

Speaker #2: We plan to share more detailed financial information based on our new regional structures in the coming weeks. Now, let me update you on our assumptions regarding evolving trade policies and enacted tariffs.

Akhil Shrivastava: We plan to share more detailed financial information based on our new regional structures in the coming week. Now, let me update you on our assumptions regarding evolving trade policies and enacted tariffs. As I mentioned in May, our task force has been moving with urgency, closely monitoring developments and evaluating various scenarios to mitigate some of the tariff impacts. Since then, our teams have acted swiftly to implement mitigation actions, including leveraging available trade programs and further optimizing our regional manufacturing footprint to bring production closer to the consumer, including through a facility in Japan. These efforts, along with the agility we have built into our supply chain, are helping to offset more than half of the expected impacts and better position us to adapt quickly to address the evolving trade policies.

That said progress may take longer in some markets and is unlikely to be linear.

Particularly in North America, we ended fiscal 2005 with an approximate five percentage point gap between retail and net sales growth for the full year.

Speaker #2: As I mentioned in May, our task force has been moving with urgency, closely monitoring developments and evaluating various scenarios to mitigate some of the tariff impacts.

While we expect the gap to narrow throughout the year, our greater disconnect is anticipated in the first quarter.

Speaker #2: Since then, our teams have acted swiftly to implement mitigation actions, including leveraging available trade programs and further optimizing our regional manufacturing footprint to bring production closer to the consumer.

Moving to top line for the full year, we expect organic net sales to be flat to up 3%. Our outlook assumes mid single digit net sales growth in mainland China as well as meaningful improvement in our global travel retail business. It also assumes more broad based improvements across the rest of the business compared to last year.

Speaker #2: Including through a facility in Japan. These efforts, along with the agility we have built into our supply chain, are helping to offset more than half of the expected impacts and better position us to adapt quickly to address the evolving trade policies.

Let me now share a few details we expect full year organic net sales in our global travel retail business to return to growth at the midpoint of our outlook.

Speaker #2: Based on what we know today and net of our planned mitigation strategies, we expect tariff-related headwinds to impact profitability by approximately $100 million.

Reflects the improvement in shipments compared to last year in Asia travel retail, particularly in the first half as we anniversary the impacts of actions taken to improve retailer inventory levels, along with the strategic decision to reduce our exposure to the seller activity.

Akhil Shrivastava: Based on what we know today and net of our planned mitigation strategies, we expect tariff-related headwinds to impact profitability by approximately $100 million. We continue to evaluate additional strategies to further mitigate these impacts, including more PRGP initiatives and potential pricing actions. Turning now to our industry expectations, for fiscal 2026, we assume modest global prestige beauty growth in the range of 2% to 3%, which is an improvement versus fiscal 2025. While there are early signs of stabilization in mainland China, travel retail conversion continues to be weak, and challenges persist in the West, including subdued consumer sentiment in the US and Western Europe. In terms of retail sales, our expectations assume retail sales growth in line with or ahead of prestige beauty in key markets. We also remain focused on improving our performance and narrowing the gap between retail and net sales growth globally.

Speaker #2: We continue to evaluate additional strategies to further mitigate these impacts, including more PRGP initiatives and potential pricing actions. Turning now to our industry expectations.

However, this improvement is expected to be offset to some extent by persistent challenges in the broader retail environment, including weak conversion as a result, we expect a wider range of net sales growth in global travel retail in the second half reflecting ongoing uncertainty.

Speaker #2: For Q4 2026, we assume modest global prestige beauty growth in the range of 2% to 3%. This represents an improvement versus Q4 2025. While there are early signs of stabilization in mainland China, travel retail conversion continues to be weak, and challenges persist in the West.

In the rest of the business, we expect to deliver low single digit organic net sales growth for the full year, reflecting improvement year on year growth rates across most markets relative to fiscal 'twenty five.

Speaker #2: Including subdued consumer sentiment in the U.S. and Western Europe. In terms of retail sales, our expectations assume retail sales growth in line with or ahead of prestige beauty in key markets.

In terms of the first quarter, we expect organic net sales to be down low single digits to slightly positive. This reflects high single digit growth in our global travel retail business, while maintaining our strategic initiative to keep the mix of business and alignment industry norms. In addition, we anticipate a return to solid growth in mainland China.

Speaker #2: We also remain focused on improving our performance and narrowing the gap between retail and net sales growth globally. In Q4 2026, we aim to achieve this through tighter monitoring of inventory in trade and a significant reduction in discounts.

And a more moderate decline in the remainder of the business.

Akhil Shrivastava: In fiscal 2026, we aim to achieve this through tighter monitoring of inventory in trade and a significant reduction in discounts. That said, progress may take longer in some markets and is unlikely to be linear. Particularly in North America, we ended fiscal 2025 with an approximate 5 percentage points gap between retail and net sales growth for the full year. While we expect the gap to narrow throughout the year, a greater disconnect is anticipated in the first quarter. Moving to top line, for the full year, we expect organic net sales to be flat to up 3%. Our outlook assumes mid-single-digit net sales growth in mainland China, as well as meaningful improvement in our global travel retail business. It also assumes more broad-based improvements across the rest of the business compared to last year. Let me now share a few details.

Turning now to RP RGB in fiscal 'twenty, six we are continuing to execute with rigor and discipline and clear purpose to optimize key elements across our cost structure to improve margins and profitability as well as create fuel for growth. We are pleased with the meaningful progress we've made in fiscal 2005 and <unk>.

Speaker #2: That said, progress may take longer in some markets and is unlikely to be linear. Particularly in North America, we ended Q4 2025 with an approximate 5-percentage-point gap between retail and net sales growth for the full year.

Main focused on advancing up the RGB initiatives in fiscal 2006.

Speaker #2: While we expect the gap to narrow throughout the year, a greater disconnect is anticipated in the first quarter. Moving to the top line, for the full year, we expect organic net sales to be flat to up 3%.

<unk> expect continued benefits in fiscal 2006 through gross margin and operating expenses, specifically non consumer facing expensive as we enhance overall productivity and right size our cost base.

Speaker #2: Our outlook assumes mid-single-digit net sales growth in mainland China, as well as meaningful improvement in our global travel retail business. It also assumes more broad-based improvements across the rest of the business compared to last year.

Now looking at our restructuring program.

We remain on track and continue to advance key initiatives inclusive of approvals through August and relative to the high end of the total expected ranges we previously communicated.

Speaker #2: Let me now share a few details. We expect full-year organic net sales in our global travel retail business to return to growth at the midpoint of our outlook.

Akhil Shrivastava: We expect full-year organic net sales in our global travel retail business to return to growth at the midpoint of our outlook. This reflects the improvement in shipment compared to last year in Asia travel retail, particularly in the first half as we anniversary the impacts of action taken to improve retailer inventory levels, along with the strategic decision to reduce our exposure to reseller activity. However, this improvement is expected to be offset to some extent by persistent challenges in the broader retail environment, including weak conversion. As a result, we expect a wider range of net sales growth in global travel retail in the second half, reflecting ongoing uncertainty. In the rest of the business, we expect to deliver low single-digit organic net sales growth for the full year, reflecting improvement in year-on-year growth rates across most markets relative to fiscal 2025.

We have approved initiatives accounting for over 60% of expected gross benefits and nearly 50% of both anticipated charges and net reduction in positions.

Speaker #2: This reflects the improvement in shipment compared to last year in Asia travel retail, particularly in the first half, as we anniversary the impacts of action taken to improve retailer inventory levels.

With that backdrop, let me walk you through our other full year assumptions.

Zoom in operating margin between nine 4% nine 9%, reflecting greater expansion in the second half of the year as we expect benefits from our PAGP to build sequentially each quarter in.

Speaker #2: Along with the strategic decision to reduce our exposure to reseller activity, this improvement is expected to be offset to some extent by persistent challenges in the broader retail environment, including weak conversion.

In fiscal 'twenty, six we expect margin.

Gresham, despite the year on year headwinds from incremental tariffs and normalized bonus levels.

Speaker #2: As a result, we expect a wider range of net sales growth in global travel retail in the second half, reflecting ongoing uncertainty. In the rest of the business, we expect to deliver low single-digit organic net sales growth for the full year, reflecting improvement in year-on-year growth rates across most markets, relative to Q4 2025.

Our estimated geographical mix of earnings is expected to drive an effective tax rate of approximately 36%. This assumes a higher rate of approximately 40% in the first quarter with improvement over the course of the year as we expect to build profitability.

In addition, we are monitoring certain provisions and global tax legislations that may expire in fiscal 2006, which if not extend it could increase our effective tax rate.

Speaker #2: In terms of the first quarter, we expect organic net sales to be down low single digits to slightly positive. This reflects high single-digit growth in our global travel retail business, while maintaining a strategic initiative to keep the mix of business in line with industry norms.

Akhil Shrivastava: In terms of the first quarter, we expect organic net sales to be down low single digits to slightly positive. This reflects high single-digit growth in our global travel retail business while maintaining a strategic initiative to keep the mix of business in line with industry norms. In addition, we anticipate a return to solid growth in mainland China and a more moderate decline in the remainder of the business. Turning now to our Profit Recovery and Growth Plan, in fiscal 2026, we are continuing to execute with rigor, discipline, and clear purpose to optimize key elements across our cost structure to improve margins and profitability, as well as create fuel for growth.

Diluted EPS is expected to range between $1 90, and $2 10.

Assuming a weighted average share count of approximately 365 million shares.

Speaker #2: In addition, we anticipate a return to solid growth in mainland China and a more moderate decline in the remainder of the business. Turning now to our PRGP.

This reflects year on year growth of 26% to 39%.

Speaker #2: In Q4 2026, we are continuing to execute with rigor discipline and clear purpose to optimize key elements across our cost structure, to improve margins, and profitability as well as create fuel for growth.

Turning now to cash generation in fiscal year 'twenty six we expect to generate net cash flows from operating activities between one to one 1 billion.

While this reflects a slight decline from last year, driven by the anticipated peak and restructuring payments. We are confident in our ability to mitigate some of the pressures to our strong focus on managing working capital.

Speaker #2: We are pleased with the meaningful progress we have made in Q4 2025 and remain focused on advancing our PRGP initiatives in Q4 2026. Through our PRGP, we expect continued benefits in Q4 2026 to gross margin and to operating expenses.

Akhil Shrivastava: We are pleased with the meaningful progress we have made in fiscal 2025 and remain focused on advancing our Profit Recovery and Growth Plan initiatives in fiscal 2026. Through our Profit Recovery and Growth Plan, we expect continued benefits in fiscal 2026 to gross margin and to operating expenses, specifically non-consumer-facing expenses, as we enhance overall productivity and right-size our cost base. Looking at our restructuring program, we remain on track and continue to advance key initiatives, inclusive of approvals through August and relative to the high end of the total expected ranges we previously communicated. We have approved initiatives accounting for over 60% of expected gross benefits and nearly 50% of both anticipated charges and net reduction in positions. With that backdrop, let me walk you through our other full-year assumptions.

We expect capital expenditures for the full year to be approximately 4% of sales.

Selecting a more efficient and normalized level of expenditures along with our focus and determination to optimize capex overall and targeted investments in consumer facing areas to fuel growth.

Speaker #2: Specifically, non-consumer-facing expenses, as we enhance overall productivity and right-size our cost base. Now, looking at our restructuring program, we remain on track and continue to advance key initiatives, inclusive of approvals through August and relative to the high end of the total expected ranges we previously communicated.

In closing we remain confident in <unk> magic grounded by a consumer centric mindset that prioritizes growth driving investments cost discipline and operational efficiency, while we are not providing an outlook beyond fiscal 'twenty six.

Speaker #2: We have approved initiatives accounting for over 60% of expected gross benefits and nearly 50% of both anticipated charges and net reduction in positions. With that backdrop, let me walk you through our other full-year assumptions.

We are determined to deliver strong cost leverage through sales growth in fiscal 2007, and bring to bear with urgency be RGB benefits from optimizing of our end to end operating model to drive cost savings, including through ongoing outsourcing initiatives.

Speaker #2: We assume an operating margin between 9.4% and 9.9%, reflecting greater expansion in the second half of the year, as we expect benefits from our PRGP to build sequentially each quarter.

Akhil Shrivastava: We assume an operating margin between 9.4% and 9.9%, reflecting greater expansion in the second half of the year, as we expect benefits from our PRGP to build sequentially each quarter. In fiscal 26, we expect margin progression despite year-on-year headwinds from incremental tariffs and normalized bonus levels. Our estimated geographical mix of earnings is expected to drive an effective tax rate of approximately 36%. This assumes a higher rate of approximately 40% in the first quarter, with improvement over the course of the year as we expect to build profitability. In addition, we are monitoring certain provisions in global tax legislations that may expire in fiscal 26, which, if not extended, could increase our effective tax rate. Diluted EPS is expected to range between $1.90 and $2.10, assuming a weighted average share count of approximately 365 million shares. This reflects year-on-year growth of 26% to 39%.

<unk> planning consistent with the strategic changes, we are making in our mix of business and a more competitive approach to procurement.

Speaker #2: In Q4 2026, we expect margin progression despite year-on-year headwinds from incremental tariffs and normalized bonus levels. Our estimated geographical mix of earnings is expected to drive an effective tax rate of approximately 36%.

To our employees. Thank you for your dedication and excellence through this period of meaningful transformation, you'll resilience and commitment drive our progress together, we are turning strategy into execution and execution into long term value creation.

Speaker #2: This assumes a higher rate of approximately 40% in the first quarter, with improvement over the course of the year as we expect to build profitability.

That concludes our prepared remarks, I'll now turn it over to the operator to begin the Q&A session.

Speaker #2: In addition, we are monitoring certain provisions in global tax legislation that may expire in Q4 2026, which, if not extended, could increase our effective tax rate.

The floor is now opened for questions. If you have a question simply press the star key followed by the digit one on your Touchtone telephone.

Speaker #2: Diluted EPS is expected to range between $1.90 and $2.10, assuming a weighted average share count of approximately 365 million shares. This reflects year-on-year growth of 26% to 39%.

To ensure everyone can ask their questions, we will limit each person to one question.

Time permitting we will.

I'll return to you for additional questions just queue up again by pressing the star key and the digit one.

Our first question today comes from Dara <unk> with Morgan Stanley. Please go ahead.

Speaker #2: Turning now to cash generation. In fiscal year 2026, we expect to generate net cash flows from operating activities between $1.0 billion to $1.1 billion. While this reflects a slight decline from last year, it is driven by the anticipated peak in restructuring payments.

Akhil Shrivastava: Turning now to cash generation, in fiscal year 26, we expect to generate net cash flows from operating activities between $1 billion to $1.1 billion. While this reflects a slight decline from last year, driven by the anticipated peak in restructuring payments, we are confident in our ability to mitigate some of the pressures through a strong focus on managing working capital. We expect capital expenditures for the full year to be approximately 4% of sales, reflecting a more efficient and normalized level of expenditures, along with a focus and determination to optimize CapEx overall and target the investments on consumer-facing areas to fuel growth. In closing, we remain confident in Beauty Reimagined, grounded by a consumer-centric mindset that prioritizes growth-driving investments, cost discipline, and operational efficiency.

Hey, good morning.

Dara.

Good morning, So clearly a lot of hard work occurring under beauty re imagine significant plans in place and the five key action areas. You mentioned I wanted to touch specifically on simplifying the organizational structure.

Speaker #2: We are confident in our ability to mitigate some of the pressures through a strong focus on managing working capital. We expect capital expenditures for the full year to be approximately 4% of sales.

And the restructuring there how much progress have you made so far what changes are left to be implemented in fiscal 2006 and.

Speaker #2: Reflecting a more efficient and normalized level of expenditures, along with a focus and determination to optimize CapEx overall, we are targeting investments in consumer-facing areas to fuel growth.

I'd just love to get your sense for how the organizations handling the change culturally.

On the organizational front, but also just in a broader context, there's obviously a lot of change occurring for a company with a proud heritage and tradition. So are you satisfied with how quickly the organizations moving so far.

Speaker #2: In closing, we remain confident in beauty reimagining, grounded by our consumer-centric mindset that prioritizes growth-driving investments, cost discipline, and operational efficiency. While we are not providing an outlook beyond Q4 2026, we are determined to deliver strong cost leverage through sales growth in Q4 2027, and to urgently bring to bear PRGP benefits from optimizing our end-to-end operating model to drive cost savings.

Akhil Shrivastava: While we are not providing an outlook beyond fiscal 26, we are determined to deliver strong cost leverage through sales growth in fiscal 27 and bring to bear with urgency PRGP benefits from optimizing our end-to-end operating model to drive cost savings, including through ongoing outsourcing initiatives, tax planning consistent with the strategic changes we are making in a mix of business and a more comparative approach to procurement. To our employees, thank you for your dedication and excellence through this period of meaningful transformation. Your resilience and commitment drive our progress. Together, we are turning strategy into execution and execution into long-term value creation. That concludes the prepared remarks. I will now turn it over to the operator to begin the Q&A session.

And how do you think this changes being secret culturally thanks, Bob Thank.

Thank you. Thank you for your question I think it's obviously at the heart of all the changes that we are implementing and obviously delivering on the vision of tier margin like you said on the on the five key action priorities I think from an organization standpoint.

Speaker #2: Including through ongoing outsourcing initiatives, tax planning consistent with the strategic changes we are making in a mix of business, and a more competitive approach to procurement.

<unk> said in the prepared remarks that we are going to announce in the next coming weeks, the add of R&D, which will actually complete.

Speaker #2: To our employees, thank you for your dedication and excellence through this period of meaningful transformation. Your resilience and commitment drive our progress. Together, we are turning strategy into execution and execution into long-term value creation.

The new leadership team in place and we've done that in a very short six months since we have announced.

The new organization.

Also if you remember we've announced the collapse of the seven region into fall. So today in the Ikea mentioned in his prepared remark also like you know the new geographical structure on which we are going to report on which is obviously the Americas you came.

Speaker #2: That concludes the prepared remarks. I'll now turn it over to the operator to begin the Q&A session.

Speaker #1: The floor is now open for questions. If you have a question, you simply press the star key followed by the digit one on your touchtone telephone.

Rainey Mancini: The floor is now open for questions. If you have a question, you simply press the star key followed by the digit one on your touch-tone telephone. To ensure everyone can ask their questions, we will limit each person to one question. Time permitting, we will return to you for additional questions. Just queue up again by pressing the star key and the digit one. Our first question today comes from Dara Mohsenian with Morgan Stanley. Please go ahead.

Travel retail and China.

That alone regions. So all of that is already in place and very very pleased with the progress that we're making at this point the team is really committed.

Speaker #1: To ensure everyone can ask their questions, we will limit each person to one question. Time permitting, we will return to you for additional questions.

On the challenges that we are doing we are relentless communication throughout the organization personally a pod like multiple.

Speaker #1: Just queue up again by pressing the star key and the digit one. Our first question today comes from Dara Mohsenian with Morgan Stanley. Please go ahead.

The whole organization on many of my executive team leaders also did the same thing internally, but also externally we spend a lot of time communicating.

Speaker #3: Hey, good morning.

Dara Mohsenian: Good morning.

Speaker #4: Morning, Dara.

Speaker 6: Morning, Dar.

With you guys, but also with our suppliers all retailers all the challenges that we are making around the world.

Speaker #3: Morning. So, clearly a lot of hard work is occurring under Beauty Reimagined, with significant plans in place in the five key action areas you mentioned. I wanted to touch specifically on simplifying the organizational structure.

Dara Mohsenian: Morning.

Speaker 6: So, clearly, a lot of hard work occurring under Beauty Reimagined, significant plans in place in the five key action areas you mentioned. I wanted to touch specifically on simplifying the organizational structure just in the restructuring there. How much progress have you made so far? What changes are left to be implemented in fiscal 2026? I would just love to get your sense for how the organization is handling the change culturally, both on the organizational front, but also just in a broader context. There is obviously a lot of change occurring for a company with a proud heritage and tradition. Are you satisfied with how quickly the organization is moving so far, and how do you think this change is being seeded culturally? Thanks.

I've said it multiple times. This is the biggest organizational transformation that we have done in now is three and we are changing compensation to just make sure that everybody is rewarding on the total and the execution of beauty a re imagined and we are really laser focus on the <unk>.

Speaker #3: Just in the restructuring there, how much progress have you made so far? What changes are left to be implemented in Q4 2026? And I just love to get your sense for how the organization's handling the change culturally, both on the organizational front but also just in a broader context.

Time that we have left to deliver the <unk> piece.

Obviously, you've held both Ikea and I am very pleased on the progress that we're making on the PR GP, which obviously, we exceeded our expectation in fiscal 'twenty five and we have more to go get in fiscal 'twenty six and continues to benefit in 2007.

Speaker #3: There's obviously a lot of change occurring for a company with a proud heritage and tradition. So, are you satisfied with how quickly the organization's moving so far?

Speaker #3: And how do you think this change is being suited culturally? Thanks.

From an organizational standpoint, we have the complete new organization in place from a leadership standpoint, but I think it's not only at the level of my leadership team is throughout the organization.

Speaker #4: Yeah, no, thank you. Thank you, Dara, for your question. I think it's obviously at the heart of all the changes that we are implementing and obviously delivering on the vision of beauty reimagining.

Stéphane de La Faverie: Yeah, no, thank you. Thank you, Dara, for your question. I think it is obviously at the heart of all the changes that we are implementing and obviously delivering on the vision of Beauty Reimagined, like you said, on the five key action priorities. I think from an organization standpoint, you have heard me say in the prepared remark that we are going to announce in the next coming weeks the head of R&D, which will actually complete the new leadership team in place. We have done that in a very short six months since we have announced the new organization. Also, if you remember, we have announced the collapse of the seven regions into four.

Last time in the last earning calls we said that we were moving the responsibility of the P&L from the brand to the region and are reiterated that also like small today as of July one all of that is in place and I think the engagement that we're seeing throughout the organization between the brands between the region between the function.

Speaker #4: Like you said, on the five key action priorities, I think from an organizational standpoint, you've heard me say it in the prepared remarks that we are going to announce in the next coming weeks.

Speaker #4: The head of R&D, which will actually complete the new leadership team in place. And we've done that in a very short six months since we've announced the new organization.

Throughout the organization is extremely encouraging and very positive and we're seeing the collaboration of the speed of execution oriented that is paying some strong dividend I think many of the progress that we've highlighted.

Speaker #4: The also if you remember, we've announced the collapse of the seven regions into four. So today and Akhil mentioned in his prepared remark also like, you know, the new geographical structure on which we are going to report on, which is obviously the Americas, UK, Asia, and travel retail, and, China, as a standalone region.

Stéphane de La Faverie: So today, and Akhil Shrivastava mentioned in his prepared remark also, the new geographical structure on which we are going to report on, which is obviously the Americas, UK, Asia, and travel retail, and China as a standalone region. So all of that is already in place, and I am very, very pleased with the progress that we are making at this point. The team is really committed on the changes that we are doing. We have had relentless communication throughout the organization. Personally, I have had multiple town halls through the organization. Many of my executive team leaders also did the same thing internally, but also externally. We spent a lot of time communicating with you guys, but also with our suppliers, our retailers, all the changes that we are making around the world. I have said it multiple times.

Of the last six months since we've announced due to re imagine our combing through all these changes that we're making from the share gains that we have in China that we have in the U S that we have in Japan.

Speaker #4: So, all of that is already in place, and I am very, very pleased with the progress that we are making. At this point, the team is really committed to the changes that we are implementing.

The acceleration that we're seeing in the MLG market, even though not yet satisfying to all of US I think many of the changes are the result of the new organization that we are putting in place. So I would say in conclusion, frankly, very upbeat with the progress that we're making the speed at which we are making I think Dara you.

Speaker #4: We have had relentless communication throughout the organization. Personally, I've had multiple town halls through the organization. Many of my executive team leaders also did the same thing, both internally and externally.

So obviously the culture is evolving and is challenging but we are really pushing on ambition and accountability throughout every.

Speaker #4: We spent a lot of time communicating with you all, as well as with our suppliers and retailers, regarding all the changes that we are making around the world.

Speaker #4: I've said it multiple times. This is the biggest organizational transformation that we've done in our history. We are changing compensation to ensure that everybody is rewarded based on the total and the execution of beauty reimagining.

I would say.

Stéphane de La Faverie: This is the biggest organizational transformation that we have done in our history. We are changing compensation to just make sure that everybody is rewarded on the total and the execution of Beauty Reimagined. We are really laser-focused on the time that we have left to deliver the Profit Recovery and Growth Plan. We obviously, you have heard both Akhil Shrivastava and I have been very pleased on the progress that we are making on the Profit Recovery and Growth Plan, which obviously we exceeded our expectation in fiscal 25, and we have more to go get in fiscal 26 and continue the benefit in 27. From an organization standpoint, we have the complete new organization in place from a leadership standpoint. I think it is not only at the level of my leadership team, it is throughout the organization.

Peters of brands and regions and functions of the organization and I think this is only the beginning of the momentum that we are just going to go see going forward.

The next question is from Steve powers with Deutsche Bank. Please go ahead.

Speaker #4: And we are really laser-focused on the time that we have left to deliver the PRGP. Obviously, you've heard both Akhil and I express our pleasure regarding the progress that we are making on the PRGP, which, as you know, we exceeded our expectations in Q4 2025.

Great and good morning, everybody.

A question, perhaps more for a cure all those stuff on I'd, obviously welcome your perspective as well I was hoping you could just.

Maybe better decompose the gap between retail sales and shipments that you see entering fiscal 'twenty six I'm curious as to how much of that is still the byproduct of.

Speaker #4: And we have more to go get in Q4 2026 and continue the benefit in 2027. From an organizational standpoint, we have the complete new organization in place from a leadership standpoint.

Elevated trade inventory in pockets versus the discounting you mentioned versus perhaps channel mix dynamics or otherwise and then I guess as you look forward just how you anticipate that gap.

Speaker #4: But I think it's not only at the level of my leadership team; it's throughout the organization. Last time, in the last earnings call, we said that we were moving the responsibility of the P&L from the brand to the region.

Stéphane de La Faverie: Last time in the last earning calls, we said that we were moving the responsibility of the P&L from the brand to the region. I reiterated that also today, as of July 1, all of that is in place. I think the engagement that we are seeing throughout the organization between the brand, between the region, between the function throughout the organization is extremely encouraging and very positive. We are seeing the collaboration and the speed of execution already that is paying some strong dividends.

Looking if it still exists as you exit the year versus the beginning thank you.

Speaker #4: And I reiterated that also like, you know, today as of July 1st, all of that is in place. And I think the engagement that we're seeing throughout the organization between the brand, between the region, between the function, throughout the organization is extremely encouraging and very positive.

Thank you Steve so.

So I would say if you look at the big picture from very close fiscal 'twenty, four, but where we closed fiscal 'twenty five when you look at our largest markets travel retail, China and U S. And every single market, we have reduced inventory and we have brought it in a meaningful way to where we needed to be.

Speaker #4: And we are seeing the collaboration and the speed of execution already that is paying some strong dividends. I think many of the progress that we've highlighted over the last six months since we've announced beauty reimagining are coming through all these changes that we are making from the share gains that we have in China, that we have in the U.S., that we have in Japan, to the acceleration that we're seeing in the emerging market, even though it is not yet satisfying to all of us.

So that's the first step.

Stéphane de La Faverie: I think many of the progress that we have highlighted, of the last six months since we have announced Beauty Reimagined are coming through, all these changes that we are making from the share gain that we have in China, that we have in the U.S., that we have in Japan, the acceleration that we are seeing in the emerging market, even though not yet satisfying to all of us. I think many of the changes are the result of the new organization that we are putting in place. I would say, in conclusion, frankly, very happy with the progress that we are making, the speed at which we are making. I think, Dar, you mentioned, obviously, the culture is evolving and is changing, but we are really pushing on ambition and accountability throughout every, I would say, pillars of brands and regions and function of the organization.

In travel retail from or where do we see retail now I think we are very much there China. We are always camp lean inventory and we are we are in a good place there in North America. We are while we have reduced inventory we still beat.

Because of the retail environment. We are just watchful of what how we want to manage that going forward. We expect this gap to narrow so in terms of your big takeaway, our natural start to track retailed much closely than it has in the past. So you should feel good about it and of course, we'll give you quarterly guidance, which is <unk>.

Speaker #4: I think many of the changes are the result of the new organization that we are putting in place. So, I would say in conclusion, I am frankly very happy with the progress that we are making and the speed at which we are making it.

Speaker #4: I think, Dara, you mentioned, obviously, the culture is evolving and it's changing. But we are really pushing on ambition and accountability throughout every, I would say, pillar of brands, regions, and functions of the organization.

On quarter, one in North America, We gave you already have the perspective that we see some challenges.

However, overall your takeaway should be that we are shipping to retail as defined in our handset very much build retail ship to retail you could have a variance on the quarter, but we will never Leonard past that we will adjust to drive in the next quarter and of course, we will be very transparent and communicating that.

Speaker #4: And I think this is only the beginning of the momentum that we are just going to see going forward.

Stéphane de La Faverie: I think this is only the beginning of the momentum that we are just going to see going forward.

Now in some of the markets like North America, where we are as part of beauty, the imagine changing our coverage and going to pure play retailers moving more to the specialty multi et cetera. There comes a channel mix, which created that dynamic that comes certain cockpits go above the line versus below the line, which create that gap between retail to net but these are profitable.

Speaker #1: The next question is from Steve Powers with Deutsche Bank. Please go ahead.

Rainey Mancini: The next question is from Steve Powers with Deutsche Bank. Please go ahead.

Speaker #5: Yeah, great. And good morning, everybody. This is a question perhaps more for Akhil, although Stephane, I'd obviously welcome your perspective as well. I was hoping you could just maybe better decompose the gap between retail sales and shipments that you see entering Q4 2026.

Speaker 6: Yeah, great. Good morning, everybody. This is a question perhaps more for Akhil Shrivastava, although Stéphane de La Faverie, I would obviously welcome your perspective as well. I was hoping you could just maybe better decompose the gap between retail sales and shipments that you see entering fiscal 2026. I am curious as to how much of that is still the byproduct of elevated trade inventory in pockets versus the discounting you mentioned, versus perhaps channel mix dynamics or otherwise. I guess, as you look forward, just how you anticipate that gap looking, if it still exists, as you exit the year versus the beginning. Thank you.

Channels and overall value, creating channel. So overall I would say we have made dramatic progress. We are watching this very carefully and going forward, we expect the gaps to be significantly narrow.

Speaker #5: I'm curious as to how much of that is still the byproduct of elevated trade inventory in pockets versus the discounting you mentioned, versus perhaps channel mix dynamics or otherwise.

Versus maybe up there and I think just one thing to add to what <unk> was saying.

Speaker #5: And then I guess as you look forward, just how do you anticipate that gap looking, if it still exists, as you exit the year versus the beginning.

I think you are seeing even in algorithm for the year.

While we say that we have a modest growth while travel retail mid single digit growth in China for the rest of the business. We are in the low single digits, but we're seeing gradual improvement from a net sell throughout the year because of what Ikea site. We are aligning our retail our net throughout the year quarter over quarter, so still a bit of a gap in <unk>.

Speaker #5: Thank you.

Speaker #3: Thank you, Steve. So, I would say if you look at the big picture from where we closed Q4 2024 to where we closed Q4 2025, and you look at our largest markets—travel retail, China, and the U.S.—in every single market we have reduced inventory and we have brought it in a meaningful way to where we need it to be.

Speaker 7: Thank you, Steve. I would say, if you look at the big picture from where we closed fiscal 2024 to where we closed fiscal 2025, and you look at our largest markets, travel retail, China, and US, in every single market, we have reduced inventory, and we have brought it in a meaningful way to where we need it to be. That's the first step. I think, in travel retail, from where we see retail now, I think we are very much there. China, we have always kept lean inventory, and we are in a good place there. In North America, while we have reduced inventory, we still, because of the retail environment, we are just watchful of how we want to manage that. Going forward, we expect this gap to narrow.

One is I keel mentioned, but frankly, you're going to see that in the exit of 26, we will be in a much better position frankly, all the geographic but again.

Speaker #3: So, that's the first step. I think in travel retail, from where we see retail now, I think we are very much there. China, we have always kept lean inventory, and we are in a good place there.

Big work.

Was done in fiscal 'twenty five on the reducing dramatically the inventory in travel retail and we exited fiscal 2005 in the right place. So now it's fine tuning to make sure that the total net sales in the retails are aligned going forward.

Speaker #3: In North America, we are while we have reduced inventory, we still because of the retail environment, we are just watchful of what how we want to manage that.

The next question is from Lauren Lieberman with Barclays. Please go ahead.

Speaker #3: Going forward, we expect this gap to narrow. So, in terms of your big takeaway, our net should start to track retail much more closely than it has in the past.

Speaker 7: In terms of your big takeaway, our net should start to track retail much closer than it has in the past. You should feel good about it. Of course, we will give you quarterly guidance, which is why on Q1 in North America, we gave you already the perspective that we see some challenges. However, overall, your takeaway should be that we are shipping to retail, as Stéphane de La Faverie and I had said, very much build retail, ship to retail. You could have a variance on the quarter, but we will never let it pass that. We will adjust it right in the next quarter. Of course, we will be very transparent in communicating that.

Morning, Lauren.

And as Lieberman, perhaps your line is muted on your end as open on ours.

Speaker #3: So, you should feel good about it. Of course, we'll give you quarterly guidance, which is why in Q1 in North America, we already provided the perspective that we see some challenges.

Hi.

Okay.

Goodbye.

Hi.

Just wanted to hone in a bit on North America.

Speaker #3: However, overall your takeaway should be that we are shipping to retail, as Stephane and I had said. Very much build retail, ship to retail. You could have a variance on the quarter, but we will never let it pass that.

I will take your comment that.

Markets with significant department store exposure remain more challenged and so we've made great progress in North America, Hasnt on Amazon et cetera in our market share gains in various periods, but how should how are you thinking about the balance.

Speaker #3: We will adjust it right in the next quarter. And of course, we'll be very transparent in communicating that. Now, in some of the markets like North America, where we are as part of beauty reimagining, changing our coverage, and going to pure play retailers, moving more to specialty multi, etc., there comes a channel mix which creates that dynamic.

Speaker 7: In some of the markets like North America, where we are, as part of Beauty Reimagined, changing our coverage and going to pure-play retailers, moving more to specialty multi, et cetera, there comes a channel mix which creates that dynamic. There come certain costs which go above the line versus below the line, which create that gap between retail to net. But these are profitable channels and overall very creative channels. Overall, I would say we have made dramatic progress. We are watching this very carefully, and going forward, we expect the gaps to be significantly narrow, versus where we have been.

Patterns in North America, and frankly, how long it takes for the weekend to get to consistent sales growth.

Kevin fill that weight in department stores, and I guess.

More pointedly.

Speaker #3: There come certain costs which go above the line versus below the line, which create that gap between retail and net. But these are profitable channels and overall very creative channels.

Would you consider sort of more dramatic action the way that you've taken in travel retail to effectively at this point proactively.

<unk> exposure to the channel.

Speaker #3: So, overall, I would say we have made dramatic progress. We are watching this very carefully, and going forward, we expect the gaps to be significantly narrower.

Thank you Laura and I will start them. So Ikea will just like to know us refer to it now when you look at North America, Let me take a little bit of a step back because the market is very strong.

Speaker #3: Versus where we have been.

Speaker #4: Yeah, and I think just to add one thing to what Akhil was saying, I think you're seeing even in our algorithm for the year what we said: we have modest growth in travel retail, with mid-single-digit growth in China.

Stéphane de La Faverie: Yeah, I think, Steve, just one thing to add to what Akhil Shrivastava was saying. I think you are seeing, even in the algorithm for the year, when we say that we have a modest growth for travel retail, mid-single-digit growth in China, for the rest of the business, we are in low single digits. We are seeing gradual improvement from our net sales throughout the year because of what Akhil Shrivastava said. We are aligning retail and net throughout the year, quarter over quarter. Still a bit of a gap in Q1, as Akhil Shrivastava mentioned. Frankly, you are going to see that, and the exit of 2026, we will be in a much better position, frankly, in all the geography. Again, the big work was done in fiscal 2025 on reducing dramatically the inventory in travel retail, and we exited fiscal 2025 in the right place.

And we've seen it in.

Fiscal 'twenty, five or the gradually improving sequentially quarter over quarter and even the beginning of fiscal 'twenty six what we see in the months of July is strong and we're strong in our prepared remark. We said that we have been gaining market share for the first the last six months of the last fiscal year and Thats. The first time in many many years.

Speaker #4: For the rest of the business, we are in low single digits. But we are seeing gradual improvement from our net sales throughout the year because of what Akhil said.

Speaker #4: We are aligning retail and net throughout the year, quarter over quarter. So, there's still a bit of a gap in Q1, as Akhil mentioned. But frankly, you're going to see that.

I've said it last quarter said it again this is a massive transformation to what youre pointing Lord Lord is coming from obviously.

The first piece.

Speaker #4: And the exit of '26, we will be in a much better position, frankly, in all the geography. But again, the big work was done in Q4 2025 on reducing dramatically the inventory in travel retail.

So beautiful imagine which is to increase the consumer coverage, we've made and we've made it very.

Intentionally and strategically today, we have 11 brown on.

Amazon and the interesting thing with Amazon, Obviously, we are very pleased.

Speaker #4: And we existed in Q4 2025 in the right place. So, now it's fine-tuning to make sure that the total net sales and the retails are aligned going forward.

Stéphane de La Faverie: Now it is fine-tuning to make sure that the total net sales and the retails are aligned going forward.

With our progress with Amazon and Clinique was like in the first bank to launch EBITDA in origin, where the last one to launch and we're seeing even as we are lapsing. The anniversary of clinic launch Clinique continues to be very very strong, which tells us that we've been able to just attract new consumers, but also reengage.

Speaker #1: The next question is from Lauren Lieberman with Barclays. Please go ahead.

Rainey Mancini: The next question is from Lauren Lieberman with Barclays. Please go ahead.

Speaker #3: Morning, Lauren.

Speaker 6: Morning, Lauren.

Speaker #1: Ms. Lieberman, perhaps your line is muted on your end. It's open on ours.

Rainey Mancini: Ms. Lieberman, perhaps your line is muted on your end. It is open on ours.

We've lapsed consumers over the past 12 months.

Speaker #6: Sorry, good catch. Okay, I'm here. So, good morning again. Good morning, Stephane. Just wanted to hone in a bit on North America and, Stephane, your and Akhil's comment that markets with significant department store exposure remain more challenged.

Lauren Lieberman: Good catch. Okay, I am here. Good morning again. Good morning, Stéphane. I just wanted to hone in a bit on North America and Stéphane, your or Akhil Shrivastava's comment that markets with significant department store exposure would remain more challenged. You have made great progress to North America, presence on Amazon, et cetera, some market share gains in various periods. How are you thinking about the balance of channels in North America and frankly, how long it takes for the regions to get to consistent sales growth, given still that weight of department stores? I guess to go more pointedly, would you consider more dramatic action the way that you have taken in travel retail to effectively, at this point, proactively reduce exposure to the channel? Thanks.

I must not only.

He is adding new consumers for us, but it is also acting a little bit as Amiga fallen to our total business because I muscle and is not only the commerce platform, but it is also the majority of the future search that is happening in the market. So we have been seeing a lot of positive momentum in retailers like Ulta, where we have very very strong.

Speaker #6: And so, you've made great progress in North America, with a presence on Amazon, et cetera. So, you know, market share gains in various periods. But how are you thinking about the balance of channels in North America?

Obviously, our online business our own online business online desktop is also like in Australia, we have a lot of work that still needs to be done on the more traditional.

Speaker #6: And frankly, how long does it take for the region to achieve consistent sales growth, given the continued weight of department stores? And I guess to go more pointedly, would you consider more dramatic action?

Channels like the department stores, and obviously as a percentage of our total business to continue to reduce and we're very keen working very closely we've always toys to historical partners to make sure that we focus on the top stores to make sure that we are also recruiting the right consumers theres still a lot of traffic and a lot of demand in the stores.

Speaker #6: The way that you've taken in travel retail to effectively, at this point, proactively reduce exposure to the channel? Thanks.

Speaker #4: No, thank you, Lauren. I'll start. I'm sure Akhil will just add free flavor to it. Now, when you look at North America, let me take a little bit of a step back.

Stéphane de La Faverie: No, thank you, Lauren. I will start, and I am sure Akhil will just let you know. I will prefer it to you. When you look at North America, let me take a little bit of a step back because the market is very strong. We have seen it in fiscal 25, really gradually improving sequentially quarter over quarter. Even the beginning of fiscal 26, what we see in the months of July is strong, and we are strong. In our prepared remark, we said that we have been gaining market share for the first, the last six months of the last fiscal year. That is the first time in many, many years. I have said it last quarter, said it again. This is a massive transformation.

So we're seeing a good momentum I'd have to say the early results that we're getting in July I extremely encouraging where July again, we are in market share gain and will not only market share gain on brands like <unk>.

Speaker #4: Because the market is very strong. We've seen it in Q4 2025, really gradually improving sequentially quarter over quarter. Even at the beginning of Q4 2026, what we see in the month of July is strong.

Ordinary but we are also across Lauder, clinique, and <unk>, which gives us a lot of confidence that we're on the right track to make the changes and you will see the mix of new retailers like Amazon are specialty mill to increasing in the total going forward. That's the tons that we have.

Speaker #4: And we're strong. In our prepared remarks, we said that we've been gaining market share for the first six months of the last fiscal year.

Speaker #4: And that's the first time in many, many years. I've said it last quarter, said it again. This is a massive transformation. To what you're pointing, Lauren, a lot is coming from obviously the first pillars of beauty reimagining, which is to increase the consumer coverage.

Stéphane de La Faverie: To what you are pointing, Lauren, a lot is coming from, obviously, the first pillars of Beauty Reimagined, which is to increase the consumer coverage we have made, and we made it very intentionally and strategically. Today, we have 11 brands on Amazon. The interesting thing with Amazon, obviously, we are very pleased with our progress with Amazon, and Clinique was the first brand to launch. Aveda and Origins, we are the last one to launch. We are seeing even as we are lapsing the anniversary of Clinique's launch, Clinique continues to be very, very strong, which tells us that we have been able to just attract new consumers, but also re-engage with last consumers, over the past 12 months.

I would add a few things towards Dupont Hello, Lauren So I think overall, we're very pleased with where the channel mix is evolving in North America as Stefan said, we really now have a much more balanced.

Speaker #4: We've made and we made it very intentionally and strategically. Today we have 11 brands on Amazon. And the interesting thing with Amazon, obviously we are very pleased with our progress with Amazon and Clinic was like, you know, the first brand to launch.

<unk>.

E channels bring him in department stores are probably less than one third of our business.

Probably the other one third less than one third of our business, we haven't built Amazon business, which is significantly.

Speaker #4: Aveda and Origins were the last ones to launch, and we're seeing that even as we approach the anniversary of the Clinic launch, Clinic continues to be very, very strong.

A larger part of our mix of business, we have a large DTC business between brand dot com, but in freestanding stores. So we now have a much more diversified business than probably.

Speaker #4: Which tells us that we've been able to attract new consumers and also re-engage with past consumers over the past 12 months. Amazon not only is adding new consumers for us, but is also acting a little bit as a megaphone for our total business.

People realized and what we intend to do is to really serve the consumers in the line E channel as part of a very consumer centric approach is a different consumer that we are serving them. According to that and over time. We will continue to debate, we do have opportunity to grow further in specialty multi and we are looking at every opportunity to go after.

Stéphane de La Faverie: Amazon not only is adding new consumers for us, but is also acting a little bit as a megaphone to our total business because Amazon is not only a commerce platform, but is also the majority of the beauty search that is happening in the market. So we have been seeing a lot of positive momentum in retailers like Ulta, where we are very, very strong. Obviously, our online business, our own online business, online.com, is also strong. We have a lot of work that still needs to be done on the more traditional channels like the department stores. Obviously, as a percentage of our total business, they continue to reduce.

Speaker #4: Because Amazon is not only a commerce platform, but is also the majority of the beauty search that is happening in the market, we have been seeing a lot of positive momentum in retailers like Ulta, where we are very, very strong.

John said wherever the consumer is we are going there of course in a value creating way.

The next question is from Ashley Wallace with Bank of America. Please go ahead.

Speaker #4: Obviously, our online business, our own online business, online.com, is also strong. We have a lot of work that still needs to be done on the more traditional channels, like the department stores.

Good morning.

One of the data points that you gave in Q3 with organic revenue guidance ex capital V power, which was minus three at that time.

Speaker #4: And obviously as a percentage of our total business, they continue to reduce. And we are working working very closely with our historical partners to make sure that we focus on the top stores to make sure that we also recruiting the right consumers.

To assure we have smart T X probably talk any cracks.

Stéphane de La Faverie: We are working very closely with our historical partners to make sure that we focus on the top stores to make sure that we are also recruiting the right consumers. There is still a lot of traffic and a lot of demand in these stores. So we are seeing a good momentum. I have to say, the early result that we are getting in July is extremely encouraging. We are July, again, we are in market share gain. We are not only market share gain on brands like The Ordinary, but we are also across Estée Lauder, Clinique, and M·A·C, which gives us a lot of confidence that we are on the right track to make the changes. You will see the mix of new retailers like Amazon or specialty multi increasing in the total going forward. That is the intent that we have.

Hi.

And lastly recognize the market is not linear.

Reporting from clinical PDP stunt show.

<unk> in the U S and China in Q4 versus Q3.

Speaker #4: There's still a lot of traffic and a lot of demand in these stores. So, we're seeing good momentum. And I have to say the early results that we are getting in July are extremely encouraging.

And maybe if you can see an improvement in your okay. Great. Thanks have a lead how what do you attribute this to is this just the gap between your filing and come out with something else.

Speaker #4: In July again, we are in market share gain. And we are not only gaining market share on brands like Origin and The Ordinary, but we are also across Clinique and MAC, which gives us a lot of confidence that we are on the right track to make the changes.

And that's happening that continuing leasing and the other players and Shanghai, China and Turkey.

And then I guess when you think about the tiny Fuchs Guy can you help us understand when we should be expecting ex complement telephonic mackie and poverty.

Speaker #4: And you will see the mix of new retailers like Amazon or specialty multi increasing in the total going forward. And that's the intent that we have.

I guess the reason I ask it does seem that this is the part of your business that you can influence more heavily through product innovation and distribution.

Speaker 7: Yeah. I would add a few things to what Stéphane de La Faverie said. Hello, Lauren Lieberman. I think overall, we are very pleased with where the channel mix is evolving in North America. Stéphane de La Faverie said we now have a much more balanced view of what each channel is bringing. Department stores are less than one-third of our business. We have built Amazon business, which is significantly a larger part of our mix of business. We have a large DTC business between brand.com, between freestanding stores. We now have a much more diversified business than most people realize. What we intend to do is to really serve the consumers and underline each channel as part of a very consumer-centric approach. There is a different consumer there. We are serving them according to that. Over time, we will continue to build.

Speaker #3: I would add a few things to what Stephane said. Hello, Lauren. Overall, we are very pleased with where the channel mix is evolving in North America.

Retail component.

Let them get more out of your control and impacted by market dynamics.

Yes.

Speaker #3: Stephane said we now have a much more balanced view of what each channel brings. I mean, department stores are probably less than one third of our business—not probably; they are one third—less than one third of our business.

So.

We our overall business excluding travel retail was in the similar range of single digit low single digit decline. Our goal is to clearly improve that business as we said in the guidance.

Speaker #3: We have built our Amazon business, which is significantly a larger part of our mix of business. We have a large DTC business between brand.com and freestanding stores.

We look to see to get to positive growth.

In fiscal 'twenty, six overall in that and low single digit that sort and that's our guidance.

Speaker #3: So, we now have a much more diversified business than probably most people realize. And what we intend to do is to really serve the consumers and underline each channel as part of a very consumer-centric approach.

And the part of the reason is what we explained right net sales in North America. In spite of the positive retail was negative which we are working to close that gap.

Speaker #3: There's a different consumer there. We are serving them according to that, and over time, we will continue to build. We do have the opportunity to grow further in specialty multi, and we are looking at every opportunity to go.

Earlier question from Steve as well at the same time, what we've seen versus the first half of 'twenty five to back half of 'twenty five we did see slowdown in Europe, which is part of that business and of course, we are working to accelerate that as part of the really the beauty re imagined.

Speaker 7: We do have opportunity to grow further in specialty multi, and we are looking at every opportunity to go. As Stéphane de La Faverie said, wherever the consumer is, we are going there, of course, in a value-creating way.

Speaker #3: As Stéphane said, wherever the consumer is, we are going there. Of course, in a value-creating way.

Pillar and emerging markets they were more diversified businesses.

Speaker #1: The next question is from Ashley Wallace with Bank of America. Please go ahead.

Rainey Mancini: The next question is from Ashley Wallace with Bank of America. Please go ahead.

In rest of the world, including the strength, you've seen in Japan et cetera, We believe that we can get to stronger growth outside of travel retail and the good news is that the China business is starting to pick up.

Speaker #6: Good morning. So, one of the data points that you gave at Q3 was organic revenue growth ex-travel retail, which was minus 3 at the time.

Lauren Lieberman: Good morning. So one of the data points that you gave at Q3 was organic revenue growth ex-travel retail, which was minus 3% at the time. Are you able to share with us what Q4 ex-travel retail organic revenue growth was? While I recognize the markets are not linear, I think reporting from global beauty peers does show a more supportive beauty backdrop in the US and China in Q4 versus Q3. So maybe if you can see an improvement in your organic revenue growth ex-travel retail, what do you attribute this to? Is this just a gap between your sell-in and sell-out or something else that is happening there, considering we have seen the other players show improving trends there? Then I guess when you think about the 2026 guide, can you help us understand when we should be expecting ex-travel retail organic revenue growth to turn positive?

Speaker #6: Are you able to share with us what Q4 ex-travel retail organic revenue growth was? Last I recognized, the markets, not many are reporting from global beauty peers, do show a more supportive beauty backdrop in the U.S. and China in Q4 versus Q3.

Back half of fiscal 'twenty, five we had mid single digit growth.

In our retail and growing share. So like you said clearly travel retail we are adjusting to retail we are focusing on building retail there and shipping accordingly, but in other parts of the business, namely China.

Speaker #6: So, maybe if you didn't see any improvement in your organic revenue growth ex-travel retail, what do you attribute this to? Is this just a gap between your sell-in and sell-out, or something else that's happening there, considering we've seen the other players show improving trends?

Retail in the U S opportunities in emerging markets. We believe that we can gradually as Stefan said this will take some time, but we are in the right direction in terms of driving this yes, yes, no as I said just to add to what Ikea side I just wanted to go back to what we've guided for the year, we have a modest growth for travel retail.

Speaker #6: And then I guess when you think about the '26 guide, can you help us understand when we should be expecting ex-travel retail organic revenue growth to turn positive?

Speaker #6: And I guess the reason I ask this is that it does seem that this is the part of your business that you can influence more heavily through product innovation and distribution push.

Lauren Lieberman: I guess the reason I ask this is it does seem that this is the part of your business that you can influence more heavily through product innovation and distribution push, where the travel retail component feels still a little bit more out of your control and impacted by market dynamics. Thank you.

And we still have waste win fields like we did with the reduction of inventory last year. It is true that we are starting from a lower base, but we have a new team in place in travel retail and we're really focused on accelerating retail.

Speaker #6: Where the travel retail component feels still a little bit more out of your control and impacted by market dynamics. Thank you.

We'd be happy to just like you know show us many of the activities that we're doing in travel retail across Asia, The Americas, and Europe, where we are expanding distribution in the Americas and in Europe. So there's still a lot of untapped potential for us in many airports around the world and actually just one data point was interesting in the months of May we.

Speaker #4: Yeah. So,

Speaker 7: Our overall business, excluding travel retail, was in the similar range of single-digit, low single-digit decline. Our goal is to clearly improve that business, as we said in the guidance. We look to get to positive growth in fiscal 2026 overall in that, a low single digit. That is our guidance. Part of the reason is what we explained, right? Net sales in North America, in spite of the positive retail, was negative, which we are working to close that gap per the earlier question from Steve as well. At the same time, what we have seen versus the first half of 2025 to back half of 2025, we did see slowdown in Europe, which is part of that business. Of course, we are working to accelerate that as part of the Beauty Reimagined pillar.

Speaker #3: Our overall business, excluding travel retail, was in the similar range of a low single-digit decline. Our goal is to clearly improve that business, as we stated in the guidance.

Speaker #3: We look to see positive growth in Q4 2026 overall, in that, a low single-digit; that's our guidance. And part of the reason is what we explained, right?

Term positive in the high <unk>, thanks to all of the activities that we've put in retail with Este Lauder La Mer Jo Malone and you name it pretty much across the board now the rest of our business is gradually and sequentially getting better with the intent of the ambition that by the end of fiscal 'twenty.

Speaker #3: In net sales in North America, despite the positive retail, it was negative. We are working to close that gap further, as per an earlier question from Steve as well.

Six we will be in positive in the rest of the business. We are foreseeing that China will be positive.

Speaker #3: At the same time, what we have seen versus the first half of '25 to the back half of '25, we did see a slowdown in Europe.

The mid single digit China is stabilizing we are gaining share. The other data point is we have early signal in July that we are also gaining share. After a very strong Q4 led by 618, where we had top ranks and very top performance voice that although la Mer Jo Malone than many other parts. So we are seeing.

Speaker #3: Which is part of that business. And of course, we are working to accelerate that as part of the really the beauty reimagined pillar. And emerging markets, more diversified businesses in the rest of the world, including the strength we have seen in Japan, et cetera.

Speaker 7: Emerging markets, more diversified businesses in the rest of the world, including the strength we have seen in Japan, et cetera, we believe that we can get to stronger growth outside of travel retail. The good news is that the China business is starting to pick up. We had back half of fiscal 2025, we had mid-single-digit growth in our retail and growing share. As you said, clearly travel retail, we are adjusting to retail. We are focusing on building retail there and shipping accordingly. In other parts of the business, namely China, positive retail in the US, opportunities in emerging markets, we believe that we can gradually, as Stéphane de La Faverie said, this will take some time, but we are in the right direction in terms of driving this business.

And gradually improve months.

Speaker #3: We believe that we can achieve stronger growth outside of travel retail. The good news is that the China business is starting to pick up.

On a net sales standpoint from a retail we already there in North America, we are accelerating the MLG markets and we intend to be in double digit growth for the fiscal year in emerging market as I said the challenge that we have to work on us the silver companies, but also.

Speaker #3: We had the back half of Q4 2025; we had mid-single-digit growth in our retail and growing share. So, like you said, clearly travel retail, we are adjusting to retail.

Because of the Chinese market is the big Europe, where we are seeing a decrease.

Speaker #3: We are focusing on building retail there and shipping accordingly. In other parts of the business, namely China, positive retail in the U.S., and opportunities in emerging markets, we believe that we can gradually, as Stephane said, this will take some time, but we are in the right direction in terms of driving this business.

In consumer sentiments and obviously.

A little bit of a softening of the trial, especially in the key markets like France, Germany and to a lesser extent in Italy and Spain.

But so we're very conscious of that and we're working with the team the new team and new camera to make sure that we are deploying more innovation in this market and I think the right consumer coverage with the right <unk> investment to recruit new concerns about 12 months.

Speaker #4: Yeah, yeah, no. And Ashley, just to add to what Akhil said, I just want to go back to what we've guided for the year.

Stéphane de La Faverie: Yeah, yeah, no, and actually, just to add to what Akhil Shrivastava said, I just want to go back to what we have guided for the year. We have a modest growth for travel retail. We still have ways to influence, like we did with the reduction of the inventory last year. It is true that we are starting from a lower base, but we have a new team in place in travel retail, and we are really focused on accelerating retail. We would be happy to just, you know, show you many of the activities that we are doing in travel retail across Asia, the Americas, and Europe, where we are expanding distribution in the Americas and in Europe. So there is still a lot of untapped potential for us in many airports around the world. Actually, just one data point was interesting.

Speaker #4: We have a modest growth in travel retail, and we still have ways to influence it. Like we did with the reduction of the inventory last year; it is true that we are starting from a lower base.

Speaker #4: But we have a new team in place in travel retail, and we are really focused on accelerating retail. We'll be happy to show you many of the activities that we are doing in travel retail across Asia, the Americas, and Europe, where we are expanding distribution in the Americas and in Europe.

The next question is from <unk> Parikh with Oppenheimer. Please go ahead.

Good morning, and thanks for taking my question. So just going back to the operating margin guidance for the full year I was just hoping to get more color on the interplay between gross margins and SG&A and you know as you guys make that.

Progress towards the double digit operating margin target, where do you see more improvement on the gross margin or SG&A line. Thank you.

Speaker #4: So, there's still a lot of untapped potential for us in many airports around the world. And actually, just one data point was interesting: in the month of May, we turned positive in Hainan.

Hello, Andrew Page I'll start Mr vanished.

Stéphane de La Faverie: In the months of May, we turned positive in Hainan, thanks to all the activities that we have put in retail with Estée Lauder, La Mer, Jo Malone London, and you name it, pretty much across the brand. Now, the rest of our business is gradually and sequentially getting better with the intent and the ambition that by the end of fiscal 2026, we will be positive in the rest of the business. We are foreseeing that China will be positive in the mid-single digit. China is stabilizing. We are gaining share. The other data point is we have early signal in July that we are also gaining share after a very strong Q4 led by 618, where we had top ranks and very top performance for Estée Lauder, La Mer, Jo Malone London, and many other brands. So we are seeing gradual improvement from a net sales standpoint.

So overall in the nine 4% to $9 nine guidance that we gave we believed that we would have gross margin flat.

Speaker #4: Thanks to all the activities that we've put in retail, we've Estée Lauder, La Mer, Jo Malone, and you name it, pretty much across the brand.

<unk> two positive in spite of the significant offset that we made so in absence of that we would have expanded gross margin on top of the 230 basis points at the standard and of course as Stefan said in his prepared remarks, we're looking at more opportunities to offset that <unk> <unk>.

Speaker #4: Now, the rest of our business is gradually and sequentially getting better. With the intent and the ambition that by the end of Q4 2026, we will be in the positive in the rest of the business.

Speaker #4: We are forcing that China. We'll be positive. In the mid-single digits, China is stabilizing. We are gaining share. The other data point is we have early signals in July that we are also gaining share.

And pricing.

Pricing opportunities, which we have not yet implemented.

So as we look forward, which is your question robust. We do think there is more opportunity in gross margin over over a longer period of time in 2006, we believe it's more in SG&A. So a large part of our growth and margin in 2000, <unk> would come from SG&A, primarily from non consumer facing so we.

Speaker #4: After a very strong Q4, led by 618, where we are top ranks and very top performance for Estée Lauder, La Mer, Jo Malone, and many other brands.

Speaker #4: So, we are seeing gradual improvement. From a net sales standpoint, from retail, we are already there in North America. We are accelerating in the emerging markets.

Stéphane de La Faverie: From a retail, we are already there in North America. We are accelerating in the emerging markets, and we intend to be in double-digit growth for the fiscal year in emerging markets. As Akhil Shrivastava said, the challenge that we have to work on, us, The Estée Lauder Companies, but also because of the trend in the market, is the big Europe, where we are seeing a decrease in consumer sentiment and obviously a little bit of a softening of the trend, especially in the key markets like France, Germany, and to a lesser extent in Italy and Spain. We are very conscious of that, and we are working with the team, the new team in UKEM, to make sure that we are deploying more innovation in this market and adding the right consumer coverage with the right media investment to recruit new consumers to our brands.

We'll make sure that we have the right fuel to drive our brands and the overall beauty imagine strategy, but on everything else outside which the consumer doesn't see whether its at G&A, whether such shared services, whether it is our employee cost, where we had announced a significant restructuring amounted to two.

Speaker #4: And we intend to be in double-digit growth for the fiscal year in emerging markets. As Akhil said, the challenge that we have to work on.

Speaker #4: Us the Estée Lauder companies but also because of the trend in the market is the big Europe. Where we are seeing a decrease in consumer sentiment and obviously a little bit of a softening of the trend, especially in the key markets like France, Germany, and to a lesser extent in Italy and Spain.

The size of our business, we will be doing that within SG&A adjust their doubleclick is that as Ivan said in his prepared remarks, we are looking at end to end business model change and driving the outsourcing opportunity driving procurement opportunity as well, where we have a full on projects looking at every single op.

Speaker #4: But, we are very conscious of that, and we are working with the new team in UKM to make sure that we are deploying more innovation in these markets and adding the right consumer coverage with the right media investment to recruit new consumers to our brands.

And the company to look at what how we can consolidate how we can drive better efficiency, how we can procure better how we can spend better or less so our growth will come from SG&A and our primary view, but also from gross margin. We believe there is opportunity in both primarily as Janet.

Speaker #1: The next question is from Rupesh Parik with Oppenheimer. Please go ahead.

Rainey Mancini: The next question is from Rupesh Parikh with Oppenheimer. Please go ahead.

Just one quick additional robust of this point, we are laser focused on growth.

Speaker #5: Good morning, and thanks for taking my question. So, just going back to the operating margin guidance for the full year, I was just hoping to get more color on the interplay between gross margins and SG&A.

Speaker 6: Good morning, and thanks for taking my question. Just going back to the operating margin guidance for the full year, I was hoping to get more color on the interplay between gross margins and SG&A. As you guys make progress towards a double-digit operating margin target, where do you see more improvement?

<unk> remember the <unk> is growth so a lot of the savings that are coming from the <unk>, which we already complete.

Speaker #5: And then, you know, as you guys make that progress towards a double-digit operating margin target, where do you see more improvement on the gross margin or SG&A line?

Completion of the first John listed up one year to go and as I said in my prepared remark with very pleased with the progress that we've made we're reinvesting a large part of this cost savings into consumer facing and I say that I said it in multiple calls before we could have taken a very different position to just like you know dropped many malls.

Speaker 1: on the gross margin or SG&A line. Thank you.

Speaker #5: Thank you.

Speaker #3: Hello, Rupesh. I'll start, Mr. Ramesh, with that. So, overall in the guidance of $9.4 to $9.9 that we gave, we believe that we would have gross margin flat to positive.

Rainey Mancini: Hello, Rupesh. I will start, Mr. Banish, with that. So, overall, in the 9.4% to 9.9% guidance that we gave, we believe that we would have gross margin flat to positive in spite of the significant tariff offset that we made. In absence of that, we would have expanded gross margin on top of the 230 basis points that we expanded. Of course, as Stéphane de La Faverie said in his prepared remarks, we are looking at more opportunities to offset that through various PRGP and pricing opportunities, which we have not yet implemented. As we look forward, which is your question, Rupesh, we do think there is more opportunity in gross margin over a longer period of time. In 2026, we believe it is more in SG&A. A large part of our growth in margin in 2026 would come from SG&A, primarily from non-consumer facing.

Speaker #3: In spite of the significant tariff offset that we made. So, in the absence of that, we would have expanded gross margin on top of the 230 basis points that we expanded.

Savings to just improve quickly of faster or the operating margin, but we strongly believe that with the strikes of our bonds with innovations that are coming under new major mobile that we're putting in place we need to fuel the growth going forward in the <unk> acquisition that we just needed to go back to historical outgoing growth algorithm and.

Speaker #3: And of course, as Stephane said in his prepared remarks, we are looking at more opportunities to offset that through various PRGP and pricing opportunities, which we have not yet implemented.

Speaker #3: So, as we look forward, our question, Rupesh, we do think there is more opportunity in gross margin over a longer period of time.

<unk> market share when we get there with the new operating model that we're putting in place with lower SG&A, a better gross margin that what we have had over the last few years, we know that there will be a lot of leverage going forward, but we need to be laser focused on activating retail and obviously as we make.

Rainey Mancini: We will make sure that we have the right fuel to drive our brands and the overall Beauty Reimagined strategy. On everything else outside, which the consumer does not see, whether it is G&A, whether it is our shared services, whether it is our employee cost, where we had announced the significant restructuring amount to right-size our business, we will be doing that. Within SG&A, just a double-click is that, as Stéphane de La Faverie said in his prepared remarks, we are looking at end-to-end business model change and driving the outsourcing opportunity, driving procurement opportunity as well, where we have a full-on project looking at every single OpEx in The Estée Lauder Companies to look at how we can consolidate, how we can drive better efficiency, how we can procure better, how we can spend better or less.

Over a question that we tightened the retail to net and this is just going to create a lot of leverage going forward.

The next question is from Chris Carey with Wells Fargo Securities. Please go ahead.

Okay, everybody. Thank you.

Alright, Thank you for the question.

No I just.

A two parter, but just regarding the quarter to date <unk>.

Developments, specifically in Asia that you highlighted in the press release I'd love to just get a bit more context on what you're seeing from the category and your own performance and then regarding Europe.

You did mention that you've just seen a bit of slowing in the category I know theres, some new leadership in the market as well looking to drive accelerated penetration.

Rainey Mancini: Our growth will come from SG&A in a primary way, but also from gross margin. We believe there is opportunity in both, primarily SG&A.

What's your outlook for Europe, specifically as we think about the next 12 months both the category.

Akhil Shrivastava: Yeah, just one quick addition, Rupesh, on this point. We are laser-focused on growth. You know, the PRGP, if you remember, the G is growth. A lot of the savings that are coming from the PRGP, which we are already in completion of the first year, and we still have one year to go. As I said in my prepared remark, we are very pleased with the progress that we have made. We are reinvesting a large part of this cost saving into consumer facing. I said it, and I said it in multiple calls before. We could have taken a very different position to just, you know, drop many more of these savings to just improve quickly or faster the operating margin.

Your own performance.

What are appropriate.

Benchmark for success and sequential progress in the market. Thanks, So much thank you Chris.

So let me just just the Copa when we talk about decades between the trend that we're seeing in China and in the rest of the Asia regional because obviously, we are as we mentioned.

We're seeing some very encouraging sign of stabilization in China and Thats. The most important thing.

<unk> is getting a little bit better it's still lower than what it was like in a few years ago.

Akhil Shrivastava: We strongly believe that with the strengths of our brands, with the innovations that are coming, and the new media model that we are putting in place, we need to fuel the growth going forward and the consumer acquisition that we just need to go back to historical algorithm, growth algorithm, and deep market share. When we get there with the new operating model that we are putting in place with lower SG&A, a better gross margin than what we have had over the last few years, we know that there will be a lot of leverage going forward. We need to be laser-focused on activating retail. Obviously, as we make in the other question, that we tighten the retail to net. This is just going to create a lot of leverage going forward.

In our case, we have a very very strong performance.

We have growth in all categories and all channels in Q4, and those are exceptional and it's been a long time for us getting to this position. We have 10 brands grew in the retail, including our big bundle in a much more diversified way, obviously lauder and La Mer continues to just like do some.

Very strong.

Shlomi activities, but we have seen.

Tremendous retail acceleration on Jo Malone, Tom Ford, including some fault makeup and so on and so forth. We are also very successful launch of the ordinary in China with Sephora that we're expanding as we speak on Tmall. So we're seeing a lot of good momentum in China.

Speaker 1: The next question is from Chris Carey with Wells Fargo Securities. Please go ahead.

Obviously, we all are there's still some work to do the market is soft, but more importantly for us we're getting market share in the rest of Asia as to say we are seeing some slowdown.

Stéphane de La Faverie: Hi, everybody. Thank you. Hi, thank you for the question. So, I just, a two-parter, but regarding the quarter-to-date developments specifically in Asia that you highlighted in the press release, I would love to just get a bit more context on what you are seeing from the category and your own performance. Regarding Europe, you did mention that you have just seen a bit of slowing in the category. I know there is some new leadership in the market as well, looking to drive accelerated penetration. What is your outlook for Europe specifically as we think about the next 12 months, both the category and your own performance, and what are appropriate benchmarks for success and sequential progress in the market? Thanks so much.

Japan continues to be strong for us we are gaining market share, but we've seen a sequential reduction of the performance linked to <unk>.

FX and over reason, which is obviously less tourists when obviously the effect has been swinging in the different direction.

<unk> has been soft and we are working with the team to we have a new general manager are in place in the market and working with the team.

To really accelerate the market. So I would say different views on China stabilization. The rest of the pack some work to do in southeast Asia to say continues to be relatively strong and part of our new emerging market structure and like I said, we have for the moment, 10% of all cells that is coming from.

<unk> market, but we are seeing a lot more potential acceleration and double digit in this year and in the years to come.

Akhil Shrivastava: Thank you, Chris. Let me just decouple when we talk about Asia between the trend that we are seeing in China and in the rest of the Asia region. Because, obviously, we have, and as we mentioned, we are seeing some very encouraging signs of stabilization in China. That is the most important thing. Consumer sentiment is getting a little bit better. It is still lower than what it was a few years ago. But in our case, we have a very, very strong performance. We have growth in all categories and all channels in Q4. That was exceptional. It has been a long time for us getting to this position. We had 10 brands who grew in retail, including our big brand, but in a much more diversified way. Obviously, Estée Lauder and La Mer continue to do some very strong activities.

When it comes to drops yes, Europe is actually a bit more concerning from consumers from standpoints.

Days.

And they were all done of receipt of the performance with a sequential slowing in prestige beauty across mainly of the main market. France is the one that has the most challenging.

We're seeing some very encouraging signs of stabilization in China and Thats. The most important thing.

Consumer sentiment is getting a little bit better it's still lower than what it was like in a few years ago.

Totaled by Germany.

But in our case, we have a very very strong performance.

Some actually still positive in Spain, and Italy, but we're seeing generally speaking.

We have growth.

Slow down.

In all categories and all channels in Q4, those are exceptional and it's been a long time for us getting to this position. We have 10 brands grew in retail, including a big bundle in a much more diversified way, obviously lauder and La Mer continues to just like you know do some very strong.

On the overall performance.

But with the team we are expanding consumer coverage, we have a lot of activities, especially in France. As you know that Europe has been for now multiple months driven a lot by the activities on prices in the market and we've demonstrated actually that both with like brands like Jo Malone with Tom.

Akhil Shrivastava: But we have seen tremendous retail acceleration on Jo Malone London, on Tom Ford, including Tom Ford make-up products, and so on and so forth. We have also a very successful launch of The Ordinary in China with Sephora that we are expanding as we speak on T-Mall. So, we are seeing a lot of good momentum in China. Obviously, there is still some work to do. The market is soft, but more importantly for us, we are getting market share. In the rest of Asia, I have to say we are seeing some slowdown. Japan continues to be strong for us. We are gaining market share, but we have seen a sequential reduction of the performance linked to effects and overreason, which is obviously less tourists when obviously the effect has been swinging in the different direction. Korea has been soft, and we are working with the team.

Actually this is but we've seen tremendous retail acceleration on Jo Malone, Tom Ford, including some fault makeup and so on and so forth. We are also very successful launch of the ordinary in China with the fall that we are expanding as we speak on Tmall. So we're seeing a lot of good momentum in China obviously.

Paul we've level, we are basically going from strength to strength and we are continuing to expand strategically all of our brands. So we can capture our fair share of the golf studies in the markets. We are also strategically investing more into this market to make sure that we ignite growth in consumer and bring more consumers I'd have to say.

We are still.

There's still some work to do the market is soft, but more importantly for us we're getting market share in the rest of Asia as to say we are seeing some slowdown.

All the work that we're doing on innovation is benefiting this market. The fact that we are accelerating our innovation that we're bringing to market in less than 12 months and now we are back to more than 25% of our innovation.

Japan continues to be strong for us we are gaining market share, but we've seen a sequential reduction of the performance linked to <unk>.

Coming to market is going to help a lot because we're seeing a lot more consumers looking for new innovation also in Europe. So I would say generally speaking stabilization of China strong in North America, and some weaknesses in the rest of APAC and Europe, but again through.

And overall reason, which is obviously less tourists when obviously the effect has been swinging in the different direction.

<unk> has been soft and we are working with the team to we have a new general manager in place in the market and working with the team.

Akhil Shrivastava: We have a new General Manager in place in the market and working with the team to really accelerate the market. So, I would say different views on China’s stabilization, the rest of the pack, some work to do. Southeast Asia, I have to say, continues to be relatively strong and part of our new emerging market structure. As I said, we have for the moment 10% of our sales that is coming from emerging markets, but we are seeing a lot more potential with an acceleration in double digits in this year and in the years to come. When it comes to Europe, yes, Europe is actually a bit more concerning from a consumer trend standpoint. There is an erosion, obviously, of the performance with a sequential slowing in prestige beauty across mainly the main markets. France is the one that is the most challenging, followed by Germany.

To really accelerate the market. So I would say different views on China stabilization. The rest of the pack some work to do in southeast Asia to say continues to be relatively strong and part of our <unk> market structure and like I said, we have Furthermore months, 10% of all cells that is coming from Enel.

Beauty re imaging, we are laser focused on expanding distribution, adding new innovation and investing in bringing new consumers to the market. So all of that gives us the confidence that by the end of fiscal 'twenty. Six we will have all four new geographical region in a positive territory.

<unk> market, but we are seeing a lot more potential acceleration and double digit in this year and in the years to come.

The next question is from Peter Grom with UBS. Please go ahead.

When it comes to Europe, Yes, Europe is actually a bit more concerning from consumers from standpoints.

Thanks.

Operator, good morning, everyone. So thank you for all the details on fiscal 'twenty.

But just listening to you both and reading through the release Theres, just a lot going on a lot of moving pieces.

Days.

And then we're also you'll see of the performance with a sequential slowing in prestige beauty across mainly of the main market. France is the one that has the most challenging.

We just think about the fiscal 2006 guidance can you just talk about the level of visibility or confidence you have in the outlook at this point in time and I guess, specifically have you embedded some cushion if some of these assumptions were going to move against you.

Akhil Shrivastava: Some are actually still positive in Spain and Italy, but we are seeing, generally speaking, a slowdown on the overall performance. With the team, we are expanding consumer coverage. We have a lot of activities, especially in France. You know that Europe has been, for now, multiple months driven a lot by the activities on France in the market. We have demonstrated that both with brands like Jo Malone London, with Tom Ford, with Le Labo, we are basically going from strength to strength, and we are continuing to expand strategically our brands so we can capture our fair share of the growth that is in the markets. We are also strategically investing more into this market to make sure that we ignite growth and bring more consumers. I have to say, all the work that we are doing on innovation is benefiting this market.

Total by Germany.

Some are actually still positive in Spain, and Italy, but we're seeing generally speaking.

Slow down.

Hello, Peter.

On the overall performance.

So overall.

But with the team we are expanding consumer coverage, we have a lot of activities, especially in France. As you know that Europe has been for now multiple months driven a lot by the activities on prices in the market and we've demonstrated actually that both with like brands like Jo Malone with Tom.

I would say that look when we give this outlook we of course take the best view possible.

<unk>.

Our risk assessment on that.

What we are seeing which is positive it is meaningful for US is definitely China. China has had market has grown and we have grown retail mid single digit.

We have low level, we are basically going from strength to strength and we are continuing to expand strategically all of our products. So we can capture our fair share of the growth that is in the markets. We are also strategically investing more into this market to make sure that we ignite growth in consumer and bring more consumers and I have to say.

The largest beauty markets on the planet that was not the case in the first half of the year. So the two back to back quarters.

Single mid single digit growth for us growing share that definitely gives us some confidence barring any geopolitical things that is not in our control.

What is controllable is working we are definitely winning in that market again, so thats. Good secondly on travel retail with the work we have done on the inventory and the difficult choices. We made in 2005 gives us a base from where we can grow.

All the work that we're doing on the innovation is benefiting this market. The fact that we are accelerating our innovation that we're bringing to market in less than 12 months and now we are back to more than 25% of our innovation.

Akhil Shrivastava: The fact that we are accelerating our innovation, that we are bringing to market in less than 12 months, and now we are back to more than 25% of our innovation coming to market is going to help a lot because we are seeing a lot more consumers looking for new innovation also in Europe. I would say, generally speaking, stabilization of China, strong in North America, and some weaknesses in the rest of APAC and Europe. Again, through Beauty Reimagined, we are laser-focused on expanding distribution, adding new innovation, and investing in bringing new consumers to the market. All of that gives us the confidence that by the end of fiscal 2026, we will have all four new geographical regions in a positive territory.

Coming to market is going to help a lot because we're seeing a lot more consumers looking for new innovation also in Europe. So I would say generally speaking stabilization of China strong in North America, and some weaknesses in the rest of APAC and Europe, but again through.

And retail is still challenged in travel retail, but our shipment base.

Was was did the hard work and 25% to make those choices so on travel retail and on China barring any <unk>.

<unk> is factors we have good visibility now.

Thirdly in North America, we are starting to build retail positive and we grew share in the back half right. So so that gives us confidence that in North America, we are getting more competitive again, but all of the channel changes et cetera, you have done. So these are the three largest businesses.

Beauty re imaging, we are laser focused on expanding distribution, adding new innovation and investing in bringing new consumers to the market. So all of that gives us the confidence that by the end of fiscal 'twenty. Six we will have all four new geographical region in a positive territory.

Other than that we have a strong presence in emerging markets around the world and we are working to accelerate and Thats one of the things Dupont.

Speaker 1: The next question is from Peter Graham with UBS. Please go ahead.

The next question is from Peter Grom with UBS. Please go ahead.

Made it clear very early on that that would be a priority so that as a growth opportunity for us where we are working to do of course emerging markets convert debt on volatility, but they are still a growth opportunity and we are well positioned there. So when you look at our largest businesses from a sales standpoint as I covered we.

Stéphane de La Faverie: Thanks, operator. Good morning, everyone. Thank you for all the details on fiscal 2026. Just listening to you both and reading through the release, there is a lot going on, a lot of moving pieces. When we think about the fiscal 2026 guidance, can you talk about the level of visibility or confidence you have in the outlook at this point in time? I guess specifically, have you embedded some cushion if some of these assumptions were to move against you?

Thanks, operator.

Operator, good morning, everyone. So thank you for all the details on fiscal 2000.

But just listening to you both and reading through the release Theres, just a lot going on a lot of moving pieces.

We just think about the fiscal 'twenty six guidance can you just talk about the level of visibility or confidence you have in the outlook at this point in time and I guess, specifically have you embedded some cushion if some of these assumptions were going to move against you.

We have good data points to support our outlook in a meaningful way when I look that from a profit standpoint, we did the hard work. They have done the hard work on <unk> to know what our cost structure would be.

Rainey Mancini: Thanks. Hello, Peter. Overall, I would say that, look, when we give this outlook, we, of course, take the best view possible and take the, of course, a risk assessment on that. What we are seeing, which is positive, which is meaningful for us, is definitely China. China has had, the market has grown, and we have grown retail mid-single digit. That is one of the largest beauty markets on the planet. That was not the case in the first half of the year. With two back-to-back quarters of mid-single digit growth for us, growing share, that definitely gives us some confidence, barring any geopolitical things that are not in our control. What is controllable is working. We are definitely winning in that market again. That is good.

What our Cogs will be what would be what mitigation. We can do so when we look at the cost of off line by line we are.

Hello, Peter.

Overall.

I would say that look when we give this outlook we of course take the best view possible and pegged our of course, our risk assessment on that.

Of course have done the work to give you the margin outlook you have given so both on top line margin growth margin and cash we believe be the outlook. We're giving you is the best based on the information we have today of course prudency.

What we are seeing which is positive which is meaningful for us is definitely China. China has had market has grown and we have grown retail mid single digit now it's one of the largest beauty markets on the planet that was not the case in the first half of the year. So the two back to back.

You would always expect from us.

And I would say Peter just one quick thing obviously, we've said it a new you see yourself there is enormous amount of volatility out there in any geographies around the world. So we have branches to gives us rooms is likely to deliver like I said the outlook.

Corridors.

Mid single digit growth for us growing share that definitely gives us some confidence barring any geopolitical things that is not in our control. What is controllable is working we are definitely winning in that market again. So thats. Good secondly on travel retail with the work we have done on the inventory and the.

And I think you should see that from this team.

Rainey Mancini: Secondly, on travel retail, with the work we have done on the inventory and the difficult choices we made in 2025, gives us a base from where we can grow. Retail is still challenging travel retail, but our shipment base did the hard work in 2025 to make those choices. On travel retail and on China, barring any exogenous factors, we have good visibility now. Thirdly, in North America, we are starting to build retail positive, and we grew share in the backhouse, right? That gives us confidence that in North America, we are getting more competitive again with all of the channel changes, et cetera, that we have done. These are the three largest businesses.

We've over delivered <unk> two our expectation we will continue we have 11 months to go into this fiscal year and there's not a day in the week that we are not looking for new opportunities to cut costs, where we need to do it to refuel is likely our bra.

The choices, we've made in 'twenty five.

It gives us a base from bad we can grow.

And retail is still challenged in travel retail, but our shipment base as was was did the hard work and 25% to make those choices. So on travel retail and on China barring any exogenous factors, we have good visibility now.

<unk> everywhere around the world to activate retail. So we have runs is obviously you would expect from any good manager business to our branches not only to deliver the outlook, but also for us to continue to do meaningful work you saw the work that we're doing in gross margin.

Thirdly in North America, we are starting to build retail positive and we grew share in the back half. So so that gives us confidence that in North America, we are getting more competitive again, but all of the channel changes et cetera, you have done. So these are the three largest businesses.

Throughout fiscal 'twenty five with the enormous amount of volume deleverage, we've been able to just improve gross margin by 240 basis point and even beat the guide that we gave for Q4 in <unk>.

Rainey Mancini: Other than that, we have a strong presence in emerging markets around the world, and we are working to accelerate. That is one of the things Stéphane de La Faverie has made it clear very early on that that would be a priority. That is a growth opportunity for us where we are working to do. Of course, emerging markets come with their own volatility, but they are still a growth opportunity, and we are well positioned there. When you look at our largest businesses from a sales standpoint, as I covered, we have good data points to support our outlook in a meaningful way.

Other than that we have a strong presence in emerging markets around the world and we are working to accelerate that's one of the things Dupont.

In.

Fiscal 'twenty five so expect us to continue to act with the same determination to cut costs, where we need to cut costs to invest to exit our rights with Dell and to deliver on our guidance for the year.

A clear very early on that that would be a priority.

So that is a growth opportunity for us where we are working to do of course emerging markets convert debt on volatility, but they are still a growth opportunity and we are well positioned there. So when you look at our largest businesses from a sales standpoint as I covered we.

The next question is from Andrea <unk> with J P. Morgan. Please go ahead.

We have good data points to support our outlook in a meaningful way when I look that from a profit standpoint, we did the hard work we have done the hard work on <unk> to know what our cost structure would be.

Rainey Mancini: When I look at from a profit standpoint, we did the hard work on, we have done the hard work on Profit Recovery and Growth Plan to know what our cost structure would be, what our COGS will be, what tariff would be, what mitigation we can do. When we look at the cost work line by line, we, of course, have done the work to give you the margin outlook we have given. Both from top line margin, gross margin, and cash, we believe the outlook we are giving you is the best based on the information we have today, of course, with prudency, which you would always expect from us.

Thank you cliff, how much <unk> savings and Stefan you.

On yields.

As a side year over.

What our Cogs will be what <unk> would be what mitigation. We can do so when we look at the cost.

The whole team has over deliver on this plan, but how much are you including guidance for gross margin expansion that you gave out at the midpoint and out of the whole program and how much investment in client facing initiatives hearing batting.

A line by line we of course have done the work to give you the margin outlook. So both on top line margin growth margin and cash.

We're making this year, so how much of kind of slows down to the bottom line and I'm just trying to reconcile your comments and Thats. Just a clarification question on the 500 basis points Gapping became I guess shipments by my math properly grew about 2% in the Americas, I think that comment with a 500 basis points.

We believe be the outlook, we're giving you is the best based on the information we have today of course.

Prudency.

Akhil Shrivastava: I would say, Peter, just one quick thing. Obviously, we have said it, and you see it yourself. There is an enormous amount of volatility out there in any geographies around the world. We have ranges to give us room, basically, to deliver, like Akhil Shrivastava said, the outlook. I think you should see that from this team that we have overdelivered Profit Recovery and Growth Plan to our expectation. We will continue. We have 11 months to go into this fiscal year, and there is not a day in the week that we are not looking for new opportunities to cut costs where we need to do it to refuel, basically, our brands everywhere around the world to activate retail. We have ranges.

You would always expect from us and I would say Peter just one quick thing obviously, we've said it a new you see yourself there is enormous amount of challenges out there in any geographies around the world. So we have ranges two gives us rooms is likely to deliver like I said the out.

It was in particular to the U S. So my clarification questions are one can you comment on how much of the exit rate wise in the Americas and B how much wood.

Luke.

And I think you should see that from this team.

<unk> retail growth standpoint, and the last for the fiscal year for the quarter.

We've over delivered <unk>.

Two our expectation we will continue we have 11 months to go into this fiscal year and there's not a day in the week that we are not looking for new opportunities to cut costs, where we need to do it to refuel is likely our brands everywhere around the world to activate.

I'm just trying I know you said it will be better than that 500 basis points gap.

Just thinking of the full fiscal year and see how much your.

You mentioned the potential for the price increase that's an upside to the gross margin outlook I was just hoping to see if you can clarify if there is.

Akhil Shrivastava: Obviously, you would expect from any good managed business to have ranges, not only to deliver the outlook, but also for us to continue to do meaningful work. You saw the work that we are doing in gross margin throughout fiscal 2025. With the enormous amount of volume delivered, we have been able to just improve gross margin by 230 basis points and even beat the guide that we gave for Q4 in fiscal 2025. Expect us to continue to act with the same determination to cut costs where we need to cut costs, to invest, to accelerate retail, and to deliver on our guide for the year.

Retail. So we have runs is obviously you would expect from any good managed business to our branches not only to deliver the outlook, but also for us to continue to do meaningful work you saw the work that we're doing in gross margin.

Any price increases and Diablo synchronization outlook for local currency growth.

That's an upside.

Yeah.

Hi, I'll start with <unk>.

Throughout fiscal 'twenty five with the enormous amount of volume deleverage, we've been able to just improve gross margin by 240 basis point and even beat the guide that we gave for Q4.

So overall when we first went announced <unk> said, one 1% to $1 $4 billion that was the first time and then Stefan <unk> expanded it when we expanded it. We also set do you hold us accountable to margin.

In fiscal 'twenty five so expect us to continue to act with the same determination to cut costs, where we need to cut costs to invest to exit our retail and to deliver on our guidance for the year.

And sort of giving you a dollar tracking of PAGP figures because the business was significantly <unk>, averaging so that was definitely and since that promise. Our mission has been to grow margin, which we grew and gross margin. We are growing gross margin will be outgrowing overall margin in 2006, that's a forecast and then of course, we are coming to <unk>.

Speaker 1: The next question is from Andrea Teixeira with JPMorgan. Please go ahead.

The next question is from Andrea <unk> with J P. Morgan. Please go ahead.

Stéphane de La Faverie: Thank you. With how much your Profit Recovery and Growth Plan savings, Stéphane, you really, as you said, you overdelivered. The whole team has overdelivered on this plan. But how much are you including guidance for this margin expansion that you gave out at the midpoint and out of the whole program? How much of the investment in client-faced initiatives are you embedding, you are making this year? So, how much it kind of flows down to the bottom line? I am just trying to reconcile your comments, and that is just a clarification question. Of the 500 basis points gap in retail against shipments, by my math, it probably grew about 2% in the Americas. I think that comment was the 500 basis points was in particular to the US. My clarification questions are: One, can you comment on how much the exit rate was in the Americas?

Adding to strong double digit margin, but within that let me give you some more clarity.

Thank you.

How much <unk> savings and Stefan you.

So out of the 1114, we had originally intended we have said, we'll do more than 50% in 'twenty five and wants to find referred to is that significantly exceeded that more than 50% number in 'twenty five.

Yes.

Really.

As a side year over I mean.

The whole team has over delivered on this plan, but how much are you including guidance for this margin expansion that you gave out at the mid point and out of the whole program and how much my investment in client facing you said testing batting.

And then to your second question how much you are embedding in 'twenty six 'twenty.

25, and 26 are both.

Colliers with large amount of <unk> savings.

You are making do you see so how much of kind of slows down to the bottom line and just trying to reconcile your comments and Thats. Just a clarification question on the 500 basis points gapping became against shipments by my math properly grew about 2% in the Americas, I think that comment with a 500 basis points.

That we are embedding.

You could read that is really to a restructuring we said that restructuring we have spent closer to $700 million. Our total announced restructuring was one $6 million or one two to $1. Six. So there is still room for us to do the outsourcing project that we talked about and other other.

In particular to the last my clarification questions are one can you comment on how much of the exit rate wise in the Americas and B how much wood.

<unk> thats defined as talked about in terms of streamlining the cost structure. So our forecast definitely takes into account a significant amount of <unk> saving what is non countered here in 2006 is really the outsourcing work that out with that still will be in outer years and also procurement work.

Stéphane de La Faverie: B, how much would be embedding retail growth standpoint in the US for the fiscal year, for the quarter to come? I am just trying, I know you said it will be better than that 500 basis points gap, but just thinking of the full fiscal year and see how much you mentioned the potential for the price increases and upside to the gross margin outlook. I was just hoping to see if you can clarify if there are any price increases in the low single-digit outlook for local currency growth or if that is an upside.

<unk> retail growth standpoint, and the last for the fiscal year for the quarter.

I'm just trying I know you said it will be better than that 500 basis points gap.

Just thinking of the full fiscal year and see how much your.

Which which we are working on which we should be another big lever. So.

You mentioned the potential for the price increase that's an upside to the gross margin outlook I was just hoping to see if you can clarify.

That is our mission overall, we said 5800 to 7000 employee head count we already communicated that we have done about 3000, plus that is still being of course, we will balance were not designed to reach a number but we are definitely trying to reach a margin in a way that we can execute the business.

Are you seeing any price increases and Diablo cinco changed outlook for local currency growth.

If that's an upside.

Okay.

Rainey Mancini: I will start with the PRGP. Overall, you know, when we first announced PRGP, we had said $1.1 billion to $1.4 billion. That was the first time. Then Stéphane de La Faverie and I expanded it. When we expanded it, we also said to you, hold us accountable to margin instead of giving you a dollar tracking of PRGP figures because the business was significantly deleveraging. That was definitely, and since that promise, our mission has been to grow margin, which we grew in gross margin. We are growing gross, we are growing overall margin in 2026. That is our forecast. Then, of course, we are committed to getting to strong double-digit margin. But within that, let me give you some more clarity.

Yeah.

Hi, I'll start with the PR GB.

The brands and then of course to deliver the margin. So that's overall <unk> RGB Adam maybe on pricing just like you know one thing I'll drill in pricing, obviously as we always do pricing.

So overall when we first went announced <unk> said, one 1% to $1 4 billion that was the first time and then Stefan <unk> expanded it when we expanded it. We also set do you hold us accountable to margin.

Pricing power and we embed low single digit increase in pricing, but I just want to make sure. We're very clear about our strategy this year.

Instead of giving you a dollar tracking of PAGP figures because the business was significantly deleveraging. So that was definitely an and since that promise. Our mission has been to grow margin, which we grew and gross margin. We are growing gross margin. We're growing overall margin in 2006, that's a forecast and then of course, we are committed to getting to <unk>.

On pricing and potentially going forward.

We will continue to be a loan pricing power Thats why we are investing in with very strong Brian, but we are making sure also that we're bringing to market new innovation Wi Fi spots submitted very clear in my prepared remarks that we are playing with the different price tier of prestige from the <unk> with the <unk>.

Strong double digit margin, but within that let me give you some more clarity.

Rainey Mancini: So, out of the $1.1 billion to $1.4 billion we had originally intended, we had said we will do more than 50% in 2025. What Stéphane de La Faverie referred to is that we significantly exceeded that more than 50% number in 2025. Then, to your second question, how much you are embedding in 2026? 2025 and 2026 are both fiscal years with a large amount of PRGP savings that we are embedding. The way you could read that is really through our restructuring. We said that restructuring, we have spent closer to $700 million. Our total announced restructuring was $1.2 billion to $1.6 billion. So, there is still room for us to do the outsourcing project that we talked about and other opportunities that Stéphane de La Faverie has talked about in terms of streamlining the cost structure.

So out of the 1114, we had originally intended we have said, we'll do more than 50% in 'twenty five and wants to find Revpar due is that significantly.

Clinique, all the way to renew trees, and Este Lauder thinking about like.

La Mer and Jo Malone, we have a lot of like you know pricing power between the L bonds, but we are very careful of understanding where the growth is happening by twice bounder.

Seeded that more than 50% number in 'twenty five.

Then to your second question, how much you're embedding in 'twenty six.

Meaning like is.

<unk> five and 26 are both fiscal years with large amount of <unk> savings.

As the price is the growth happening between 10 to 15 is it happening between 20 to 25 or beyond and really tailoring, our innovation to where the growth is and in addition, I want to make it also very clear and we said it we've taken some strategic price reduction on some.

That we're embedding the way you could read that is ready to a restructuring we said that restructuring we have spent closer to 700.

Our total announced restructuring was $1 $6 billion of one two to one six so theres still room for us to do the outsourcing project that we talked about and other things other opportunities thats defined as talked about in terms of streamlining the cost structure. So our forecast definitely takes it.

Our products to reignite growth on some historical products not only we've reduced discounts, but we've adjusted prices now on the total obviously, we're still pricing power and we are increasing part and Thats. The way that our guide is also field for fiscal 'twenty six.

Rainey Mancini: So, our forecast definitely takes into account a significant amount of PRGP saving. What is not counted here in 2026 is really the outsourcing work that still will be in outer years. Also procurement work, which we are working on, which should be another big lever. So, that is our mission. Overall, we said 5,800 to 7,000 employee headcount. We already communicated that we have done about 3,000 plus. There is still, we, of course, will balance. We are not trying to reach a number, but we are definitely trying to reach a margin in a way that we can execute the business, fuel the brands, and then, of course, deliver the margin. So, that is overall on PRGP.

To account a significant amount of <unk> saving what is not counted here in 2006, Israeli the outsourcing work that out.

Okay.

And Youll ask one other question you had was on North America, the five point gap so clear.

That is still will be in outer years, and also procurement work, which which we are working on which we should be in other big lever. So.

Clearly I mean, we as quarter one we expect this gap to be.

To be high but for the full year, we expect this gap to definitely compressed from the five points that you saw in the full fiscal of 'twenty five and of course, we will continue to give you visibility into this every every quarter and so count on that.

That is our mission overall, we said 5800 to 7000 employee head count we already communicated that we have done about 3000, plus that is still being of course, well balanced when our designed to reach a number but we are definitely trying to reach a margin in a way that we can execute the business fueled the brands and then of course.

To deliver the margin. So that's overall <unk> Adam maybe on pricing just like you know one thing I'll drill in pricing, obviously as we always do we have pricing power and we embed low single digit increase in pricing, but I just wanted to make sure that we're very clear about our strategy. This year.

This concludes today's question and answer session. If you were unable to join for the entire webcast playback will be available at one P. M. Eastern time today through September three.

Akhil Shrivastava: On pricing, one thing I will draw out on pricing. Obviously, as we always do, we have pricing power and we embed low single-digit increase in pricing. I just want to make sure that we are very clear about our strategy this year on pricing and potentially going forward. We will continue to build on pricing power. That is why we are investing and we have a very strong brand. We are making sure also that we are bringing to market new innovation at the right price point. I made it very clear in my prepared remark that we are playing with a different price tier of prestige from the entry with The Ordinary and Clinique all the way to Re-Nutriv and Estée Lauder, thinking about La Mer and Jo Malone.

In the investors section of the company's website to review a replay of the webcast.

That concludes today's Este Lauder.

On pricing and potentially going fall.

Carl I would like to thank you all for your participation and wish you a good day.

We will continue to be a loan pricing power Thats why we are investing in with very strong Brian.

We are making sure also that we're bringing to market new innovation at the right price points I made it very clear in my prepared remarks that we are playing with the different price tier of prestige from the <unk> with the <unk> and Clinique, all the way to retrieve and Este Lauder thinking about like.

Akhil Shrivastava: We have a lot of pricing power between our brands, but we are very careful of understanding where the growth is happening by price band, meaning is the growth happening between $10 to $15? Is it happening between $20 to $25 or beyond? We are really tailoring our innovation to where the growth is. In addition, I want to make it also very clear, and we said it, we have taken some strategic price reduction on some of our products to reignite growth on some historical products. Not only we have reduced discounts, but we have adjusted prices. On the total, obviously, we are still pricing power and we are increasing price. That is the way that our guide is also built for fiscal 2026.

<unk> and Jo Malone, we have a lot of like you know pricing power between notebooks, but we are very careful of understanding where the growth is happening by twice bump.

Meaning like.

As device is the growth happening between 10 to 15 is it happening between 20 to 25 or beyond and really tailoring, our innovation to where the growth is and in addition, I want to make it also very clear and we said it we've taken some strategic price reduction on some of.

Our product to reignite growth on some historical products not only we've reduced discounts, but we've adjusted prices now on the total obviously, we're still pricing power and we are increasing part and Thats. The way that our guide is also build for fiscal 'twenty six.

Rainey Mancini: Your last other question you had was on North America, the five-point gap. Clearly, we, as Q1, expect this gap to be high, but for the full year, we expect this gap to definitely compress from the five-point that you saw in the full fiscal of 2025. Of course, we will continue to give you visibility into this every quarter. Count on that.

And Youll ask one other question you had was on North America, the five point gap so clear.

Clearly I mean, we.

As quarter, one we expect this gap to be.

To be high but for the full year, we expect this gap to definitely compressed from the five points that we saw in the full fiscal of 'twenty five and of course, we will continue to give you visibility into this every every quarter and so our count on that.

Speaker 1: This concludes today's question and answer session. If you were unable to join for the entire webcast, a playback will be available at 1:00 P.M. Eastern Time today through September 3rd. Please visit the Investor section of The Estée Lauder Companies' website to review a replay of the webcast. That concludes today's Estée Lauder conference call. I would like to thank you all for your participation and wish you a good day.

This concludes today's question and answer session. If you were unable to join for the entire webcast playback will be available at one PM Eastern time today through September 3rd please.

In the investors section of the company's website to review a replay of the webcast.

That concludes today's Este Lauder.

Carl I would like to thank you all for your participation and wish you a good day.

[music].