Q3 2025 Coty Inc Earnings Call
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Thank you very much for your time.
Chelsea: My name is Chelsea and I'll be your conference operator today. At this time I would like to welcome everyone to Cody's third quarter fiscal 2025 question and answer conference call.
Chelsea: As a reminder, this conference call is being recorded today, May 7, 2025, at 8 o'clock a.m. Eastern time, or 2 o'clock p.m. Central European time.
Speaker Change: Please note that on May 6th at approximately 4.30 p.m. Eastern time, or 10.30 p.m. Central European time, Coty issued a press release and prepared remarks webcast, which can be found on its investor relations website.
Speaker Change: On today's call are Sue Nabi, Chief Executive Officer, and Laurent Mercier, Chief Financial Officer
Chelsea: I would like to remind you that many of the comments today may contain forward-looking statements.
Chelsea: Please refer to Coty's earnings release and the reports filed with the SEC where the company lists factors that could cause actual results to differ materially from these forward-looking statements.
Chelsea: In addition, except were noted, the discussion of Coty's financial results and Coty's expectations reflect certain adjustments as specified in the non-GAAP financial measures section of the company's release.
with that we will now open the line for questions.
Chelsea: If you would like to ask a question, please press the star key, followed by the number one on your telephone keypad.
Speaker Change: You may remove yourself from the queue at any time by pressing star 2. Once again, that is star 1 to ask a question and we'll take our first question from Rob Ottenstein with Evercore. Please go ahead.
Rob Ottenstein: Great, thank you very much. Sue, I was wondering if you could give us a little bit more
detail on the Q4 sales outlet.
Outlook, is it a reflection of...
Rob Ottenstein: Weakening, Consumer Demand, or changes in retail inventories or actions that you're doing just to better understand why you expect to see that sharp sale deceleration in Q4.
Please, thank you.
Hello, good morning, Robert. Good morning, everyone. Good morning, everyone.
Rob Ottenstein: Trevor Ritalan from China, which are still under pressure, so this is really...
in the perceived vision about intervening actively.
Rob Ottenstein: To clean up the baseline, given how big is going to be the pipeline of innovation for fiscal 26.
We wanted to play the role of...
Rob Ottenstein: You know, stimulating the demand and coming back to growth as big as possible and for this you need a clean baseline. For the consumer beauty division, we see a continuation of the mid-single digit decline in the cosmetic category globally.
Rob Ottenstein: We also see some impact on our cosmetic self from the marketing education and some headwinds in the growth to net which should reverse next year. So in summary I would say that this figure [inaudible]
is if we didn't go to that cleaning.
Rob Ottenstein: This minor, the high single digit decline would be a rather low single digit decline without the cleanup. So that's the way I would describe it.
Rob Ottenstein: Still the same trends, strong dynamism behind fragrances, including in the U.S., but still amid single digit declining co-opismetics, while our brands are continuing to fight for market sharing
Speaker Change: Thank you. Our next question will come from Filippo Falorni with City. Please go ahead.
Filippo Falorni: Hey, good morning, everyone. Sue, maybe just following up on Drop's question, just on the prestige fragrance category you mentioned, is still growing a mid-single digit rate if you adjust for the Easter timing, a low single-digimon or a reported basis? Can you give us a sense of just geographically how you're seeing the growth of the category, especially accident-deporter, if you think this mid-single digit is sustainable, go ahead forward. Thank you. Thank you very much.
Sue Nabi: We believe this mid-single-digit percentage growth is sustaining for specifically in the U.S. It's also strong in most European markets.
Filippo Falorni: and the reason why we believe this is going to continue our sustain is that this famous fragrance index that we've been referring to since now almost three years.
Filippo Falorni: Driven by a new generation of users, it used to be Gen Zs, it used to be male consumers, Hispanic consumers, this continues to a lesser extent but now it's around male teens.
and Steve, the continuation of Gen Z.
Filippo Falorni: Friending Towers, niche fragrances. So we believe this, I would say, growth engine for this category will continue in the U.S. In Europe , the growth problem in the coming years will be driven by mix and pricing. And in China, if this market, which we see, starting to [inaudible]
Filippo Falorni: Get a little bit better, a quarter after quarter, but there again, the penetration level is also solo that we believe the volumes coming from more and more users will continue to provide the growth of this market. So to answer the question, the market is strong in most European markets.
Filippo Falorni: It continues to be missing in the US, it's today still affected in China, but we believe that all in all the global growth of the category of fragrances both in prestige and in mass will continue to be the strongest among the three key categories of the beauty business.
Speaker Change: Thank you. Our next question will come from Susan Anderson with Canacor Genuity. Please go ahead.
Thank you.
Thank you. Bye.
Speaker Change: Thank you. So if I understand where your question is about, so you know how to increase the profitability of the consumer beauty division. So consumer beauty division is two stories, if I may say. There is color cosmetics on one side and then mass fragrances on the other side.
Speaker Change: The first information that needs to be known is that we see really diverging trends with color cosmetics and the pressure
Speaker Change: We know the declines of this market both globally and in the US, but what we see is at the same time the massive fragrances are really continuing to grow high single digits sometimes [inaudible]
at the Forum.
So the color arithmetic category per se
Speaker Change: is when you look at the gross margin of this category as Coty.
Speaker Change: It's quite high in terms of gross margin, so it's really something that is not a big difference versus our peers who are more exposed to skincare hands, higher profitability in this kind of mass market division, but if you compare colocosmetics to colocosmetics
We are quite close to our competitors.
Speaker Change: The thing that happened is that when we started as a team in 2021 to reposition the division, we had to reinvest in building an innovation pipeline, in increasing marketing spend, in strengthening brand reach relevance equity, stabilizing the distribution which led to investments that really weighed on operating margin for some time.
Speaker Change: Depending a Hodea position, which at the end of the day did not grow the full market, you know, and that's what I did say last quarters that this. [inaudible]
Speaker Change: Kolokosmetic's market in mass market needs to be a story of legacy plus indie rather than just a story of indie.
Speaker Change: who are failing to grow the total market. So on this side, what we are doing on the co-location ethics part is that we are making our efforts.
even more granularly decisive.
Speaker Change: to put them behind mass fragrances which are by the way much more profitable with gross margins much higher than color cosmetics. So that's the key shift that we are operating in this division.
Speaker Change: Still continuing to do the right things behind perocasmetics while freeing investments to support what is growing and what is much more profitable for us, which is mass fragrances. To finish on this, I can give you one good example of what we have done with the Riemel in the UK, which is a very interesting example of what is the right playbook.
Speaker Change: to be successful in this business. So on Remelie in UK, we have put in place a combination of number one innovations that were prestige inspired, as I may say. I'm thinking about the lead butter, I'm thinking about the multitasker concealer which went very, very strongly viral and also benefited from very strong always on influencer content, organic consumer content plus advocacy.
Speaker Change: Activations using Tiktok shops, sorry, for the first time which led to a brand halo and a strong momentum on Amazon, all together this required less investment than the classical launches we were doing before, but at the same time they allowed us to stabilize the market share of the brand in the UK for the first time in three years. [inaudible]
Speaker Change: So, at the end of the day, we feel that we are finding the right recipe to support cortocosmetics with a little bit downsizing investment while having better results while we are investing behind the mass fragrance category. Thank you very much.
Speaker Change: Man, there was a second question around for Moshe-Lein-Evarmut, Lauren, you want to take it? [inaudible]
Laurent Mercier: Indeed, as we indicated, we are seeing some of our peers playing really some strong promotions and we are really making sure that in our portfolios that we are protecting our brands.
Laurent Mercier: Versus, Versus is the coach. So now we have really dedicated teams working on SRM, so strategic revenue management.
Laurent Mercier: Working on the portfolio, really working on the segmentations of the portfolio on the innovations.
Sue Nabi: So, indeed, yes, there is this context, but again, back to the point that Sue was referring to, we are making sure we are protecting the gross margin and really that we keep sufficient ammunition to support the brands.
Speaker Change: Thank you. Our next question will come from Bonnie Herzog with Goldman Sachs. Please go ahead.
Thank you, everyone. Thank you, everyone.
Speaker Change: Actually, I had a question on FY26 phasing. You called out gradual improvement in like for like trends over the course of the year.
compared to expected weakness in FQ-4.
Speaker Change: So, growth in Q1, or is this more about an FQ2 story? Thank you.
Yeah.
Speaker Change: and indeed, so we are currently seeing, indeed, that there will be some decline in sales in each one. However, we expect, I mean, the trend to be better than Q4, and this trend will gradually improve over the course of the year. So this is really what we are seeing. So then the...
Speaker Change: How is this built? I would say, you know, more or less the same components as Sue just explains that we think that this decline will remain largely driven by consumer beauty again with the color cosmetic category remaining and the pressure. I mean, still in this H1, she's called 26.
Speaker Change: and at the same time, we are seeing the prestige pretty muted, but I will say more headwinds on the cosmetics and skincare, but fragrance remains strong and step-by-step is really that we can reconcile our selling and sell out.
Sue Nabi: And indeed this will be supported by big initiatives in Prestige Fragrance that indeed Sue can
This game-changing blockbusters, okay?
Speaker Change: So that's the first thing I wanted to really re-insist on. It's probably going to be the best type of innovations in the last five years, and this new launch that you are referring to will have an impact on Q1.
Speaker Change: Thank you. Our next question will come from a Korean Wolfmeyer with Piper Sandler. Please go ahead.
Speaker Change: We're going to see some of that pricing increase and then how are you thinking about the elasticity of that? Thank you. Thank you.
Thank you very much for your time.
Speaker Change: Yeah, absolutely. I mean, good morning. So, I mean, first of all, I really want again to emphasize that, I mean, we are pretty well positioned in this context.
and he's always, you know, that geographical footprint. The footprint.
and talking about prestige, prestige fragrance.
Speaker Change: Yes, we have most of our production is in Europe and you know that we have the the biggest factory in Barcelona but we have also prestige and the fragrance
Speaker Change: Faktori in the US, and also Skin Care. So we have really seen this protection. So having said that
Speaker Change: We indicated that we see the impact of being in the low 100 million. This impact is driven by prestige [inaudible]
Speaker Change: marketing materials, GWP, so I would say it's more marketing stuff.
Thank you very much.
Speaker Change: Now we are taking, and we started even before, to make some actions. Number one, we built in inventory before this tariff came in place, so that's why we indicated that we are well protected at least.
Procurement already started, you know, even before the work actively.
Speaker Change: We are accelerating, so this is absolutely what we are doing from the manufacturing standpoint.
Speaker Change: We have labors, we have labors and as a shared we have already factories in the U.S.
So we can make decision [inaudible]
to vote, you know, Prestige Fragrance Line. [inaudible]
Speaker Change: to the US, if needed. But this is something that we are contemplating.
Thank you very much.
Speaker Change: So the last element is about pricing, so indeed we share that we are implementing, you know, meet single-digit pricing fees on prestige.
Speaker Change: So this is what we are doing, and again we use the same recipe as we did a few years ago, we have a dedicated price in your face.
Speaker Change: We are very granular. We do it in a very precise manner. Again, we are leveraging our tools about strategic for the new management.
playing between you know mass backgrounds. [inaudible]
Speaker Change: Sue was explaining also about the pen spray which is also a segment which is growing very fast so we are really playing with all these levers. So that's why I mean and we have the data that this category is pretty inelastic versus price increase.
This is what we...
Speaker Change: We got from the last years when we did a strong price increase, and you saw that...
Speaker Change: The category kept growing in terms of volumes, so we are tracking very carefully.
But indeed, we are pretty confident.
Speaker Change: that we can do this without impacting the volumes. So we continue to monitor the situation and to see how it evolves based on the final decisions about the stars.
Thank you [inaudible]
Speaker Change: Our next question will come from Oliver Chen with TD Cowan, please go ahead
Oliver Chen: Hi, Sue and Laurent, regarding retailer replenishment. What do you see happening?
Speaker Change: over the next quarters and years, and what are the implications for how you're managing your own inventory?
Speaker Change: Second question is on organizational changes in the U.S. that you mentioned. We'd love your thoughts on how that will drive more agility and what's happening. And as you think about regionalization versus centralization, it sounded like both of those are different opportunities for different reasons. Thank you.
Thank you.
Oliver Chen: Yeah, thank you, Oliver. So, retailer, replenishment, indeed, this is something that we flagged already or...
Oliver Chen: Very strong on their inventory, so this we think would say in both divisions. It started really, we saw it first in consumer beauty.
Color Cosmetic
Speaker Change: Very low inventory. So this is really a new pattern. I mean, and this is also exacerbated now by the...
Speaker Change: the acceleration of the e-com players and to name the biggest one, Amazon.
Speaker Change: who are extremely strict, extremely disciplined, extremely well organized on these inventory management, and you see of course that the traditional retailers, of course, they are now need to take also the same approach to optimize their cash.
Thank you. Thank you.
Speaker Change: and then on the second part of your question, Good Morning, Oliver, which is around the organization of changes in the U.S.
Speaker Change: This was something that we've been working on for now quite some time. We believe that...
Speaker Change: When we reorganized the company back in 2021, we had to give, I would say, a lot of power to central organizations because we had to rebuild, you know, marketing strategy, brand equity Cheers!
Speaker Change: You know, to make sure that everyone is aligned behind the same goals, the same ways of doing the same culture, we believe this is the right moment to give the power to regions. Thank you very much.
Speaker Change: specifically now that the brands and the way of doing is quite different from one region to another. So we created a new region which is a region that
Speaker Change: is English-speaking region with USUK, Canada, Australia and New Zealand.
Speaker Change: Versus just, you know, what used to come from Central as a guideline, so this globalization of the world is translated into a globalization of our organizations, global still had a key, I would say power, but local has as much power as global today, so that's what I believe is making a [inaudible]
Speaker Change: probably going to help us, sorry, to regain the momentum specifically in the US.
Speaker Change: You've probably noticed that the immense majority of our decline is US driven.
Speaker Change: For many regions, one of them is to strengthen the leadership teams and the management and the ability to execute properly. The other one is that the U.S. market is indeed the market where Bordeaux-Rigodesk
Speaker Change: Kaylee Cosmic, and of course, Marc Jacobs Desiwal were the biggest successes, so this is really what created the biggest comp in this country more than anywhere else around the world. [inaudible]
Thank you.
Steve Powers: Our next question will come from Steve Powers with Deutsche Bank. Please go ahead.
Thank you so much. Thank you.
Good morning. Thank you
Speaker Change: And this question may build a bit on Oliver's question there on the US organizational changes, but if we think about the cost saving initiatives that you've announced in this color rated...
Steve Powers: Recently more holistically, is there a way to parse what proportion of them you think you would have done in any environment? [inaudible]
Steve Powers: It's such that we might consider them truly structural versus those that maybe have been pulled forward more in reaction to the current environment, sort of as bell tightening, such that they may come back into the cost structure when conditions turn more favorable, even if they come back in a slightly different form. Thank you. Thank you very much.
Yeah, yeah.
Laurent Mercier: Rethinking and re-channenging our organization and ways of working because the world is moving very fast. So what Sue explains is really the change of organization is also in a context where indeed with his omnichannel is changing very fast. So Sue was explaining what we do in the US. I just want to give also the example about Europe . Europe .
Laurent Mercier: Where you are seeing that our retailers are moving also for cross-country [inaudible]
Laurent Mercier: that we can refuse the brands and reorganize, so indeed it's structural and this is something that we continue on ongoing basis is also leveraging technology. Thank you.
Laurent Mercier: And now we are also leveraging, you know, this tool, this technology, of course, to optimize our ways of working and we will continue of course.
Laurent Mercier: And yes, so this virtual change is also helping to address and to manage, I mean the current, you know, very high volatile environment.
Laurent Mercier: and Steve, to compliment on Laurent's answer, I would say that this is really structural changes with the dose of contractual changes this I may say. Laurent was referring earlier to the rise of the likes of Amazon.
Laurent Mercier: which may become the number one beauty retailer in this in this calendar year but at the same time while Amazon is growing you have a new challenger called Tik Tok Shop
Laurent Mercier: which represents something already $3 billion of sales, which is at the same time entertainment and sales in the same platform, in the same place.
Laurent Mercier: and this one is even challenging classical purtayers of irritate. So there is really this kind of moves that are happening under our eyes and we absolutely need to adapt on almost on a monthly basis. So it's really both.
Thank you [inaudible]
Speaker Change: Our next question will come from Olivia Tongue with Raymond James, please go ahead Thank you very much for your time.
Olivia Tong: Great. Thanks. Good morning. First, just a point of clarification on consumer beauty. If you could help clarify what through a volume to be flat while price mix was the driver, the weakness in Q3 wouldn't have expected that to be the case.
Speaker Change: and then I'm building on the all-in-to-win plan. Could you talk about what's new about the streamlining?
Olivia Tong: that you want to do as part of this plan versus the savings you were targeting in the prior plan.
Speaker Change: You know, where the head count reductions are coming from. And then as you think about your portfolio, should you be in all the brands that you have, are you scrutinizing your portfolio, thinking about, you know, potentially exiting some under performers or repositioning some of the under performers. Thank you.
Thank you.
Speaker Change: and we flagged mostly about the US, but on the other hand, as you know, we are very good performance in Brazil.
Speaker Change: Where we have significant volume growth, but indeed you know that the net revenue or the price per unit in Brazil indeed is lower versus the rest of the countries of the US. So this is what's driving indeed.
Speaker Change: So, on your second question about streamlining, superb functions. So, what we shared and...
and we will keep you posted. [inaudible]
and indeed it's also to align.
Speaker Change: Super Function, also, with a new commercial organization that Sue was describing, okay? So again, if I give the example of the Europe ...
Speaker Change: Where we are seeing retailers, where we are seeing econ players playing video cross-country approach is really that we are making sure that indeed we are.
Speaker Change: Streamlining of support function, you know, according to the commercial organization.
Speaker Change: We already started, as you know, we share last time, we already started, you know, with a consolidation of a demon planning into a single herb, so this is really what...
Speaker Change: He's already in motion for Sophia, really to manage the demand and the forecast, and here again to leverage technology, and is also now that we can enable...
Thank you very much.
Olivia Tong: And to answer the second part of your question around the, you know, the portfolio, Olivia, good morning, you know, as you know, like most of the corporations in this business, we are always and constantly...
Olivia Tong: Evaluating the pertinence of our portfolio and the long term opportunities, and of course, ROI driven by each and every brand, each and every category and each and every market.
Olivia Tong: Will we keep all the brands in the portfolio, not necessarily? And the best example is what we just started to do with SKKN, what we did with SKKN recently, which was announced during Q3.
Speaker Change: Thank you. Our next question will come from Ashley Helgans with Jeffries. Please go ahead.
Speaker Change: Hi, thanks for thinking our question. So I know you talked a little bit about-
Speaker Change: Retail Inventory Levels that, wondering if you could just talk a little bit more about how selling, sell out friends, or retail tightening varies by region, and then also for the mid-singledage of price increases planned this summer, is that going to be total procedure portfolio or select brand? Thanks.
Speaker Change: So, indeed, that means setting versus set out just to be very clear and we share that we are seeing
Speaker Change: in this quarter, some disconnect in the US, and this is really what's driving most...
Speaker Change: of our decline and this is really what we are working on actively really to reconcile or set in and sell out. So this is the work we are doing and we will start to see the results in fiscal 26.
Speaker Change: I mean, on the other regions, I mean, Europe remains, you know, very healthy category, if I talk really about prestige for our grunts is very healthy, and here we have really a bit of selling and sell out, you know, a pretty well in line, so we are tracking very carefully, but again, all the regions are very healthy, that I'm Brazil, as I said, okay, so we are managing, you know, tightly.
Speaker Change: And Asia, as you know, is pretty small for us, so China is very small, so we are still indeed some headwinds in China, but it's pretty limited for us
Speaker Change: At the same time, I want again, and this was a previous question to insist about the fact that we are seeing our retailers being very aggressive on their inventory management
Speaker Change: And this is also exacerbated in the current context where we have seen indeed some slowdown in the consumer beauty category and some normalization in the prestige category. So that's why we remain very cautious.
Especially about the H1 physical 26.
Speaker Change: So about price increase, again, we are focusing first on prestige U.S. because
Speaker Change: There is just a mechanical effect due to the sourcing from Europe and this is the case of all players to make it very clear that it's really the normal adjustment that we have to operate and again because we are...
Pretty confident on the inelasticity of this, of this category [inaudible]
Speaker Change: Now, having said that, yeah, we continue to be very active and really to look carefully at all the categories and also at all the regions and indeed when we see that we can implement price increase
Laurent Mercier: With low elasticity, this is, of course, something that we will contemplate and put in place, and also to continue our growth margin expansion journey. To compliment on Laurent's point, Ashley, is that what we...
Laurent Mercier: The lead is going to happen being not elastic in terms of price increases behind prestige, fragrances, or the toilet, or the parfum. We are at the same time.
Laurent Mercier: To a level that was not done in the past we believe that the conjunction of the two should keep a healthy demand either with consumers looking for value proposals and they find them behind our brands or those who are just trying to increase the wardrobe effect or at the end those who are trying a small sample before moving to a bigger content and size.
Thank you [inaudible]
Laurent Mercier: Our next question will come from Andrea Teixeira with JP Morgan. Please go ahead Thank you. Good afternoon for some of you and so my question is on the US Holocaust medics looking at the success you had elevating remail Thank you.
Andrea Teixeira: in the UK, and I know you've invested in the studios here in the US as well to modernize your way to get to the consumer. In retrospect, why it worked well abroad and not here? And what is the new leadership aiming to do differently from the past?
Andrea Teixeira: Or do you think structurally the markets are completely different here? What works here wouldn't work in the UK in vice versa?
Andrea Teixeira: And a follow-up to Lohan's point about the 370 million are we in to win? Of course, saves. How much will go and flow through to the bottom line? Thank you.
Speaker Change: Yeah, good morning, Andrea. Your question is a valid one, I have to say. And so, at the end of the day, what we see is that indeed, as you quoted it,
Andrea Teixeira: There are structural differences, but it's a question of intensity rather than a question of what is at state.
Andrea Teixeira: So, at the end of the day, both European and US markets are seeing a disruption coming from India or New Bruns, but this is to a much bigger extent in the US.
Andrea Teixeira: So the reason why you don't see this happening as quickly as we should in the US behind color girl to name it is that probably the US market is a much more competitive market
especially in terms of shelf space.
Andrea Teixeira: And the third region is that what we are doing is that we usually start by testing new ways of doing in the UK before implementing this in the US. That was also the rational behind having the same head of the region out looking at the US, at Canada, at UK, and Australia, New Zealand, which are markets. And that's what we are doing in the US.
with more or less the same portfolio brands.
on this part of the business.
Andrea Teixeira: So, how much of the 370 million savings will flow through the bottom line? Maybe Laurent, you can tell him this one? Yes, thank you, Andrea. So, I mean, first of all, just to recap again, I mean, the house is 170 million is built. So, it is really on the, you know, on the two coming years is really that, you know, we have 120 million, which is ongoing productivity. And it been on top of this, I mean, the program that we announced two weeks ago is adding up a hundred thirty million. Thank you very much.
Andrea Teixeira: in addition to this ongoing productivity. So what's very important to have in mind is that
Andrea Teixeira: As we discussed, these are structural interventions. The objective number one is really to create some headroom and really to manage the current volatility. And as you understand, there are a lot. I mean, there is one, so we are really working actively to do this. Number two, of course, is really to be in opposition that we are using part of this money.
Sue Nabi: to invest in our brands, to invest in all our initiatives who are referring indeed to the big innovations that we have next year on prestige fragrance indeed, but it's also that we need to continue and we are continuing really to invest on the other categories. Mass fragrance is a big one, but we need also to defend the other segments. So that's really the
Sue Nabi: The objective, there are also some elements that are talking about the next year, I will share that.
Sue Nabi: The EBITDA's issue and we'll reverse next year. So again, the objective is really to create a headroom, to be back to normal algorithm. But ultimately, the end game is that we is really to continue constant EBITDA margin improvement as we flagged in several forums. And again, the issue is the clear example that we are accelerating. We will grow EBITDA margin by 70 basis point.
Sue Nabi: So that's really part of the cycle, using this money to reinvest, to be back to the, you know, to the virtual cycle, and indeed to continue to improve our a bit of engine.
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Thank you [inaudible]
Speaker Change: Our last question will come from Anna Lizzul with Bank of America. Please go ahead.
Hi, good morning. Thank you so much for the question Thank you very much.
Speaker Change: I was wondering if we could take a step back just thinking about the current market conditions for prestige versus consumer beauty. On the consumer beauty side, we've seen some weakness and lower income tears, just the US mass beauty broadly speaking.
Speaker Change: was wondering if you're seeing some of this drive incremental weakness here. And then in prestige, are you seeing any slowdown or incremental weakness from higher income consumers? Thank you.
Sue Nabi: Yes, hi Anna, this is Suspicking, so let me start with the procedure division, and Levin Laurent, you can do the consumer division, so we end up together on this question. The procedure division, regarding if we are seeing a slowdown, as I mentioned earlier, so far we have seen this kind of normalization that happened between fiscal 24 and fiscal 25, which was moving from either high single digits or low teens to mid single digits. Which was really the way...
Sue Nabi: We've been guiding, regarding how this market will evolve globally, and this is still the case, including with the latest numbers we got on the march quarter.
Lissi, but in these dukes are taking a small portion of this market. So clearly the prestige fragrance market.
Sue Nabi: Stratford Leeds is continuing to grow and we believe this is going to intensify . . . . .
Speciously, now that's it!
Sue Nabi: or just because they don't have the ability to buy something more expensive, this is going to continue to drive the penetration of this category. Now, when it comes on call of cosmetics for prestige,
Sue Nabi: We believe that the pressure on color cosmetics is going to continue very soon. Thank you.
Sue Nabi: Beats in Asia and in Travel Retail, Asia, for the regions that were mentioned by some of our peers, namely, you know, the disappearance of the Daegu phenomenon in the ski region of the world, but also what we are seeing, for example, in some regions.
Sue Nabi: is that the brands that has been doing the growth for the last years, specifically on prestige color cosmetics, such as designer brands, not designer brands, such as indie brands.
Sue Nabi: The Drainers of this market, in a way. So what we saw in color cosmetics in mass market is also happening in prestige, meaning that people are probably refocusing on values that are value of sure, as we say in French, versus trying again and again new things at the same time. So that's what I could say about what we see behind prestige market, namely on color cosmetics and on fragrances.
Sue Nabi: And when you open this category, you see that indeed it's color cosmetic mid-single digit, negative, but on the other hand, you see that mass fragrance.
Thank you very much today.
Kolorkosmetic category will remain negative.
Sue Nabi: On the other hand, of course, we are really betting strongly.
and at the same time, of course, on cosmetic colors.
Sue Nabi: We need to be very targeted, really focusing on big innovations.
Sue Nabi: really plays all these games, these advocacy and the genders. So this is currently what we are contemplating for fiscal 26, really with these two-speed, really model in the consumer beauty.
Sue Nabi: Thank you. That does conclude the question and answer portion of today's call. I would like to turn the call back over to Sue for any additional or closing remarks. Thank you very much.
Sue Nabi: Yes, thank you very much for giving me this opportunity and thank you for the questions. So let me zoom out for this closure remarks as you know across the latest economic cycles.
Sue Nabi: Again, what we have seen is that beauty has remained resilient and this for decades for decades.
Even in this very challenging landscape in this landscape.
Sue Nabi: We have, as you know, with significantly strengthened our strategic operational and financial fundamentals.
Sue Nabi: We've been driving gross margin expansion, we've been driving a stronger cash flow generation, we've been substantially
Sue Nabi: Other initiatives being distribution and efficiencies, all of these give us strong confidence for the years ahead. Thank you very much.
Speaker Change: Thank you ladies and gentlemen. This concludes today's program and we appreciate your participation. You may disconnect at any time.
Thank you for watching and see you later.
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