Q4 2026 Coty Inc Earnings Call

August 20, 2026

Speaker #1: Good morning and good afternoon, everyone. My name is Chelsea, and I'll be your conference operator today. At this time, I would like to welcome everyone to Coty's fourth quarter fiscal 2026 question and answer conference call.

Operator: Good morning and good afternoon, everyone. My name is Chelsea, and I will be your conference operator today. At this time, I would like to welcome everyone to Coty's Q4 fiscal 2026 question and answer conference call. As a reminder, this conference call is being recorded today, 20 August 2026, at 8:00 AM Eastern Time or 2:00 PM Central European Time. Please note that on 19 August, at approximately 4:30 PM Eastern Time or 10:30 PM Central European Time, Coty issued a press release and prepared remarks webcast, which can be found on its investor relations website. On today's call are Markus Strobel, Executive Chairman of the Board and Interim Chief Executive Officer, and Laurent Mercier, Chief Financial Officer. I would like to remind you that many of the comments today may contain forward-looking statements.

Operator: Good morning and good afternoon, everyone. My name is Chelsea, and I will be your conference operator today. At this time, I would like to welcome everyone to Coty's Q4 Fiscal 2026 Question and Answer Conference Call. As a reminder, this conference call is being recorded today, 20 August 2026, at 8:00AM Eastern Time or 2:00PM Central European Time. Please note that on 19 August, at approximately 4:30PM Eastern Time or 10:30PM Central European Time, Coty issued a press release and prepared remarks webcast, which can be found on its investor relations website. On today's call are Markus Strobel, Executive Chairman of the Board and Interim Chief Executive Officer, and Laurent Mercier, Chief Financial Officer. I would like to remind you that many of the comments today may contain forward-looking statements.

Speaker #1: As a reminder, this conference call is being recorded today, August 20, 2026, at 8:00 AM Eastern Time, or 2:00 PM Central European Time.

Speaker #1: Please note that on August 19, 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 #1: On today's call are Marcus Strobel, Executive Chairman of the Board and Interim Chief Executive Officer, and Laurent Mercier, Chief Financial Officer. I would like to remind you that many of the comments today may contain forward-looking statements.

Speaker #1: 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 those forward-looking statements.

Operator: 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 those forward-looking statements. In addition, except where 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. If you would like to ask a question at this time, please press star one on your telephone keypad. To remove yourself from the queue, you may press star two. Once again, that is star one to ask a question. Our first question will come from Filippo Falorni with Citi. Please go ahead.

Speaker #1: In addition, except where noted, the discussion of Coty’s financial results and Coty’s expectations reflects certain adjustments as specified in the non-GAAP financial measure section of the company’s release.

Speaker #1: With that, we will now open the line for questions. If you would like to ask a question at this time, please press *1 on your telephone keypad.

Speaker #1: To remove yourself from the queue, you may press *2. Once again, that is *1 to ask a question. And our first question will come from Filippo Fallerini with Citi.

Speaker #1: Please go ahead.

Speaker #2: Hi, good morning, everyone, and good afternoon.

Filippo Falorni [Director: Hi, good morning everyone and good afternoon.

Filippo Falorni: Hi, good morning everyone and good afternoon.

Speaker #3: Hi, Filippo.

Laurent Mercier: Hi, Filippo.

Speaker #2: Hi. So I wanted to ask a bit about fiscal '27. Obviously, you characterized it as a transition year, and the framework you provided in the prepared remarks was helpful.

Filippo Falorni [Director: Hi. I wanted to ask a bit about fiscal 2027. Obviously, you characterize it as a transition year, and the framework you provided, the prepared remarks was helpful. But I would love to hear a bit more of your KPI internally that you are looking to achieve throughout this transition year, and maybe talk a little bit more about the potential sources of upside, both from a top line and profit standpoint, and any risk that you see as you think about this transition year. Thank you.

Filippo Falorni: Hi. I wanted to ask a bit about fiscal 2027. Obviously, you characterize it as a transition year, and the framework you provided, the prepared remarks was helpful. But I would love to hear a bit more of your KPI internally that you are looking to achieve throughout this transition year, and maybe talk a little bit more about the potential sources of upside, both from a top line and profit standpoint, and any risk that you see as you think about this transition year. Thank you.

Speaker #2: But I'd love to hear a bit more about the KPIs internally that you're looking to achieve throughout this transition year. And maybe talk a little bit more about the potential sources of upside, both from a top-line and profit standpoint, and any risks that you see as you think about this transition year.

Speaker #2: Thank you.

Speaker #3: Okay. Yeah, Filippo, you probably know that in the last couple of quarters our sell-out has been trailing below the category, okay? And obviously, it has led to lower sell-in and has led to all sorts of problems that we had.

Markus Strobel: Okay. Yeah, Filippo, you probably know that in the last couple of quarters, our sell-out has been trailing below the category. Okay? And obviously, that has led to lower sell-in and has led to all some of the problems that we had. So our objective is to drive sell-out and to drive market share. This is new thinking for the organization. The organization was traditionally sell-in focused. It takes some time to create this adaptation. So we believe as we outline in the first quarter, we probably see a similar trend that we have seen in the last two quarters, but then we want to sequentially improve that. We have some strong incremental innovation coming up. We have a more disciplined approach to spending. We focus on fewer bets. We believe that this will, over time, decrease the sell-out gap versus the market.

Speaker #3: So, our objective is to drive sell-out and to drive market share. This is new thinking for the organization. The organization was traditionally selling-focused, and it takes some time to create this adaptation.

Speaker #3: So we believe, as we outlined in the first quarter, we'll probably see a similar trend to what we've seen in the last two quarters. But then, we want to sequentially improve that.

Speaker #3: We have some strong incremental innovations coming up. We have a more disciplined approach to spending. We're focusing on fewer bets, and we believe that this will, over time, decrease the sell-out gap versus the market.

Speaker #3: Now, the question is, how long this will take? I cannot answer that today. If this catches on faster, that will be upside.

Markus Strobel: Now, the question is how long this will take. I cannot answer you that today. If this catches on faster, that will be upside. If this takes longer, then we got to manage. So far, we have tried to give a 50/50 balanced picture on that. But it all depends on how fast can we drive sell-out, how fast can we drive market share. That is an important KPI for us. We have even changed all our bonus systems for fiscal 2027, where market share sellout is now a very important KPI, and it has not been the case before. So we believe the whole organization will be focused on this, and we hopefully see some upside here. This is about sales, and we talk about EBITDA. Obviously, we are reducing the decline rate we have seen in the last two quarters. Is there upside?

Speaker #3: If this takes longer, then we’ve got to manage. And so far, we have tried to give a 50/50 balanced picture on that. But it all depends on how fast we can drive sell-out, how fast we can drive market share.

Speaker #3: That's an important KPI for us. We have even changed all our bonus systems for fiscal '27, where market share—sell-out—is now a very important KPI, and it has not been the case before.

Speaker #3: So we believe the whole organization will be focused on this, and we hopefully see some upside here. This is about sales, and we talk about EBITDA.

Speaker #3: Obviously, we're reducing the decline rate we have seen in the last two quarters. And is there upside? Yeah, that depends on how the Middle East is going to shape up, and how oil prices are going to shape up.

Markus Strobel: Yeah, that depends on how the Middle East is going to shape up, how oil prices are going to shape up. We have built in $20 million, $30 million of cost for an oil price between $90 and $100. This is getting better, might be getting a little bit better. Also, we are still waiting for a potential tariff refund, which is about $30 million that comes or comes not, depending when it comes. But there is some upside. Of course, we keep working on future productivity and the cost savings effort on which we have delivered quite a good result in the last couple of years. So, that is my balanced view on this.

Speaker #3: We've built in $20 to $30 million of cost for an oil price between $90 and $100. This is getting better—might be getting a little bit better.

Speaker #3: And also, we are still waiting for a potential tariff refund, which is about $30 million. That may or may not come, depending on when it comes.

Speaker #3: But there's some upside. And, of course, we keep working on future productivity and the cost savings effort, on which we have delivered quite a good result in the last couple of years.

Speaker #3: So that's kind of my balanced view on this.

Speaker #2: Great. Thank you very much.

Filippo Falorni [Director: Great. Thank you very much.

Filippo Falorni: Great. Thank you very much.

Speaker #1: Thank you. Our next question will come from Javier Escalante with Evercore ISI. Please go ahead.

Operator: Thank you. Our next question will come from Javier Escalante with Evercore ISI. Please go ahead.

Speaker #4: Good morning, everyone. I'm Laurent. Thank you very much for all the help. You're going to be missed. I have two questions on the presentation.

Javier Escalante: Good morning, everyone. Laurent, thank you very much for all the help. You are going to be missed. I have two questions on the presentation. One is if you can talk about what is happening in EMEA, excluding the Middle East. I believe that most of it is consumer brands in Europe, but if you can talk about why there is no improvement there, that would be helpful. Particularly on the consumer side, if you can walk us through what is the portfolio there beyond the core brands that you always talk about. More like the smaller brands, what is happening there. Moving into the US is the second question. You made some comments about SKU reduction, also there are some comments about capital spending related to marketing equipment.

Speaker #4: One, if you can talk about what's happening in EMEA, excluding the Middle East. I believe that most of it is consumer brands in Europe.

Speaker #4: But if you can talk about why there is no improvement there, that would be helpful. And particularly on the consumer side, if you can give us if you can walk us through what is the portfolio there beyond the core brands that you always talk about, more kind of like the smaller brands, what's happening there.

Speaker #4: And moving into the US is the second question. You made some comments about SKU reduction, and also there were some comments about capital spending related to marketing equipment.

Speaker #4: So, if you can talk about whether that pertains to the U.S., whether that's a mean for CoverGirl, and if you can give us an update in terms of shelf reset heading into the fall.

Javier Escalante: If you can talk about whether that pertains to the US, what does it mean for COVERGIRL, and if you can give us an update in terms of shelf reset heading into the fall. Thank you.

Speaker #4: Thank you.

Speaker #3: Okay, let me just unpack this. So, to recover for your first question—the more European brands versus the US brands—I mean, we have started our Color the Future performance improvement program in the Consumer Beauty business basically in January.

Markus Strobel: Okay, let me just unpack this. Javier, for your first question, more European brands versus US brands. We have started our Color the Future performance improvement program in the consumer business basically in January, and that is a version of Coty.Curated for consumer. We have started this program in the US. We have started all the interventions. We have been making a simpler lineup, more powerful, fewer SKUs that we ship in and all these kind of things on, since it is US, mostly on brands like COVERGIRL and Sally Hansen. We see great traction. Both brands have reduced the gap versus the market substantially over the year, and Sally Hansen is now even growing ahead of the market, even in value. We have been positively surprised by how quickly the interventions take on.

Speaker #3: And that's a version of COTY Curated for the consumer. We have started this program in the US, and we've started all the interventions. We've been making a simpler lineup, more power.

Speaker #3: Fewer SKUs that we ship in, and all these kinds of things, since it's the US, mostly on brands like CoverGirl and Sally Hansen. We see great traction.

Speaker #3: Both brands have reduced the gap versus the market substantially over the year. And Sally Hansen is now even growing ahead of the market, even in value.

Speaker #3: So, we have been positively surprised by how quickly the interventions take on. We also believe these interventions will help our EBITDA over time, because part of our EBITDA decline on consumer duty is returns.

Markus Strobel: We also believe these interventions will help our EBITDA over time because part of our EBITDA decline on consumer beauty is returns. Obsolescence, because when the innovation is not selling, you get it back in the US trade. If you sell in less, more powerful things, and we have fewer SKUs on the shelf that are turning much more quickly, we are going to have less excess and obsolescence as we move along. This is a very big part of our EBITDA building plan on consumer beauty. Having said that, we have started this program in the US, and now we are rolling it out to the rest of Europe. The last country we are rolling out is the UK, where now on Rimmel, especially in the last month, where Rimmel is catching up with the category, finally.

Speaker #3: Obsolescence, because you get—when the innovation is not selling, you get it back in the U.S. trade. And if you sell in less, more powerful things, and we have fewer SKUs on the shelf that are turning much more quickly, we're going to have less excess and obsolescence as we move along.

Speaker #3: So this is a very big part of our EBITDA-building plan in Consumer Beauty. So, having said that, we've started this program in the US.

Speaker #3: And now we're rolling it out to the rest of Europe. The last country where there's action now is the UK, especially in the last month, where Rimmel is catching up with the category, finally.

Speaker #3: And as a final step, in the next few weeks or months, we're going to roll this out to our mostly European brands. These are brands like Max Factor and Bourjois.

Markus Strobel: As a final step, in the next few weeks or months, we are going to roll this out to our mostly European brands. These are brands like Max Factor and Bourjois, that are mostly prevalent in Central Europe and in parts of Western Europe. We have not implemented these interventions there yet, but they are about to come. I am expecting that we are going to see some improvements there as well. Coming back to the SKUs and the CapEx, you know that CapEx in makeup, in cosmetics is very expensive. We have done a lot of improvements with procurement and in the work with our vendors to have great quality installations, but at a lower price. Our CapEx is going down. When we look at the 20% SKU reduction on shelf, we do not believe this is going to have any material impact on our sales.

Speaker #3: These are mostly prevalent in Central Europe and in parts of Western Europe. We have not implemented these interventions there yet, but they're about to come.

Speaker #3: So, I'm expecting that we're going to see some improvements there as well. Coming back to the SKUs and the CapEx, you know that CapEx in makeup, in cosmetics, is very expensive.

Speaker #3: So we're going to be we've done a lot of improvements with procurement and in the work with our vendors to have great quality installations, but at a lower price.

Speaker #3: So our CapEx is going down. And when we look at the 20% SKU reduction on shelf, we don't believe this is going to have any material impact on our sales; on the contrary.

Markus Strobel: On the contrary, that is going to leave the space for the fast-turning SKUs. Because in the past, with an innovation not working, you are putting a slow turner in and the fast turner goes out of the shelf. That does not make much sense. We are very, very deliberate about that. We believe we are going to see continuous uptick in our consumer business over the next couple of months.

Speaker #3: That's going to leave the space for the fast-earning SKUs. Because in the past, with an innovation not working, you're putting a slow turner in, and the fast turner goes out of the shelf.

Speaker #3: That doesn't make much sense, so we're very, very deliberate about that. We believe we're going to see a continuous uptick in our consumer business over the next couple of months.

Speaker #4: But just to double-click, if you can comment on the shelf resets going into the fall, do you think that the phasing—the total phasing to the consumer in the US for CoverGirl and Sally Hansen—is going to hold up, or how is it going to change?

Javier Escalante: But just to double-click, if you can comment on the shelf resets getting into the fall.

Markus Strobel: Do you think that the total faces to the consumer, in the US for COVERGIRL and Sally Hansen is going to hold up? Or how is it going to change?

Markus Strobel: Yeah.

Markus Strobel: Do you think that the total faces to the consumer, in the US for COVERGIRL and Sally Hansen is going to hold up? Or how is it going to change?

Speaker #3: Yeah.

Speaker #4: And then the color in Europe was interesting, but I'm more interested in the brands that you don't talk about. Like, you used to have brands, at least that I remember, something called Aster, Manhattan—the brands that you don't talk about.

Markus Strobel: Yeah.

Markus Strobel: And the color in Europe was interesting, but I'm more interested in the brands that you don't talk about. Like, you used to have brands, at least that I remember, something called Astor, Manhattan, the brands that you don't talk.

Speaker #4: What is happening to them? Thank you.

Markus Strobel: Oh, okay.

Markus Strobel: what is happening to them? Thank you.

Speaker #3: Oh, I'm happy to talk about them. I'll come back to your first question in a second—happy to talk about them. Aster, do you still have that?

Markus Strobel: Oh, I am happily talking about them. I am coming back to your first question in a second. Happily talking about them. Astor, we still have that?

Speaker #4: Yeah, yeah, the brands that are not—the brands that you rarely talk about. Thank you.

Javier Escalante: Yeah. The brands that you-

Javier Escalante: Yeah. The brands that you rarely talk about. Thank you.

Javier Escalante: Yeah

Javier Escalante: rarely talk about. Thank you.

Speaker #3: Yeah. And Manhattan is basically the equivalent of Rimmel in Germany. Okay? It's the same portfolio; it's just called the Rimmel brand in Germany—Manhattan.

Markus Strobel: Yeah. Manhattan is basically the equivalent of Rimmel in Germany. Okay? It is the same portfolio, they are just called a Rimmel brand in Germany, Manhattan, because of historical reasons and in Europe. Again, Manhattan, Max Factor, Bourjois, are all brands on which we are going to bring the interventions now. We have not done it on these brands in Europe yet. Okay? It is coming so, and we hopefully can replicate the US success model. When it comes to shelf space and shelf resets, we have mostly managed to have stable shelf space. Shelf space is always under threat if your sell-out is not great. But the improvements we have seen in Q4, this is the time when shelf resets are being decided. We have lost a bit, we have gained a bit, but overall, we should be stable.

Speaker #3: It's a historical reason. And in Europe, and again, Manhattan, Max Factor, Bourjois are all brands on which we're going to bring the interventions now.

Speaker #3: We haven't done it on these brands in Europe yet, okay? But it's coming, so we hopefully can replicate the U.S. success model. When it comes to shelf space and shelf resets, we have mostly managed to have stable shelf space.

Speaker #3: Shelf space is always under threat if you're a sellout—it's not great. But the improvements we have recently seen in Q4, this is the time when sales resets are being decided, we have lost a bit.

Speaker #3: We have gained a bit, but overall, we should be stable. So we don't see a big risk from losing shelf space or anything like this for the time being.

Markus Strobel: We do not see a big risk from losing shelf space or anything like this for the time being.

Speaker #2: Thank you. Our next question will come from Annelisole with Bank of America. Please go ahead.

Operator: Thank you. Our next question will come from Anna Lizzul with Bank of America. Please go ahead.

Speaker #5: Hi, good morning. Thank you so much for the question. Good afternoon as well. I was wondering if you could comment on the promotional environment here.

Anna Lizzul: Hi. Good morning. Thank you so much for the question. Good afternoon as well.

Markus Strobel: Hi.

Anna Lizzul: I was wondering if you could comment on the promotional environment here. You mentioned in fiscal 2026 it had been elevated throughout the year. I am just wondering as well, in terms of competitors' actions here, we have seen some pricing reductions being taken and then pricing being elevated again. I am curious for your take on some of the competitor actions, in the Max Factor side in particular. Thanks so much.

Speaker #5: You mentioned in fiscal '26 it had been elevated throughout the year. And just wondering as well, in terms of competitors' actions here—we've seen some pricing reductions being taken, and then pricing being elevated again.

Speaker #5: I'm curious to hear your take on some of the competitor actions on the mass side in particular. Thanks so much.

Speaker #3: Yeah. On pricing, I think they're going a little bit back and forth. We have seen, in prestige, a lot of pricing competition during the key holiday season from October to December.

Markus Strobel: Yeah. On pricing, things are going a little bit, back and forth. We have seen in the Prestige, we had seen a lot of pricing competition in the key holiday season from October to December, but it has abated a bit ever since then, which actually is good. In consumer, I think what all the companies are doing now, we have been doing, said, okay, instead of going up in price or down or being broad based, but being much more searchable, okay? What type of businesses, what type of SKU can I support a higher price, and what kind of SKUs I cannot support a higher price, right? So that differentiation, is, I think, going to help stabilize this pricing and promotion environment a little bit in the next couple of months.

Speaker #3: But this has abated a bit ever since then, which actually is good. And in consumer, I think what all the companies are doing now—we've been doing—is saying, okay, what are the, instead of going up in price or down, or being broad-based, but being much more searchable.

Speaker #3: Okay? What type of businesses, what type of SKU can support a higher price? And what kind of SKUs cannot support a higher price, right?

Speaker #3: So that differentiation is, I think, going to help stabilize this pricing and promotion environment a little bit in the next couple of months.

Speaker #5: Great. And then in terms of your strategic review for the consumer beauty business by the end of calendar '26, is that really a hard deadline?

Anna Lizzul: Great. In terms of your strategic review for the consumer beauty business by the end of calendar 2026, is that really a hard deadline? Is that something you are working toward, but there is room to see if there is maybe not an agreement made by that time? Curious on just how flexible you are there. Thank you.

Speaker #5: Is that something you're working toward, but there's room to see if maybe there's not an agreement made by that time? I'm curious just how flexible you are there.

Speaker #5: Thank you.

Speaker #3: Yeah, yeah, yeah. I know I'm sticking my neck out on this 2026 thing. So, it's our very, very, very, very strong aspiration to get it done by then.

Markus Strobel: Yeah. I know I am sticking my neck out on this 2026 thing. So it is our very, very strong aspiration to get it done by then. At the end of the day, if the results are 10 times better, if we have another month, then yeah, of course, we would do that. But it is our intent to finish this by calendar 2026.

Speaker #3: I mean, at the end of the day, if the results are ten times better, if we have another month, then yeah, of course we would do that.

Speaker #3: But it's our intent to finish this by calendar '26.

Speaker #2: Thank you. Our next question will come from Susan Anderson with Canaccord Genuity. Please go ahead.

Operator: Thank you. Our next question will come from Susan Anderson with Canaccord Genuity. Please go ahead.

Speaker #6: Hi, good morning. Thanks for taking my questions. I wanted to dig in a little deeper on the Consumer Beauty business, particularly the improvement you saw in the US with CoverGirl and Sally Hansen.

Susan Anderson: Hi. Good morning. Thanks for taking my questions. I guess maybe just to dig in a little deeper on the consumer beauty business, particularly the improvement you saw in the US with COVERGIRL and Sally Hansen. I guess I am just curious, is that being driven by the better marketing, sharper price points? Are you guys being more promotional there or is it new innovation? I guess maybe just a little bit of color on what is driving that, and then just the performance internationally versus the US. Thanks.

Speaker #6: I guess I'm just curious, is that being driven by better marketing, sharper price points, are you guys being more promotional there, or is it new innovation?

Speaker #6: I guess maybe just a little bit of color on what's driving that, and then just the performance internationally versus the US. Thanks.

Speaker #3: Yeah, so I think it's actually on the contrary. It's less driven by promotion; it's more driven by equity-building advertising. Because on brands like CoverGirl or Sally Hansen, we have been in and out of advertising over the years.

Markus Strobel: Well, I think it is actually on the contrary. It is less driven by promotion. It is more driven by equity-building advertising, because on brands like COVERGIRL or Sally Hansen, we have been in and out of advertising over the years. But we have made a choice to concentrate our funds in really equity-building advertising. We are back on television with COVERGIRL. We mentioned that we are targeting Gen X. Gen X still watches television quite a lot. We are back nationally on air, and we are focusing our efforts on our two biggest franchises, which is Simply Ageless and Lash Blast. Really focusing on the core and on COVERGIRL has really helped us dramatically to improve the gap, the sell-out gap versus the category, and we are getting now very close. Same thing on Sally Hansen.

Speaker #3: But we have made a choice to concentrate our funds in really equity-building advertising. We are back on television with CoverGirl. I mentioned that we are targeting Gen X.

Speaker #3: Gen X still watches television quite a lot. So we're back nationally on air, and we are focusing our efforts on our two biggest franchises, which are Simply Ageless and Lash Blast.

Speaker #3: Really focusing on the core and on CoverGirl has really helped us dramatically to improve the sellout gap versus the category, and we're now getting very close.

Speaker #3: Same thing on Sally Hansen. We're back on national advertising for Sally Hansen in the nail care category, coupled with some very good innovation like our InstaDry innovation, which has found extremely good reception.

Markus Strobel: We are back on national advertising on Sally Hansen in the nail care category, coupled with some very good innovation like our Insta-Dri innovation has found an extremely good reception. If I have to sum it up, I think where we are going with Coty.Curated and Color the Future is much more putting the money where we have a return and where we also have long-term equity building to drive our brands and drive our core franchises, versus competing everywhere and in every SKU and so on and so on and so on. I would say focus and focused spending.

Speaker #3: So, if I have to sum it up, I think where we're going with Coty Curated and Color the Future is much more about putting the money where we have a return.

Speaker #3: And where we also have long-term equity-building to drive our brands and drive our core franchises, versus competing everywhere and in every SKU, and so on and so on.

Speaker #3: I would say focus, and focus spending.

Speaker #6: I see. Good. And then just the performance internationally versus the US, because I think you noted that mass body and skin care helped to drive the growth.

Susan Anderson: Okay, good. Then just the performance internationally versus the US, because I think you noted that

Markus Strobel: Yeah

Susan Anderson: mass body and skincare helped to drive the growth. I guess was that the Brazilian business as well? Thanks.

Speaker #6: So I guess, was that the Brazilian business as well? Thanks.

Speaker #3: Yeah, yeah, yeah. I mean, Brazil is also back to growth, which is where the skincare part comes from. So, Brazil had a bit of a wobble at the beginning of the year, but they're doing well now.

Markus Strobel: Yeah. Brazil is also back to growth, which is where the skincare part comes from. Brazil had a bit of a wobble at the beginning of the year, but they are doing well now. They are back. The market is growing. We are growing, and we are about to grow share again in Brazil. That is going in the right direction. Again, Europe, I think I have mentioned on the question before, where we are not as far advanced yet in the implementation as we were in the US, but we see the US working, and now obviously we are going to replicate this in Europe. Good initial response on Rimmel in the UK.

Speaker #3: They're back. The market is growing. We are growing, and we are about to grow share again in Brazil. So that's going in the right direction.

Speaker #3: And again, Europe—I think I have mentioned this in the question before—where we are not as far advanced yet in the implementation as we were in the US.

Speaker #3: But we see the U.S. working. And now, obviously, we're going to replicate this in Europe. And good initial response on Rimmel in the U.K.

Speaker #2: Thank you. Our next question will come from Steve Powers with Deutsche Bank. Please go ahead.

Operator: Thank you. Our next question will come from Steve Powers with Deutsche Bank. Please go ahead.

Speaker #7: Great. Thank you very much. Laurent, thanks from me as well for your help over the years. Marcus, I wanted to ask—you explicitly stated the goal of returning the underlying portfolio, excluding Gucci, to growth in fiscal '28.

Steve Powers: Great. Thank you very much. Laurent, thanks from me as well, for your help over the years. Markus, I wanted to ask, you explicitly stated the goal of returning the underlying portfolio, excluding Gucci, to growth in fiscal 2028. There are a lot of balls in the air as we think about fiscal 2027, but I guess, I just wanted to get a better sense of your confidence around that goal and I guess, the key building blocks, the most critical assumptions, or the things that we should be looking for to develop over the course of 2027 to be able to hit that target.

Speaker #7: There are a lot of balls in the air as we think about fiscal '27, but I guess I just wanted to get a better sense of your confidence around that goal.

Speaker #7: And I guess the key building blocks, the most critical assumptions, are the things that we should be looking for to develop over the course of ’27 to be able to hit that target.

Speaker #3: Yeah, I think I'd ask that, Steve, and ask about two or three points that are extremely important. One of them is, for us, really the focus on our big brand franchises.

Markus Strobel: Yeah, I think there's, Steve, there's 2 or 3 points that are extremely important. One of them is for us, really the focus on our big brand franchises. And the role that every brand franchise plays in our portfolio. For example, our big global brands, Burberry, Hugo Boss, there's no excuse if you don't grow. So we've got to make these products grow. And, for us, one of the most important things, apart from focusing and spending the money on them, is to create more incremental innovation that creates a halo effect on the total business. We have not done that as successfully last year because our innovation has been performing well, but it was not incremental enough. It didn't create a halo. I'll give you one example on Hugo Boss. We had a very good launch with Boss Bottled Elixir.

Speaker #3: Okay? And the role that every brand franchise plays in our portfolio. For example, our big global brands—Burberry, Hugo Boss—there's no excuse if you don't grow.

Speaker #3: So we've got to make these products grow. And for us, one of the most important things, apart from focusing and spending the money on them, is to create more incremental innovation that creates a halo effect on the total business.

Speaker #3: We have not done that as successfully last year, because our innovation has been performing well, but it was not incremental enough—it didn't create a halo.

Speaker #3: If you want an example on Hugo Boss, we had a very good launch with Boss Bottled Beyond. I mean, one of the top—I think the top two—male launches of the year, doing very well.

Markus Strobel: I mean, one of the top 2 male launches of the year. Doing very well, building share in the US, but it hasn't driven up the total franchise. What we're just in the process of doing, we have just launched, starting in travel retail, Boss Alive for her, woman. So we are creating a female business for Hugo Boss, which obviously by definition is going to be incremental. And, we have constructed it in a way and tested it and confirmed it in a way that every USD that we spend on the female campaign has a halo effect on the male campaign as well. So that's kind of what we're trying, the way we look at our big brands and our innovation. To construct innovation better for incrementality and also better for the total halo effect. And then, playing our portfolio where the strengths are.

Speaker #3: Building share in the US, but it hasn't driven up the total franchise. What we're just in the process of doing—we have just launched, starting in travel retail, Boss Beyond for her, woman, right?

Speaker #3: So we're creating a female business for Hugo Boss, which obviously by definition is going to be incremental. And we have constructed in a way and tested it and confirmed it in a way that every dollar that we spend on the female campaign has a halo effect on the male campaign as well.

Speaker #3: So that's kind of what we're trying—the way we look at our big brands and our innovation—to construct innovation for better incrementality.

Speaker #3: And also, better for the total halo effect. And then playing our portfolio where the strengths are—again, big global brands—and then we have, probably, more regional brands at the moment. And Marc Jacobs, where we are very strong, in English-speaking countries: the US, UK, even Australia.

Markus Strobel: Again, big global brands, and then we have probably more regional brands at the moment in Marc Jacobs, where we are very strong in English-speaking countries, US, UK, even Australia, where we have actually double-digit fragrance growth in the last 6 months. And now we're bringing the makeup, the cosmetics line on top. But we are concentrating it on the markets where we can win with this proposition. So it's all about focused investment, having a right to win, and incremental innovation that creates a halo effect.

Speaker #3: We have actually had double-digit fragrance growth over the last six months, and now we're bringing the makeup—the cosmetics line—on top. But we are concentrating it on the markets where we can win with this proposition.

Speaker #3: So, it's all about focused investment, having a right to win, and incremental innovation that creates a halo effect.

Speaker #7: Yes, very good. Okay, thank you very much. If I could ask a follow-up—you mentioned efforts underway to develop plans to moderate the sales and profit impacts as we look to fiscal '28 from the Gucci departure.

Steve Powers: Yes. Very good. Okay. Thank you very much. If I could ask a follow-up.

Markus Strobel: Sure.

Steve Powers: You mentioned

Steve Powers: You mentioned efforts underway to develop plans to moderate the sales and profit impacts as we look to fiscal 2028 from the Gucci departure. I guess, how much of that planning is dependent on the rest of the portfolio resuming growth, as we just talked about, versus you being able to actually restructure some costs specifically to mitigate the financial impact through restructuring? How much is growth oriented versus cost out, if that makes sense?

Steve Powers: efforts underway to develop plans to moderate the sales and profit impacts as we look to fiscal 2028 from the Gucci departure. I guess, how much of that planning is dependent on the rest of the portfolio resuming growth,

Speaker #7: I guess, how much of that planning is dependent on the rest of the portfolio resuming growth, as we just talked about, versus you being able to actually restructure some costs specifically to mitigate the financial impact through restructuring?

Markus Strobel: Yes

Markus Strobel: as we just talked about, versus you being able to actually restructure some costs specifically to mitigate the financial impact through restructuring? How much is growth oriented versus

Speaker #7: How much is growth-oriented versus cost-out, if that makes sense?

Markus Strobel: Yeah

Markus Strobel: cost out, if that makes sense?

Speaker #3: Yeah. What we're trying to do—I mean, I think on this one, we are trying to go with both belts and suspenders, okay? So we're going to grow these brands.

Markus Strobel: Yeah. What we are trying to do, I think on this one, we are trying to go with belts and suspenders. So we are going to grow these brands. That is a big part of the building blocks, and we are also bringing in new brands like Swarovski, Etro, next year. But we want to make sure, and this is our intention, that our cost savings restructuring program alone can gather the gap. This is our intention, okay? Because if we achieve that and we bring the growth on top of our big global brands, I think then we are going to be in very good shape. Right? So it is a belts and suspenders approach, and hopefully all these activities are going to add up to more than what we need, because in the end, you always get a little bit less, and then it is going to be good. So that is our approach.

Speaker #3: That's a big part of the building blocks. And we're also bringing in new brands like Swarovski next year. But we want to make sure—and this is our intention—that our cost-savings program and restructuring program alone can gather the gap.

Speaker #3: That is our intention, okay? Because if we achieve that, and we bring the growth on top of our big global brands, I think then we're going to be in very good shape, right?

Speaker #3: So it's a belts-and-suspenders approach. And hopefully, all these activities are going to add up to more than what we need. Because in the end, you always get a little bit less, and then it's going to be good.

Markus Strobel: So it is a belts and suspenders approach, and hopefully all these activities are going to add up to more than what we need, because in the end, you always get a little bit less, and then it is going to be good. So that is our approach. You will hear more about our restructuring program in the next few months, because we are also still working on the study for the consumer business. There are a lot of interdependencies. We just want to come to the market once and say, "This is it. This is what we are going to do," and then it is execution.

Speaker #3: So that's our approach. And you will hear more about our restructuring program in the next few months, because we are also still working on the study for the Consumer business.

Markus Strobel: You will hear more about our restructuring program in the next few months, because we are also still working on the study for the consumer business. There are a lot of interdependencies. We just want to come to the market once and say, "This is it. This is what we are going to do," and then it is execution.

Speaker #3: There are a lot of interdependencies, so we just want to come to the market once and say, "This is it. This is what we're going to do." And then it's execution.

Speaker #2: Thank you. Our next question will come from Olivia Tong with Raymond James. Please go ahead.

Operator: Thank you. Our next question will come from Olivia Tong with Raymond James. Please go ahead.

Speaker #5: Great, thanks. I'm not sure how much you can share, but can you give us an update on the strategic review of consumer beauty that you expect to be done by calendar year-end?

Olivia Tong: Great. Thanks. I am not sure how much you can share, but can you give us an update on the strategic review of consumer beauty that you expect to be done by calendar year-end? In the past, you had flagged that Brazil would be a cleaner exit, potentially, versus the US business.

Speaker #5: In the past, you had flagged that Brazil would be a cleaner exit, potentially, versus the U.S. business. So just a little bit more color there would be great.

Olivia Tong: Just a little bit of more color there would be great. Thank you.

Speaker #5: Thank you.

Speaker #3: Yeah. You mentioned the fact that, obviously, Brazil is a very ring-fenced market, and it would be easier in isolation. But we're not necessarily looking for the clean and easy.

Markus Strobel: Well, we mentioned in the past that obviously, Brazil is a very ring-fenced, and it would be easier in isolation, but we are not looking for necessarily the clean and easy. We are looking for the best solution that creates the most value for us. So we keep working on the strategic review as a total, including everything in consumer.

Speaker #3: We're looking for the best solution that creates the most value for us. So we keep working on the strategic review as a whole, including everything in Consumer.

Speaker #5: Got it. Thanks. And then you just mentioned to Steve about the plan with respect to Gucci and absorbing the incremental costs, and how you will look at costs overall.

Olivia Tong: Got it. Thanks. You just mentioned to Steve about the plan with respect to Gucci and absorbing the incremental cost, and how you will look at cost overall. But now that we know that it is a low double-digit percentage of sales with healthy profit, can you give us a sense on some of the specific actions you are going to take to minimize the overhead challenges? Presumably, some of that cost may go to L'Oréal, but maybe not very much. I understand that you will be satisfying the inventory for a period of time. But just, given that they probably do not need a ton of hand-holding in this category beyond the initial inventory

Speaker #5: But now that we know that it's a low double-digit percentage of sales with healthy profit, can you give us a sense of some of the specific actions you're going to take to minimize the overhead challenges?

Speaker #5: Presumably, some of that cost may go to L'Oréal, but maybe not very much. And I understand that you'll be satisfying the inventory for a period of time, but just given that they probably don't need a ton of hand-holding in this category beyond the initial inventory, what can be done?

Markus Strobel: Yeah

Olivia Tong: What can be done?

Speaker #3: Yeah, yeah. I would imagine they don't take too much hand-holding. You've probably got that right. But I think, first of all, we are super happy with the deal we made with Caring, because it was our objective and we did it on our terms.

Markus Strobel: Yeah. I would imagine they don't take too much hand-holding. You probably got that right. I think first of all, we are super happy with the deal we made with Kering, because it was our objective, and we did it on our terms. It was really our objective to get full compensation of a year of profit and cash. We wanted to get funds that help us to pay down debt, and we wanted to also get some money that helps us with the restructuring. Plus, we wanted to solve the inventory question. All of these things have been addressed. That's why we're happy with that deal. When it comes to our fixed cost saving, there's obviously quite a chunk of money in allocated overhead. The way you have to look at the business is that in Prestige, we have a scaled R&D organization.

Speaker #3: It was really our objective to get full compensation of a year of profit and cash. We wanted to get funds that help us to pay down debt.

Speaker #3: And we wanted to also get some money that helps us with the restructuring. Plus, we wanted to solve the inventory question. So, all of these things have been addressed.

Speaker #3: So that's why we're happy with that deal. When it comes to our fixed cost savings, there's obviously quite a chunk of money in allocated overhead.

Speaker #3: Okay? Because the way you have to look at the business is that in Prestige, we have a scaled R&D organization. We have a scaled manufacturing and distribution organization.

Markus Strobel: We have a scaled manufacturing, distribution organization. We also have our central lead team. All the corporate functions, they're all working for Prestige. With a brand in the low double-digit teams, that's quite a sizable money. We're looking at a very serious restructuring program that will encompass our go-to-market setup, manufacturing and distribution network, a continuous delayering of the organization, which we have started anyway to get to faster decision-making and more agility. Of course, also a right sizing of our central organization, to reflect, initially, lower sales.

Speaker #3: And we also have our central lead team—all the corporate functions—they're all working for Prestige. So with the brands in the local digit teams, that's quite a sizable amount.

Speaker #3: So we're looking at a very serious restructuring program that will encompass our go-to-market setup, manufacturing and distribution network, a continuous de-layering of the organization—which we have started anyway—to get to faster decision-making, more agility, and, of course, also a right-sizing of our central organization to reflect initially lower sales.

Speaker #2: Thank you. Our next question will come from Sydney Wagner with Jefferies. Please go ahead.

Operator: Thank you. Our next question will come from Sydney Wagner with Jefferies. Please go ahead.

Speaker #5: Hi, thanks for taking our question. So, you've now built market share into the fiscal '27 incentive structure to help reinforce the sell-out culture. How are you thinking about making sure that doesn't inadvertently encourage chasing volume promotionally in a market that's already quite competitive?

Sydney Wagner: Hi. Thanks for taking our question. You have now built market share into the fiscal 2027 incentive structure to help reinforce the sellout culture. How are you thinking about making sure that does not inadvertently encourage chasing volume promotionally in a market that is already quite competitive? Just curious what guardrails you have in place so the comp structure and the margin discipline stay aligned. Thank you.

Speaker #5: Just curious—what guardrails do you have in place so the comp structure and the margin disciplines stay aligned? Thank you.

Speaker #3: Yeah. No. I mean, our total bonus structure—which I'm not going to go into the details of; it would probably take me half an hour to explain this—has market share as a big KPI.

Markus Strobel: Yeah. Our total bonus structure, which I am not going to go into the details, probably would take me half an hour to explain this, has market share as a big KPI. But there is also a sales component, and there is an EBITDA component. There is a very strong EBITDA component. So we cannot just willy-nilly do promotion to increase sales. Well, it comes at the expense of profit, right? I think the way it is calibrated, I think then we have done a decent job to put the guardrails already into the design of the program. And why we believe this is superior is when you just focus on sales, especially then, end of the year, end of the quarter, people are starting selling stuff in that does not sell out, then you get exactly to these wide swings in inventory that we want to avoid.

Speaker #3: But there's also a sales component, and there's an EBITDA component. There's a very, very strong EBITDA component, so we cannot just willy-nilly do promotions to increase sales.

Speaker #3: Well, it comes at the expense of profit, right? So, I think the way it is calibrated, we have done a decent job to put the guardrails already into the design of the program.

Speaker #3: And why we believe this is superior is when you just focus on sales, especially at the end of the year or end of the quarter, and people are starting to sell stuff in.

Speaker #3: That doesn't sell out. Then you get exactly these wild swings in inventory that we want to avoid. We want to have sell-out growth, but sell-out growth pretty much in line, too, with sell-in.

Markus Strobel: We want to have sell-out growth, but sell-out growth then pretty much in line with sell-in, so that we get out of these inventory swings. Okay?

Speaker #3: So that we get out of these inventory swings. Okay?

Speaker #2: All right. Thank you. Our next question will come from Andrea Teixeira with J.P. Morgan. Please go ahead.

Operator: All right. Thank you. Our next question will come from Andrea Teixeira with J.P. Morgan. Please go ahead.

Speaker #5: Thank you all and good morning. So Lohan, I want to extend also my gratitude and wish you well. So just thinking of what you discussed about the consumer beauty brands, I was looking like you obviously had said that you want to maximize returns and make bigger bets.

Andrea Teixeira: Thank you all, and good morning. Lorhan, I want to extend also my gratitude and wish you well. Just thinking of what you discussed about the consumer beauty brands, you obviously had said that you want to maximize returns and make bigger bets, but you also mentioned that some of the European brands you want to also reinvest, like Bourjois, I think you mentioned Manhattan and Max Factor, if I am not mistaken. Just to make sure that we understand, and layering that with that strategic review for consumer beauty in the middle of this kind of promotional environment. I was just wondering how to think through the end of the calendar year, which is your H1, how we should be thinking of that improvement. In terms of, I believe you mentioned the number of SKUs that you are going to be taking out.

Speaker #5: But you also mentioned that some of the European brands you want to also reinvest in, like Bourjois—I think you mentioned in the heads—and in Miss Sporty, if I'm not mistaken.

Speaker #5: But just to make sure that we understand—and layering that with that strategic review for Consumer Beauty—in the middle of this kind of promotional environment.

Speaker #5: So I was just wondering how to think through the end of through the end of the calendar year, which is your first half, how we should be thinking of that improvement.

Speaker #5: And in terms of—I believe you mentioned the number of SKUs that you're going to be taking out. Is that something you implement? And what is the timeline for that?

Andrea Teixeira: Is that something you implement, and what is the timeline for that?

Speaker #3: No, I think—here we go. Again, when you look at the investment profile and how we're running this, again, in the US, we are investing into advertising and equity building.

Markus Strobel: No, I think here we go. Again, when we look at the investment profile and how we are running this, again, US, we are investing into advertising, equity building. We intend to do this in Europe as well, but again, we are behind in Europe. No matter what the outcome of the strategic review is, this is the right thing to do. This is the way we create value. We have a better business, we create value for ourselves, so we create value for somebody else, and that value will be reflected at one point in time. What we are doing, I think, is spot on, and it is going to put us in a better position in any scenario. When it comes to the SKUs, it is basically part of the shelf resets that happen in spring and in fall.

Speaker #3: We intend to do this in Europe as well. But again, we are behind in Europe. And this is, no matter what the outcome of the strategic review is, the right thing to do.

Speaker #3: So, either this is the way we create value—we have a better business, we create value for ourselves, so we create value for somebody else.

Speaker #3: And that value will be reflected at one point in time. So what we're doing, I think, is spot on, and it's going to put us in a better position in any scenario.

Speaker #3: When it comes to the SKUs, it's basically part of the shelf resets that happen in the spring and in the fall. That's when we're going to be executing this.

Markus Strobel: That is when we are going to be executing this, so in the next few months now.

Speaker #3: So, in the next few months, no.

Speaker #5: And have you quantified? That's helpful. Because—I mean, to be fair, this has been happening for the last decade, right? I mean, this has always been the case and this is natural for a lot of the CPGs, in particular in beauty.

Andrea Teixeira: Have you quantified? That is helpful, because, to be fair, this is happening for the last decade, right? This is natural for a lot of the CPGs, in particular in beauty. You are going to always have to take down as you layer innovation. What is different now, and what is the actual percentage of SKUs that you are taking out, and how much you are losing shelf space? I am assuming that comes at a cost of losing shelf space.

Speaker #5: You're going to always have to take down as you layer innovation. What is it doing now, and what is the actual percentage of SKUs that you're taking out, and how much are you losing in shelf space?

Andrea Teixeira: What is different now, and what is the actual percentage of SKUs that you are taking out, and how much you are losing shelf space? I am assuming that comes at a cost of losing shelf space.

Speaker #5: I'm assuming that comes at a cost of losing shelf space.

Speaker #3: I think this is not necessarily directly related. It can be at times, but it doesn't have to be. Because at the end of the day, every retailer is also interested to have returns on the shelf of high-volume SKUs.

Markus Strobel: I think this is not necessarily directly related. It can be at times, but it does not have to. Because at the end of the day, every retailer is also interested to have turns on the shelf of high volume SKUs. So, if you take a slow-moving SKU out, then suddenly you negotiate for two facings on the fast-moving SKU, this helps everybody. It helps the manufacturer and helps the retailer. So it is a very detailed, fine-tuned discussion, retailer by retailer, almost like store by store, to have the right assortment for the retailer, have the right assortment for the store, because what you want to see is turns on the shelf, right? Products that do not turn are not helpful for anybody.

Speaker #3: So if you take a slow-moving SKU out, then suddenly you negotiate for two phasings on the fast-moving SKU. This helps everybody—it helps the manufacturer and helps the retailer.

Speaker #3: So it's a very detailed, fine-tuned discussion, retailer by retailer—almost like store by store—to have the right assortment for the retailer, to have the right assortment for the store.

Speaker #3: Because what you want to see is turns on the shelf, right? And products that don't turn are not helpful for anybody.

Speaker #2: Thank you. We have one more question in the queue, this one from Oliver Chen with TD Cowen. Please go ahead.

Operator: Thank you. We have one more question in the queue, this one from Oliver Chen with TD Cowen. Please go ahead.

Speaker #5: Thank you for taking the question. This is Julia Shylansky on for Oliver Chen. I'm curious, as you think about the upcoming innovation calendar, how important is the ongoing recovery in travel retail versus realizing the full potential of those launches in terms of what you're seeing in domestic and specialty channels?

Julia Shalansky: Thank you for taking the question. This is Julia Shalansky on for Oliver Chen. I am curious, as you think about the upcoming innovation calendar, how important is the ongoing recovery in travel retail versus realizing the full potential of those launches in terms of versus what you are seeing in domestic and specialty channels? Thank you.

Julia Shelanski: Thank you for taking the question. This is Julia Shalansky on for Oliver Chen. I am curious, as you think about the upcoming innovation calendar, how important is the ongoing recovery in travel retail versus realizing the full potential of those launches in terms of versus what you are seeing in domestic and specialty channels? Thank you.

Speaker #5: Thank you.

Speaker #3: Can you just say that again? Because I just had a very bad connection for a second here. I just came to the other side of the cable, to the microphone.

Markus Strobel: Excuse me, can you just say that again? Because I have just had a very bad connection for a second here. I just come to the other side of the table to the microphone.

Speaker #3: Could you just ask the question again? I'm sorry. Yeah.

Julia Shalansky: Could you just

Julia Shelanski: Could you just

Markus Strobel: Could you just ask the question again? I am sorry. Yeah.

Speaker #5: Yes. Apologies. As you think about the upcoming innovation calendar, how important is the recovery and travel retail to realizing the potential of those launches versus what you're seeing in domestic and specialty channels?

Julia Shalansky: Yes. Apologies. As you think about the upcoming innovation calendar, how important is the recovery in travel retail to realizing the potential of those launches versus what you are seeing in domestic and specialty channels?

Julia Shelanski: Yes. Apologies. As you think about the upcoming innovation calendar, how important is the recovery in travel retail to realizing the potential of those launches versus what you are seeing in domestic and specialty channels?

Speaker #3: No. I think travel retail is an important channel for us. Because travel retail is not only there to create sales. Travel retail is there to create the image.

Markus Strobel: No, I think travel retail is an important channel for us because travel retail is not only there to create sales, travel retail is there to create the image. That is why we have, like I told you in the example with Boss The Scent For Her, we have started in travel retail because you can get amazing space, and the travel retailers see their stores, especially in the airports, more as drawing consumers in. In the past, when things in the airport were cheaper than domestic, people went in there for the price. That is no longer the case. Now they go in there for the entertainment, for the in-store presence, for what is happening in the store. So if you come with launches in travel retail, you can get amazing placement because you are helping the retailer to stop the travelers and get them into the store.

Speaker #3: So that's why, as I told you in the example with Boss for Her, we have started in travel retail, because you can get amazing space, and the travel retailers see their stores, especially in the airports, more as drawing consumers in.

Speaker #3: In the past, when things in the airport were cheaper than domestic, people went in there for the price. That's no longer the case. Now they go in there for the entertainment, for the in-store presence, for what's happening in the store.

Speaker #3: So if you come with launches and travel retail, you can get amazing placement, because you're helping the retailer to stop the travelers and get them into the store.

Speaker #3: In return, it gives you a very good image, because you don't have two or three SKUs on the shelf. You have a big display or a very nice stand with a beauty consultant, and so on and so on.

Markus Strobel: In return, it gives you a very good image because you do not have two or three SKUs on the shelf. You have a big display or very nice stand with beauty consultants and so on. I think travel retail for us is important and travel retail for us is actually growing nicely.

Speaker #3: So I think travel retail for us is important, and travel retail for us is actually growing nicely.

Speaker #5: Great. Thank you for the color.

Julia Shalansky: Great. Thank you for the color.

Julia Shelanski: Great. Thank you for the color.

Speaker #2: Thank you. We've now reached our allotted time for questions, so I'd like to turn the call back over to our speakers for any additional or closing remarks.

Operator: Thank you. We have now reached our allotted time for questions, so I would like to turn the call back over to our speakers for any additional or closing remarks.

Speaker #3: Yeah. Before we wrap this up, let me just reiterate a few points, and I'll be very clear. I mean, we had good improvements this quarter, but we're obviously not satisfied—not satisfied at all—with our current level of performance.

Markus Strobel: Yeah. Before we wrap this up, let me just reiterate a few points and just be very clear. We had good improvements this quarter, but we are obviously not satisfied at all with our current level of performance. But we know what it takes to make it better. We have strong brands, leading positions in attractive categories, and a clear framework to strengthen execution. While we have given guidance for Q1 only, we are targeting to deliver fiscal year 2027 EBITDA and free cash flow close to fiscal 2026 levels. Our priorities are straightforward: improve sell-out, close the gap to market, strengthen profitability. We are implementing the changes needed to achieve those objectives, and we will continue to act with focus and urgency. Thank you for your continued interest in COTY, and thank you for joining us today. Have a great rest of your day.

Speaker #3: But we know what it takes to make this better. We have strong brands, leading positions in attractive categories, and a clear framework to strengthen execution.

Speaker #3: While we've given guidance for Q1 only, we are targeting to deliver 50% fiscal year '27 EBITDA and free cash flow close to fiscal '26 levels.

Speaker #3: Our priorities are straightforward: improve sell-out, close the gap to market, and strengthen profitability. We are implementing the changes needed to achieve those objectives, and we will continue to act with focus and urgency.

Speaker #3: Thank you for your continued interest in Coty, and thank you for joining us today. Have a great rest of your day.

Speaker #2: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation, and you may now disconnect.

Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation, and you may now disconnect.