COTY - Earnings call transcript Q4 2021

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Operator

Good morning. My name is Brittney, and I will be your conference operator today. At this time, I would like to welcome everyone to Coty's Fourth Quarter Fiscal 2021 Results Conference Call.

As a reminder, this conference call is being recorded today, August 26, 2021. On today's call are Sue Nabi, Chief Executive Officer; and Laurent Mercier, Chief Financial Officer. remind forward-looking many statements. to today the like contain may would you of that comments I factors actual Please reports these SEC, lists filed to forward-looking with could refer Coty's the where earnings statements. the materially to differ results release and that from cause company

to Coty's the release. In except over non-GAAP the section the company's and financial will the certain now adjustments call Coty's financial discussion measures Nabi. addition, reflects of as I turn noted, results where expectations Ms. specified in of

Sue Nabi

Ladies we year and still conclusion momentum about the for Coty. months, of our very pleased excited fiscal I’m transformational and gentlemen, with over ahead. XX 'XX This by have last more opportunities year, the the has even progress truly and the a made been

have significantly XX strategy, a profile, our and is executing last of beauty and we that clear Wella, experts, multi-year and on profit on our savings, the Coty of team improved months, transformation divestiture revenue, leadership unveiled and began our objectives. leverage It's over-delivered the built completed Over as future There of more points take At to Coty that the want same time, today. willing beauty the up nimble clearly number expertise risks much and stepped emerging the has to its highlight to shape organization. are beauty stronger a industry. of a and I key

to part the the our our consumer same consumer expansion digit demand turnaround cosmetics by quarter First, continued in in prestige triple of ahead migration our triple beauty in rebuilding and to double portfolio. China, fueled robust are XX%, trusted renewed the brands growth a brands growth towards prestige consumer the our digit and to our coupled each as brands, of expectations, the see fragrance revenue trend and underpinning close growth fourth of by beauty grew we prestige CoverGirl in At region, in driven was with that time, U.S. continued footprint.

and of of guidance above the our our X.XX high 'XX result, billion range. fiscal a As revenues end

million, $XXX delivery our were Second, higher or accelerate our over by our than and delivery and accelerating profit 'XX in fuel we in growth. reinvestment fiscal $XXX to million business both target, over our savings able to at being original

adjusted or above making we we and an XXX despite ended EBITDA higher fiscal XX expectations. of Coty of fiscal basis well EBITDA sales million And clear million above than into that our 'XX, levels 'XX organization. points In with it's base, advanced margin pre-COVID guidance XX.X% in leaner in a lower XXX fact, are a with

will each pillars, to our broad-based continue of the strategic we strategic and make today's six of across milestones progress Third, I cover on call. some

across are coupled initiatives first as we now and months Coty 'XX, that a quarter it's is combination building industry by with of of quite two strong in into improving an the our clear propelled business, Finally, fiscal cosmetics, backdrop. momentum fragrance

strategic year. progress me Laurent Let in it revenue our update I you on the our course with and will review now wrap to take hand Then, to I our to financials. over up trends before through take fiscal in QX it minutes for 'XX, a an few coming outlook of and

fourth year-on-year doubled COVID of year. the Our quarter in the impact revenues as we nearly lapped prior peak

digit strategy. confirms reinforces continuing to our momentum Canada. past date year in Brazil our full and standouts. over remain year in we fiscal returned double U.S. the and the X% prestige with Coty and in driven growth U.S. regions in XX% performance the U.S. and will for year-on-year U.S. that view China growth region growth by were all and and to have investment market the growth grew products While QX in QX, markets seen the Americas in key 'XX, The a The

both through basis, digits restrictions most sales more XX% on with we EMEA powerhouse full grew of year-on-year and Coty. 'XX focus for QX, European QX, on than fiscal Pacific double in remained another China growing China building market the quarterly versus into under in quarter. also doubled Asia year even a markets as many and as

in market share stable our of QX, quarter. brand in in first key consumer the though initiatives at started years, the beauty brands even EMEA five fact, live only In going our recorded time for the over end

to Moving on channel. sales by

prestige channel, QX, we flat more nearly 'XX continue sales QX, as and to prestige in low Our a than reduce negative even brand Gucci, in sales were Marc to fiscal impact low-teens and digits standout and in Nearly in high-single cosmetics Calvin Coty's supplemented engines, to digit prestige Jacobs, doubled expansion with quality fiscal negative triple to in related were double which like-for-like 'XX. QX, skincare. represented Chloe, brands sales with prestige in a new Klein, Burberry, 'XX fiscal up in from growth all impact performance and

beauty of market XX% In our the compared growth fiscal in versus half grew fact, looking range. like-for-like our year, second at year last the prestige XX% prestige to brands

also beauty returned unveiled the vertical year-over-year our these turning of store our XX% like-for-like consumer to QX, growth each was region, mass mass Factor growth. of led as category by COVID-related each increased portfolio. the impacted key revenues beauty cosmetic we Having in behind was Growth last CoverGirl, mass by Our brand, Max with positioning closures. and least are year's part focus even channel the new as brand the beauty across the now Rimmel to

Here Paixão of brands, we the global intend to care Adidas. brands our our knowhow body key to like accelerate including and leverage Monange capabilities Brazilian and

now transition as of putting our have based place, This year, and run basis, these slightly to decided ahead we businesses. how with for two grew reporting during dedicated first of organizational chief our prestige consumer on to the internally with concluded officers segment we beginning brand new six-month quarter the X%, are 'XX business to On of align like-for-like beauty beauty. each new structure we plan commercial segments, and mass in process our beauty brands will of the underlying the the Having in consumer and market.

reflecting financial results. recast I this We call. before take our call will be few our through over weeks to earnings next Laurent now a financials segments to you will the over hand publishing historical

Laurent Mercier

Sue. you, Thank

due Starting from of strong Our quarter margin percentage with COVID our as significantly reduction, our maintained that gross exceed our delivered our profit our the of brands. gross which This over above year I and marks adjusted say us by to to QX was strategic by to gross quarter marketing last cost full our second EBITDA fourth margin us QX we target. profit XX% allowing step both adjusted our on to behind this XX.X% investments was am delivery pleased XX allowing base margin performance, consecutive of driven meaningfully up depressed margins points crisis. gross improved year, framework.

'XX our and line For an of XX%, fiscal margin with from RemainCo points sales 'XX, gross the basis base. gross business XXX margin lower fiscal of in reached in 'XX, a increase the despite fiscal

'XX prestige obsolescence. the 'XX improved expansion shift productivity focused well towards mix from We remain cost on by e-commerce material supply as fiscal margin benefited further skincare excess chain positive and Our fiscal and beyond. in brands, driving as margin and laser and gross savings enhanced gross

will to deliver our category plan margin and multi-year we regional shifts. in us profit multi-pronged, simultaneously behind This in expansion. turn expect brands reinvesting also gross while a continue from channel, allow to benefit and place, strong attack positive have mix We

levels. also which As up QX XX% approximately that emphasize we step first we giving QX. these marketing a quarter, to a during better, very we lot which behind I details our than brands, while the A&CP focused fewer, of want from QX had with remains working XX% marketing our 'XX are soon our we was in investment increasing you of mentioned are fiscal that investments. sequential on will well return media on investment half the as during your to the acceleration last means philosophy we growth bigger sales the of across Sue as pillars. earnings on our is continue call, more successes have from and 'XX reinvesting be of

directing investments. I will where highlight are some areas of However, media just we the

Hansen. continue brands to launches Jacobs we and success Perfect, share market Sally momentum, behind including with invest CoverGirl Marc proven First, and and

icons are categories, Gucci Marc is accelerate our our and to strong U.S., the both example, driving Daisy, in Guilty. icons, into such by make-up is fueled ability China, plus also growth for Signature, deliver we as fragrance reductions. in new Jacobs Bottled, in key and online investments grew expansion finally, strong our Gucci share investing Boss We X.X The and winning ROI offline. market Chloe And where marketing profit particularly which our This in our be QX. cost point enabled to percentage continues

contributor down QX, during XX% approximately the largest fixed cost headcount, our services. cost is total declined fiscal This year-over-year cost XX% million were million. quarter, 'XX our bringing for XXX expectations 'XX. year. over savings significantly During to business fiscal for initial costs reductions, and savings of of The the achieved ahead our We fixed XX 'XX including and were savings fiscal of

that buckets up investments. other of A&CP goods included savings XXX cost The made sold, million trade and structural reduction, of this

have in fiscal million, below same associated have projects our XXX a testament importantly, A&CP. 'XX, our actively the how identifying the related savings million drive This of structural budget the growth XXX target another XXX does to was track important years, time, enable net We cost million bringing bonuses, will more million, our savings inflation, total savings. organizational culture the that to it's 'XX one-time which target. approximately tightly. cash-centric very are XX reinvestment total fiscal much the we us note two are we cost to to the culture, managing we to is XXX savings Given over this of to this not include And to behind or cash of been outlay we cash beyond Equally program anticipate fiscal we our one-time down able cash And accelerated our this a which a outlay below intended million. at on year, remain achieved true cost now over initial some of we reach pillars, of expect been reinstating to with in savings next million transform 'XX. the 'XX turn fiscal of reinvestment leverage. though XXX In

to in adjusted us year EBITDA full exceed ahead adjusted profit our allowing guidance. EBITDA for came expectations delivery, our to Moving of QX,

million was this the EBITDA of million sales And or XXX quarter. XXX XX.X%. adjusted the XX% for year, Our was in or

year, our was COVID the despite last from levels improvement lowered. fiscal significant our was margin which very points a higher heavily 'XX marks EBITDA XXX crisis, basis by impacted fiscal sales actually being this 'XX RemainCo While than

attainable investments We and strong driven a Our the cost performance goals. year delivery between but tradeoff profit marketing profit I as a be strong evidence started savings. the should see robust not by year growth simultaneous mentioned, fixed was focused the 'XX very fiscal and see In both expansion, that summary, previously this achievement was gross sales of we improvement, do virtuous the as cycle. profit margin

of to which income now Turning full which XXX income adjusted EPS, tax EBITDA tax with quarter million year June XX refinancing. negative related bring as the X write-offs our rate following to despite XX primarily of drivers; of XX the previous million, to for deferred pre-tax included as other of the effective Nearly XX% the line items well million which and to financing true-up adjusted reflected our of dividends the in comments. the preferred includes million million April

QX diluted our at ended negative result, a adjusted $X.XX. As EPS

tax based diluted XXX ended on EBITDA the adjusted adjusted we of million and EPS around 'XX with effective XX%, EPS For at year of $X.XX. the fiscal rate

value the during value rose While trend included EPS, the not quarters. adjusted quarter, by last market two XX in the Wella of million, our expansion fair continuing in

fiscal Looking for context some provide on drivers different EPS. I to 'XX, would our adjusted like to the

adjusted 'XX, results, excluding will EPS. of be QX from including we our non-cash stock as First, adjusted compensation

of debt by will effective expect basis, in global tax and million now Further expense of on $XXX lower a Second, somewhat Amsterdam are refinancing. cost an net 'XX fiscal for 'XX the a bit than higher the offset the interest reflecting continuing higher we our in are debt fiscal principle expense we million, tax on XXs US. the mid XXX the ops post balance percentage jurisdiction in as adjusted rate side, the anticipating high

degree effective with projections uncertainty However, there high current the a rate we in of environment. is note tax

need have the preferred on help treatment Web calculation on in to convertible mind. site EPS correctly, adjusted complexities we balance Coty’s you sheet a Coty To Finally, our do short model Relations diluted overview EPS. our of a Investor keep shares introduce and the of analysts investors posted the that accounting number of to

Now for typically came cash the which seasonally quarter, moving cash flow despite flow to roughly being in free QX quarter. a weaker even

fiscal 'XX the during management one-time cash cost one-time cost in below We continued our million. coming strict CapEx quarter and of for with XXX

for a a which with generated forward. million, expectations. very result, we line Cash for remains 'XX, our going is flow important in priority As generation cash XXX fiscal free of us

We to XX across have our net steady drive believe and and our identified bolster cash opportunities in a in we a further number fiscal streams, key of beyond, debt. 'XX which flow reduction

convertible with Turning X.X approximately of X now ended of We This at of to increase from as to refinancing in XX% approximately we XX year a dividend ended the a completed which valued around the so negative costs slight the Factoring billion, stake our net million impact, financial billion, Forex is debt in result net QX balance the capital of X.XX structure. largely transactions with well quarter. the related two economic of our debt cash is billion. Wella payment QX. a

significantly senior due and XXXX, with notes for us upsize of remain the profile both our successfully a on calendar 'XX we towards the demand both through structure allowing sale approximately a a issuance, debt pivotal X.XXX% X% and secured of to Wella strong leverage million transactions. ratio QX, end in with Fiscal the our During extended $XXX we the improvement reduced notes senior of million, stake with of Xx. portfolio secured moving of XXXX €XXX transactions XX% track risk. in year in and These calendar capital and Xx due maturity was 'XX in issuance to completed of a 'XX net leverage refinancing

first to financial continue stake monetize non-strategic in valuation tactical asset market, further the be in always Coty’s lookout our on leverage. is as identifying and this to and and Building As business order will and upside, to opportunities at of agenda. and we to intends Coty provide with the Due stake time, brands, today, continue the a Brazil in IPO Wella to our a care value this Commission this leverage Coty remain of filing, in affiliate. we beauty dynamism In of regulations growth to but also Brazilian the a deleveraging on cannot help details advance its Coty’s this Brazil reduce the Earlier point, further XX% markets, This growth. retained shareholder following will regulates due commence to pursuing updates to business. confirms at to partial CVM, first fuel create considering capital a controlling Coty the reminder, further local offer IPO course. partial the will active filing opportunities that process. assets its its Coty support completed it's Brazil personal Brazil Securities view of Wella so which for Coty

Additional the call the discussion a information hand milestones on Web be site. now IPO to and will outlook. of Brazil about back the our accessed can the I for Sue of business operational partial CVM

Sue Nabi

you Thank much, very Laurent.

April. further end to initial our organization momentum. to know building our first at financial Starting prestige ideal skincare beauty stabilizing for take Sklavenitis we execute him recent speed moving our integral level, Brands and at So in footprint have the our you has to on as year, Chief leader some new come, to strategic tangible into on appointment brands. powerhouse. our Decay, The makes Constantin addition the Urban let and with make-up fragrance as to on beauty of of Cosmetics, pillar, with unveiled prestige the transform Officer in the Cosmetics of Kiehl’s six Constantin’s to IT achieved consumer next and at good it's MAC while the plans top pillars strategic is Coty’s background even journey made Prestige our in to our delivery QX so Coty milestones a the the been spend few Coty me progress we minutes We’ve a still already more

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in I improving launch very Coty’s the on impact with double though results pillar high-teens watch we the Combining and result are Finally, of make-up this first strong date, our sales of August digit the a very the growth our a just gradually together percentage. tangible is strategy, remains quarter demand the out. six like-for-like discussed, execution in very first strong Building Coty in sales of which COVID strong anticipating 'XX backdrop business. improving, growth in calendar, demand to July is sales also momentum with

though get no Looking launch At in calendar the difficult. time, to COVID strong through the should same beyond year. of we significant continue extend rest demand beauty should improve, base assuming more QX, globally, to conditions the deterioration our expect year comparisons

points. result, of fiscal we cost like-for-like expansion fixed base percentage stable, fixed leverage continued 'XX revenues strong by maintain our for lower approximately a as growth should in As sales operating teens net margin, the as are which basis gross of cost relatively drive percentage, low targeting our XXX a we

of of 'XX To continue margin leverage XX adjusted improvement. R&D of to calendar XXX Continued has our incredibly million EBITDA expansion points of on 'XX accomplished in which basis have basis investments, conclude, towards to Coty to expand, by X.X% in $XXX and year. currency continue a target Xx approximately proud And existing what year past roughly approximately and we I'm calendar should Xx. representing leverage the grown basis, constant points

with ended of and expectations. fiscal revenues, We have savings ahead 'XX EBITDA

in this plans on seeing QX on seat. high-teens every progress, 'XX our growth each in as starting pillars, our are that building executing and each area. in showing put fiscal the and for the on motion, milestones we have Coty sales positive of We a and strategic very already like-for-like like-for-like growth is footing, expecting strong year clearly whole, driver's low-teens in And

flow six of through drive As improvement to expect sales pillar reductions 'XX, strong and the further business the fund expansion our fiscal both we the coupled we with additional in strategy. and our move to profit gross reinvestment through margin cost

Our today. and your drive through commitment profitability Thank beyond, you acceleration. remains sales to all and continue time calendar strong by meaningfully 'XX to reduce our for growth end of leverage

take We your are to questions. now happy

Operator

to question [Operator do you that Instructions]. everyone we In to allow the opportunity. ask limit interest of one time, an yourself

from first question Rob with take Evercore. our We will Ottenstein

Your line now is open.

Rob Ottenstein

focus and on consumer Obviously, progress. very you which the stabilizing you wondering I tricky business. Thank difficult strategic much more judge beauty if little Great. help the your first was us progress. comps, bit it's can a the little is for a just us given terrific and to maybe pillar,

are or us terms continue to repeat you you. maybe go to the good or progress. if in indicating You certainly a you're seeing brand equity stabilization is that in could Thank wondering trends significant of that But data, some support which any I the scores and bit metrics likely purchase was future? little gave market other the share confidence deeper

Sue Nabi

Thanks big CoverGirl. really very speak about question. we're gives me something really having occasion to this. to I was Rob. for a the say on success achieve. This much Hi, would that That easy not that was a great

you the CoverGirl back that we skincare Clean with to decided way, of brand, today area followed which way mascara. by one of best As key area by is the selling ones indexing when you the in U.S. was also the Clean is, is the that Beauty bet the community. call Clean Hispanic and two innovation anti-aging on Lash also business. the brand left recovery Blast area spring, ago, U.S. make-up cosmetics another know, And see people a the foundation the the the Clean with meets it Ageless, over you consumers been clearly the launched you in losing has market. Simply we made asset bold but which in this decision the the imagine, to that years. the can years only growing launching that doing with these what became brand come King is biggest That's we've specifically but last which the CoverGirl, inventor the category, to key American Beauty line And again, Beauty. the share not fact, the And clearly by years of add way in past, that's was is market brand back the namely in brand who from is are advertising, business, And as beauty XX together for who new are of Gen millennials, of Z, Fresh re-attracting

growing consumers of So understand are together, when again, very are you add the the is brand all biggest these these who make-up. those you can demographics why because easily

I of done one convert a testing which number When brand progressing, from of We just was one your the advertising older us. brand highest you that Taylor does that only of question beginning very probably following are about the is and the we the what take such CoverGirl would of And second cetera, as CoverGirl, intention, it's Simply category think who comes we Ageless the metrics the very, This the mascara. restarted old, as is years key probably advertising seen August. of new asset than among which the are one I XX people say, for really probably categories ever honesty, company I on -- it to Coty metrics, such we Niki where past has in best purchase you the U.S. is a can carefully to ability are one any If testing really, including are interest the know example, tell that in are producing. in I the part are also for people U.S. that foundation not a on the the et purchase, is into database but to following

has that fall brand in months for So we people et has the winning for share new generation arriving cetera, is any been advertising three now make-up growing beauty, of around row, by why lost market lot are not a are the things second a super, CoverGirl. see you'll in shelf of and those again, behind products the row. space year skincare, in that super for confident a And the that recipe. And are new looking clean that's powered today, reason the

Operator

Deutsche And we Powers question Bank. will with take our from next Steve

line now Your open. is

Steve Powers

Starting August. first for Thank September and question then a outlook guess the frame digit my the and dig strong to outlook you your deceleration. double And wanted first implies about Hi. July fiscal much. which very teens bit in more just into think talked with I obviously just 'XX. quarter, growth and the you high just I for quarter, Yes.

not year, a bit for make I'm get relative similarly you maybe the they that while base just Anything, do. that out? sure sort us could Wella base comparisons key progressively the 'XX easier. drivers the you'd it clean more of for So they frame sale. difficult then adjusting call appreciate for do a to I just year and And any full

So base. implied you. drivers any maybe the there deceleration better Thank and that frame just pre-COVID versus

Sue Nabi

you, Steve. Thank

function Gucci of Canada, the part But question September, If when in that more think the was get that received or it's it best do we demand. again, about just your slowing I in Flora, not one designation. one figures commented it information comes selling number in what So what a you absolutely give the U.S. during deceleration market, fragrance be we the example, launched it's again, would to Kylie you speech, Comps difficult first can the two by of a is outstanding. the and say, Gardenia, top the are CK tell figures with Burberry the Hero, with and three Defy would can world outperforming on I pipeline and we the same in been Gorgeous the today the that the of in best, initiatives having of the estimates. of Cosmetics has momentum new start our continuing. is everywhere kind market huge you re-launch for the Flora that Cosmetics, the honestly, Kylie we Gucci have we with

described wouldn't again, don't So see I I describe way -- the it it. this you

sure the teens But ready kind for because just out super just why of 'XX launches for be, laid confident. for course, growth are reason the these fiscal are hopefully going year, we happen. watch low that any still having to are That's are make of of We we to the outperforming the out this things remainder have we could market year. the

comes on In are delivering our six-pillar how the you strategy. fact, building what tell I we good fiscal can to it is we 'XX, news when are that

share right big honestly first now And in consumer beauty but prior last years. which highest consumer again, CoverGirl, market having Europe the time for words I in time about months. beauty, is that's its the words just So stabilizing starting this years. business in could for I say five share Max has the I in stabilized a Factor Rimmel -- first said for gained market four the XX few that could about say to stores. re-launch

are was So to business, huge and potential the number the take U.S., one, be also of prestige seeing beauty advantage part Europe. growth in it China, huge but full on in to the stabilizing the the allow already I requirement would consumer say, the of us in we

these the say high is growth of the we've expertise year 'XX. during two last So about coupled been strong giving us I for e-comm capabilities and together commitment that would confidence clearly fiscal a teens with building strong

Operator

Fargo. with we Chris take will Wells Carey And from our next question

Chris Carey

Hi. for question. Thanks the

the is about for recovering talk core can in sales, and I quality Just wonder business. accounting just from COVID 'XX impact channels unique and after me, prestige. on on bit. for in to reductions a The -- revenue the had And this quality following you up if 'XX included on of little that just fiscal those and excuse [ph] billion concept M&A -- low low bridge Kylie $X.X some fiscal or and of with the reductions

just So to to, further, the sales a -- over time much how had very And base? talk can exit improve expect quick those. streamline of had just that maybe I for business 'XX. you get you thanks those of are COVID, you recover, for impact of back implying that portfolio, the from to on quality What spend A&CP the if you expect outlook? So portfolio, businesses in you the the say, done or your of just out the fiscal kind much come much how question would could to

Sue Nabi

Thank you, question. Chris, for the

Kylie continue is working our the So just his presentation, of Factor the Laurent media question. A&CP, end successes during CoverGirl, of let's course, is of seeing a Klein, behind of behind the Cosmetics, which today last acceleration Rimmel the to the and key of start comes Calvin name invest And, out the with sequential and early Gucci, growth as it XX% going When A&CP, during laid are are clearly we quarter. to a to part Burberry, huge also Max few. but to behind we there

to compared media. to 'XX fiscal going Three particularly around to investment up in tell are 'XX. the fiscal we 'XX, fiscal things clearly step can continue on So you working I

cetera. You were recovery, talking sales, about et

cities when acceleration is sell-outs started the cities June market, we basis, The prestige you in see Xx with are business we a the of first that the one when calendar which six-month the year, just and shared Coty starting than sell-outs we on and could this compare seeing company clearly we that growing the the faster market. of is on you is

of the Coty prestige also first an compared peers. is thing. health This how So that's is indicator to business the the at about

slightly grown at have by consumer for market is X% the thing, is which beauty, our second that has even seen The consumer beauty months if what the of ahead doing. last we six look we

me both is the way So seeing assess therefore outperformance the are of competitors would strong say we what doing best is doing. sell-outs a divisions, market and the I are market, what the for the busters to [ph] which in

and Another has days thing you in the by tell lower compared basis XXX EBITDA improvement points on fiscal margin The our sales. to I is XXXX, again. versus can growing of this been 'XX EBITDA

than you of EBITDA we and last metrics, specifically progression So recovering clearly can faster at in again, we much a as of versus sell-out, media year what see on the all 'XX, beginning are thought fact. sales, working

Operator

from question we Steph Wissink next And Jefferies. will with take our

line is Your open.

Steph Wissink

morning, through that have Or follow-up on maybe balance you. for maybe then, Thank key And three bottom feel Thank see is the through looking guess the what that incremental everyone. start But for you. a more I sales, your that media? in reinforce two you in question reinvest quality Good year, in working metrics the bit to upside will two-part, are at some you and a of investment? A&CP I you to invest upside the this drop you as of and maybe a and the side, are sales the activation, terms continue on to tactical think into to more tactical point A&CP. demand you're philosophical. Laurent, can or upside you where like you as is plan about line? do beyond

Laurent Mercier

you. Thank

start part on question. will the second I on So your

what we what 'XX our was the net QX QX level on we to at of this what A&CP XX% HX So, is you basically, of is that seeing are explained sales. up XX% and QX, in grew XX%, and A&CP already

gross A&CP savings that you and delivering strategic to we really year 'XX, fixed savings support using we just are that explained. refuel are to the fiscal next for So margin but initiatives the not on guidance are growth that the has on Sue any understand and easily costs giving on the we

is in Now buckets, are these really of different deeper this there level plans. go to in A&CP

and if see in very take A&CP can knowledge other lines working A&CP. media really other the in of time at of working we using have and we We you and on keep media. focus refuel discipline samples, all optimizing our keep to part these to on -- same this in testers where I productivity So the it is strict the plan and and example

we we are media the results. we what reallocate in did money? This you CoverGirl this now fiscal initiative. we definitely also continue the on daily again, example, this and And A&CP, this when will we for doing see is tight very, actually a -- A&CP writing see much, on and your it's and faster really so the Definitely, when are a team. it's much very creating are Refueling, working a work, see discipline managing on leadership question profit, within great making in here virtuous we growth at with and circle Sue So now we the we was this. this Indeed we are fueling to even weekly have together additional delivering weekly year, upsize is if where discussion On is what the and What same decisions, a any upside? okay, time and 'XX. and EBITDA.

started So we that's to and next year continue what year. really this we do

gave and On way are the the elements, working professional a media. on very, very getting spending we metrics, in Sue are few we

and testing decisions. very have copy but So chasing and we KPIs, the we making are strict are them are clear we we

is using have all what are for decision we prestige, make We scores this and we we again, team. and doing are a as a for this consumer to beauty, is what for categories, where [indiscernible] are

specific to metrics these purchase very and have KPIs specific so resource. we awareness, on all allocate intent, and So on, our

Operator

from with next Andrea question Teixeira And take we will JPMorgan. our

Andrea Teixeira

launch still congrats that those fragrance understand chunk and portfolio can, runway going should how is I I you. spoken Kylie wanted you included, thinking so question if very the just fragrances for how Thank is you've go Kylie and I to -- brand, in And come sales you. some back positive And July. your back want Skin What Cosmetics the dollar what annual understand up of pretty in we rationalization just we this is to Klein that embedded terms to think terms wanted in should on I as [indiscernible] in forward? about a you the Good a on perspective, then be that. to before Calvin follow about Thank business. sizeable and back how we guidance? so morning. thinking your a of the results. for be maybe

Sue Nabi

Thank you the for question.

I'm we side sold I led brands. we time same see key the line have celebrity So individual again been, summer on brand not on skincare has Kylie, the the first outpacing done brands. for the all would lines again, going comment on with say, on that the you to that during tell But cosmetics re-launch this I can really metrics we what that the as usually call

something year market. rest least, this a if of make-up, last XX also feedbacks the has conversion In fact, because monitor example, When comments million we of session more media. during orders during we likes, the on was that you the number cetera, first XX fact, that per happened interactions, it And million what KPIs the shopping was these the minutes. Kylie, call of versus done XXX of what basket XX see of terms than on that comments, it on or preparation minutes a like in followers of a terms not was minute which live the ingredients sales the the even that not interactions, formulations. seen, could likes that great seeing, quiet channels feedbacks, social et her different she's different would been in from course, in I been been this the XX but say, the free, had re-launch, Kylie we industry all cruelty contested re-launch removing done X,XXX And the that during and And for has was huge; were was that doing first year, surprise, gaining during last we've for higher Kylie the we've Xx today, summer. are like the because feedbacks outstanding. qualitative of All absolutely we've and now the line for vegan, are during XXX% something is the including we

the So different when different across growth fiscal 'XX comes it it of outlook, different channels. the and, to markets, brands, embeds our broad-based course, the

Operator

question And take Stifel. Astrachan will next our Mark from with we

Mark Astrachan

everyone. ask growth about sales Wanted good and to afternoon Thanks, morning or progression.

comparison but So, XQ obviously, strong driven. really sales

or conversely, September acceleration that at imply for some little growth sequentially your less You for CAGR the your year maybe I look stack the the bit would strong than in or was underlying Like underlying pretty quarter strong of and two-year then a peers. growth. think guidance a

the guess bit you're the really done comments at it it Maybe some there profile helpful. I work? the is Thank the in more acceleration? is this of could if to of a -- you that that really question point So strong these of starting A&P give terms is lower if driving what would you. channel is Is lapping exits brands, be

Sue Nabi

for Thank Mark, you, the question.

I question our driving that on outlook clearly for we are So thing again, your progress strong fiscal first the seeing pillar. if what's understand our again is 'XX,

that this a Flora or the had But add Coty’s of selling last last than probably year bigger with best years. ago year in to launch by launches course, remember We what's fragrance was this biggest from best to selling the going these prestige biggest when you back of by we fragrance launch the Gorgeous maker, improve Also Again, Gardenia activity are very us re-launch. to the which Hansen behind have being that strong there quarter multiple one. in number brands is now the one year, year one that confidence show it we and Defy, Xx re-launch they gives also I Sally very, got this is the same be layer what the XX seeing Gucci; Kylie come launchers. continues have Xx be something day in U.S. strongly of the and re-launch, fragrance can, again, that Jacobs, on Cosmetics new going which Marc happening to one initiatives, the the be is in in are you to ago Flora Gucci, demand Canada China U.S., figures confidence Again, prior Burberry, by we Europe. Perfect

a started during second fiscal building momentum a we we're that half 'XX. of on So momentum the

Operator

take And Olivia James. next question our Tong we Raymond with from will

Olivia Tong

press the Great. about your on release value Thank the lookout you. in I revisit for wanted always being creation. comment to

geographies sales to of if -- of may And on and any then obviously brands And just decision you call. the just about we've the in there's are traditional rest P&L your into portfolio? can number that's of incorporated discussed thinking the first, So the IPO part genesis And of talk impact fit or a in there brands that, sense whether of your your others a outlook? in quite that your Brazil? not view about

follow prepared in Thank have to those So up. that be you mention you. that should for then the a And candidates we maybe brand if remarks, I alternatives? assume are your likely didn't more potential strategic

Laurent Mercier

Okay.

comment question partial let IPO. first on on me So

the keep no we of operations. all, So made consolidation keep we these of we that and majority. control is first clear There the

definitely supporting it's care with of the a business brands. decision personal and goal So of a Coty’s Brazil growth the

And I P&L so are the really regulation. it's on and will not local the comment making. Then considering an important decision strategic also we more elements

Web refer If more site operation, you can CVM in information you to want Brazil. the this about

Operator

question of Bank William next take Reuter from our And we will America. with

William Reuter

Hi. I just one. have

travel terms pre-pandemic we travel In a levels the in this would percentage segment tail still what I'm have I'm -- prestige retail wondering end was as of I in of wondering type historical where guess levels. returns segment. of to as a

Sue Nabi

seen travel domestic this retail, any So in when most in what now And spot we terms our to the of More namely been single globally even travel clearly Hainan. bright single used in we retail, digits. the be retail, of are kind they has distribution travel digits. on again, call to restrictions, it recent low comes haven't with It high slowdown brands.

around ease re-launch great that test travel growth China for location But this and restrictions to said, some in the we've us as come, course, key news you used and Of skincare. brands, is specifically key more. such as Hainan in to more there is more

and for news. key top the high skincare As This a line in we top and and great Hainan retail. engine great relying et you to going were can We've seen of where imagine, travel decades, It's XX a front got gives add we are skincare in in big segment travel skincare three in that line brands is cetera. growth mainly fragrances. on for retail specifically our new travel a us in skincare And have China we APAC there namely confidence skincare is again, that that region a now. line end been moreover growth, to the retail

William Reuter

you. Thank

Operator

next Casella will question Carla with from we JPMorgan. our And take

Carla Casella

Hi.

point to the or partially for that curious, leverage. or the then either mentioned business? sell growth what you potential and that on terms do delever. Wella you help you that up Have are in use Brazil additional that you So And listing. any restrictions in follow in could stake I'm you delever mentioned that? there just of one revisit at help whether you And core

Laurent Mercier

Thanks for patience. your

some First stake, want value to into of Wella as we remind really indeed that increase I you remember. see all,

we X.XXX. X.X, now from are So

there So a country value top now on XX QX. was and in XX increase in

balance value this continue. our in XX% will this and So sheet, increasing see we

Second, this about we really is And why no that on stage, this this. be if there be specific with agenda. terms indeed billion. now where our point, at an there will specific we we agenda is to will so that But is is economic But net there something are value, X definitely this net is this But interesting opportunity, your in our no debt. rate which financial are leverage, asset contemplating To in we of is ready explore. we net show is explained that our economic debt. answer debt indeed this

Carla Casella

Okay. leverage And then you in EBITDA guidance. gave covenant to your current stand? your Where net debt debt your net does

Laurent Mercier

Yes.

covenant our is, are So, today, net in we situation. debt very good

keep we under things So control.

very our -- good [indiscernible] under increasing our EBITDA roadmap roadmap and net calculation on our leverage, debt our and So

Operator

on Sue have call We to or no closing any will remarks. further over additional questions I this back turn at the the for time. line

Sue Nabi

team, Thank this Again, to everyone amazing an are performance everyone. Coty. super opportunity you great I we to proud of much. Thank our take by at you, delivered very thank you all and say

Operator

This does your participation. program. you for today's Thank conclude

time, wonderful disconnect day. and have may a any You at

Coty (COTY) 26 Aug 212021 Q4 Earnings call transcript