Coty (COTY) 21 Aug 242024 Q4 Earnings call transcript

Company Profile

Participants

Susan Anderson	analyst
Sue Nabi	executive
Laurent Mercier	executive
Oliver Chen	analyst
Filippo Falorni	analyst
Javier Escalante Manzo	analyst
Anna Lizzul	analyst
Korinne Wolfmeyer	analyst
Andrea Teixeira	analyst
Olivia Tong Cheang	analyst
Linda Bolton-Weiser	analyst
Christopher Carey	analyst
Stephen Robert Powers	analyst
Ashley Helgans	analyst
Mark Astrachan	analyst

Call transcript

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Operator

My name is Ashley, and I will be your conference operator today. At this time, I would like to welcome everyone to Coty's Fourth Quarter Fiscal 2024 Question-and-Answer Conference Call.

As a reminder, this conference call is being recorded today, August 21, 2024 at 8:15 a.m. Eastern Time or 2:15 p.m. Central European Time.

webcast, August p.m. approximately issued Central release prepared on Time p.m. a that found and XX:XX be or European remarks note XX investor X:XX at Eastern press on Please its can website. which Time, Coty

are call Executive Chief Financial Nabi, Mercier, Officer; Sue Laurent Chief today's On and Officer.

SEC remind list the many statements. like of that to refer I reports Please actual differ today with earnings comments results company to materially forward-looking Coty's would and with the could cause you from that release factors statements. filed the forward-looking the may to contain the

In I addition, adjustments results as the now for line will company's measures of certain and the in Coty's the non-GAAP financial open the except financial where noted, specified section questions. reflected that, Coty's With expectations of discussion release.

Operator

[Operator first take from with Chen our Oliver TD Cowen. Instructions] We'll question

Okay.

from next with take question Genuity. will Susan We Anderson our Canaccord

Susan Anderson

guess I'm do a then expansion into rollout Nice year. curious and the you job to this I first? And expect roll year. the distribution to pretty throughout already Or countries also, in And I'm this expand retail time should curious beta, kind into global have just distribution just expect the the of I'm going next? the out, line, quarter quickly? on year for guess, we to in out is slow if place. about what maybe you start I our and curious

Sue Nabi

This your you thank speaking. question. for Sue Susan, is

-- serums brand this technologies which first have of using by, the the would the allowed of got, I been brand strategy. number technologies. brand years the the And X.X its the is So OmniPotent highest brand I Whisper [indiscernible] regarding idea to is the our serum, awards. kind awards pharmaceutical specifically readying say, probably that senolytic highest highest of behind we've this indeed, adidas, and of ultra-premium inspired a This number one think, with of

Saks some in Maison an Harrods store Shanghai. the as U.S. in brand Avenue London, We've such Fifth been department in La present Saks in is in several as and stores also the Orveda having locations York, the such which New China, own in

the is to lot course, in of first starting of brand in a brand. doors. accelerate The the right the Now moment half. going This expansion open coming the niche doors is high-end of fiscal, to the doors, is,

Where talking specialty to happen talking about not able who about are We're more we are consumers what a $XXX the brand. willing are And even and shop ready moisturizer stores, and is We a doors. $XXX more. are classical is to not we stores. talking the serum about really shopping going department believe high-end and this behind and

the So long something was of we was talking the 'XX, of are that acceleration expansion fiscal really about which this in brand an awaited.

Susan Anderson

maybe I That Great. can sounds Okay. innovation If more one just add on the exciting. pipeline.

then versus number there year, fiscal or go for that launches curious you on And the You 'XX. also haven't should we 'XX in mentioned either for volume a of throughout yet announced maybe in Prestige any touch I'm that we fiscal as if mix could the fragrance been in Cosmetics? pricing expect presentation. are

Sue Nabi

Yes.

part the mix Let pricing versus take maybe part. can start then the and with me Laurent first volume

of of Remember, Prestige growth, 'XX of and 'XX, QX a this a of very reminder, QX above indeed the XX% growth in X Fiscal Burberry Chapter last innovation of did since even XX% bigger. So fiscal. very, as It company the started Goddess. and was in terms pipeline, we've of been big. was active was very fiscal

This clearly launch. double is size success on to the surfing the Goddess of of almost now. So the that's we are Goddess huge the us way, adding arriving Burberry by brand. is Intense That, allowed number the one. which

having carryover also second are that the half 'XX. the we in of launches of two, happened fiscal the Number

its And have during Cosmic the continue #X read few think, arriving Chloé Marc U.S. the Wild continue volume will fall. biggest also may it its are spring Jacobs is is which U.S. launch Chloé a #X Kylie Daisy -- HX during one. for in in this in is you HX. I ever, innovation Intense we the and its doing also ago, WWD, in moment. days carryover also in carryover this So going to

really adding the are pipeline confidence continue plus or [ we So 'XX, X of and behind be blockbusters momentum our this fragrances. carryover the us that from as ] and innovations are Prestige on record top fragrances, these successes Chapter of of Chloé Intense of fiscal new of to the it giving previous HX such track launches going

active Now also are other categories. we on

We active, color of cosmetics. are course, on

We these. have few arriving a without launches revealing

We have launches thinking behind I'm Kylie cosmetics brand. I'm our, about about I successful few color say, the Cosmetics. arriving specifically would most thinking Burberry.

arriving Lancaster Europe. behind We is have thing big There in skincare. also a

almost well been year-on-year size. China, Lancaster doubling of doing in terms has So fantastically in

it's behind picture we brand. the of Europe brand that activated this both the of Now for this sides really turn so have

first Thrill We've other and many but XD Extreme a from of second from innovation. is last is called Beauty line the growing but to which division. we fragrance Mascara with big the this into ignite Seeker which of many, going least, Vibes, in leg have And clearly CoverGirl, launches. the adidas not of big we categories Last going believe be a launch to announced inside we least, also Consumer Rimmel Beauty. There global is is also not launch a fragrances Consumer believe

fragrance these now we Next volume? pricing in to happening launch color big Laurent, divisions. and cosmetics, a have

Laurent Mercier

component that fiscal the was 'XX, digit. the definitely -- had to remind back was pricing price we we of price a absolutely. with and just Susan, implemented and I a And high peak big on mean, of definitely little some where single carryover growth year 'XX step fiscal from was the inflation, Yes, It increase.

'XX. the 'XX. fiscal increase impact in beginning digit, but And the in mid-single low which positive fiscal to in also of more was we was carryover year, which at this continued fiscal had implement second single half price 'XX also we So digit in

really fiscal high So single in was 'XX, indeed, digit. pricing

Now moving I balanced price Definitely, volume, X% equation, mix. X% to more our growth and to between 'XX. forward mean, algorithm fiscal is our

So the just And absolutely innovation that it that, are key. is means of also driving was volumes. indeed, course, shared, volume really additional

continue price will targeted we manner implement we definitely a indeed. the we where have very we Pricing, in data. definitely can know know We increase because

really either the but is also to And So because piece, very, strong definitely doing way improve And All are also a the And granular. work important. meant strategic we that to to possible. up captured mix these can revenue, margin. is course, all SKUs the leading contributing is all the current on unlock innovation revenue management but we are gross portfolio, is this value mix. initiatives very to the it's portfolio mix the net which under we upgrade of very and now the is in really drive to is are stream, last

Operator

next Oliver TD our Cowen. from take with Chen We'll question

Oliver Chen

retailers and are what elaborate the planning on seeing a term. in result. placing mentioned of helpful caution are would retailers order with some that? how be you're You terms inventory near as That in Can you

lots consumers this your year, terms would given environment, about continued in fragrance best and as the comparing and/or think we remains regionally, highlights, investments more that of very of finally, in attractive. practices as love generally or crosscurrents feeling how as Second, any there's clearly customers contrasting in thoughts digital especially And the on just are well innovation R&D.

Sue Nabi

Laurent, part. start you with the can first

Laurent Mercier

absolutely. Yes,

regions in important question you very a can very So Oliver, a it's are also and in indeed, putting indeed, be this is on very Because I the think the that different. question, way categories. that in depending your -- dynamics really

seeing lower end mean, are and being Beauty And growing, keeps we upper in being growth markets being beauty overall and we mid-single our being digits. in mid-single engine and double the very being what really Consumer seeing, is digit we the Prestige definitely, seeing are we mean, like As you is indeed mature I dynamic and know, in keeps more more that the digit this and we the also I and are that in we seeing, are really the end.

Now managing the same are at that indeed we seeing. Beauty with U.S. I your of to is retailers seeing when cosmetic our indeed are market, depth, in in question, indeed, time, their we seeing U.S. inventory we Definitely, color Yes, is some caution. that that But indeed are the go we this this which and net highlight what more are indeed challenged, a want portion is on revenue. Consumer only is

growth engines very Beauty a growth really on the other small the retailers are I it's the seeing are Prestige, part. but we dynamic So in we also seeing same engines -- definitely the on in at Consumer regions, that mean time keeping in market. And

why in driving for be Beauty positive QX. that's Consumer expectation to mean, I So it's definitely, moderately our

indeed, this we in into consideration taking So are algorithm. our

Sue Nabi

This is Sue speaking.

of about was So how the in are your question part consumers different the regions. second feeling

parfum, So also fragrances, but bright of big fragrances remain presumes, would de twofold, U.S. story region elixirs, mass fragrances a I for all kind of spots. a is strong to concentrated see big fragrances, we first course, of with high-end the shop market eau us, trail continuing that fragrances. highly really mainly the for Prestige where the us fragrances, by the that way, specifically region clearly It's of are high-end say. shopping People

very, in see very channel entry same the fragrances time, at the well. But Prestige doing also same you

not that towards, but say, younger by it's Prestige, either. would trial It's saw say, It's both time. body the formats I generation. we at are, not so And of So users I sprays would other. lot heavily the these or used formats, smaller one a including entry of also same course,

fragrance we clearly is this what So the part. on see

a clearly of lot see years. this color the some quite market the prices and has mass last dynamism been in we consumers X still the On increasing market. interestingly cosmetics, of strongly now that in And

some really environment. kind trade see which first is of up, You in a this

consumers market to from entry You color up trading see cosmetics. portion mass a of Prestige

interesting. very that's So

are we at trade seeing not So downs. all

We we brackets, the are seeing and seeing price still very in active. operating consumers very, are so different trade-ups

is we there is see are intact. pressure. beauty bright are the of dynamism better doing The spot. mainly in drugstore we U.S. us In U.S. really U.S. in less than the this doing reason chains, in of Europe, also the the rest where what distribution the the the pressure pressured. Fragrances in see is a Europe the for market on cosmetics they Color still The are

here Last but twofold so Asia, in a least, again. not it's story

fragrances. XX at a We there behind is got play, to the of low. very recently we -- also And years markets. We $XX. at of a [indiscernible] news in that is China, dynamism look #X from $XX in our $XX in that in it's French-Spanish one countries, it story we call you If and the less that it's It's than active reignited specifically ago launched it what initiatives. Fragrance country [indiscernible]. We become index many recently. called above there, under agile was ago. is this the a see Africa engine outside brand year is growth penetration including fragrance South beauty

you is there huge look see whatever still, good, would price, feel clearly say, for element. the good, is this I So that demand

Highlights in 'XX, on best practices. investment fiscal

the fragrances. practices I 'XX blockbuster and when continue comes fiscal in to X practices that creation in best best is Prestige investment it think our -- X to of highlights

not X years are used phase be catch-up like anymore We to in we a ago.

market this been mass which to in gourmand/vanilla/banana company blossom are trendsetting driving fragrances, big area. becoming are a flower in really we economy. And today resonating we've the from Now

that we really this continue. So something to intend is

thing, Second are up in bringing have advocacy put place. model we our that also we

may a the really That's the grown we've during huge and progress. both EMV You that by CoverGirl noticed remarks Rimmel prepared XXX%. have of

increase months as agility we Now going what a to the previous we to putting as put place to on innovation versus quickly And to more a innovation, in X year this, the inside our years. is X the start-up organization than of market company. need do the in are in

in one by allow fragrances huge level this in multiply have X X. we innovation this that marketing multiplied progress this level start-up but machine cosmetics, us that division, will advocacy on in already knowing the Coty color coupled with innovation on side, So also of by to inside an agile

we really a So are in pace. high-speed

adidas marketing, not that fragrance huge fast but advocacy we mass the launch on it of also or applying fragrance believe side, least, are these opportunity. market a the other with practices, is Last best to beauty mass momentum Vibes we sorry, be

Operator

our We Falorni question will take Citi. Filippo from of next

Filippo Falorni

Consumer the Beauty consumers. seen of So I wanted lower to in you the go to U.S. income level back promotional have under What category Clearly, more pressure, the market? we've business. being with particularly environment seen

how Or adjust more of the planning certain promos to value you in iterations are some part of consumers. you for planning are kind low-income portfolio? respond So a to the

Sue Nabi

CoverGirl, XX, of and kind which to XX to the is to, to cosmetics done is understand that really XX in really coupon. Beauty, even talking advertising, XX, U.S. Sue of of Filippo, younger a very brand still Consumer It's the TV old of people of to a a above are is mainly growth lot specific like It's support speaking. which what And Coty We've years influencer a really example. bit of in lot to seeing a up really marketing, bit way, this really from coupons. mix little years studies our is take are old. recently still marketing a what advocacy for this color in a for we little or levers

consumption. is pressure So on the promotionality and driving not what is prices, prices

just ago, Beauty, category from category. some cosmetics to Prestige are Remember entry said minutes we consumers trading few color up seeing I what a Consumer

really it's seeing. we that So are this

the us the mass prices but at It's entry of part brands Cheaper really the the that say, would like if market, is recipe the it's mass So job say, brands. of not cheaper like and volumes. of this, industry innovation, between Prestige. the are players put I and the, shared I may not on this this it about I is upper call about to of Prestige market. job taking that all It's works. really This would the

Operator

next our from take Javier Evercore. We'll Escalante question with

Javier Escalante Manzo

you on mentioned grew it Brazil, Gross is points. question margins increased high If remarks, that your -- about My prepared in digits. -- very XXX basis double Brazil. I from

And do how X follow-up. you is have year What accomplish in I X so year. So much margins? a Brazil of consumer role just in the profit driving

Sue Nabi

Javier.

the me first market Brazilian giving Let growth Brazilian and part, us highlight you would say, the trajectory fantastic, the opportunity with and and to the I giving very thank for Coty me teams. of start the much

this on market. this let -- So me maybe you update on

'XX. been growing It's more the less this or fiscal seen business So have XX% that in has Brazilian growth of very in rapidly. we market

many already We a are categories. leader in

body a Monange. We are as in Risqué in a the strong has the are phenomenon, And with positions #X #X in very with by leader scented brand of oils, the body we category called way. Coty the which body becoming brand global nail called care lotions and the are

very to of market in penetration over Brazilian We A unlocking It's little you item substantial and billion this big scenting said usage the opportunity as market, now are a $X it. country. the of or fragrance market is bit context, XX%. is a close the fragrance usage

is you So imagine a for can company like Coty. this paradise

portfolio quickly while So both recently. global we Prestige very been you very leveraging country, direct the and Prestige in our door-to-door very can of our big well imagine, been brand. selling, positioned this channel but has is here, growing retail fragrance has in also and strongly And as historically win company as mass to particularly mass, are

as can distribution in locally. our fragrance capabilities, We manufacture have we we this are the factory extensive a country that big our where leading fact leveraging as well

launching So Brazilian in a fragrance market only we brands retail country over the mass with of #X after X our already share. few of reached this X% year rank channel, the in

now and almost where such Of XXX we from course, few Calvin we going drive through of distributors business took reaching we is by points But as a the versus X. fiscal share accelerate story to as brand years this up led it's and productivity, Prestige Hugo and ago, are market basis we Boss. almost continue additional 'XX, Klein introduction, step the XX% brands will the a this fragrances, to also and expansion improved over are

and complement land Laurent, you of of opportunities, story. us, you for can maybe profitability beginning part this imagine just for... the the the can is on really So it's a that expected

Laurent Mercier

Yes, absolutely.

growth So indeed, Brazil engine to agenda very manner. really course strong make Javier, was for that in of it definitely, was, the a but it's a profitable

we So numbers And even this that indeed over-delivered. mandate. was definitely you the see from the

initiatives. again, there. the the of Definitely, was fantastic really talking of by the Risqué playbook. brand, this, lot portfolio. are opportunities. is able and And power a to a the really these all one, were management implemented was when margin, brand with really the there was will a gross really innovation, there about first but a And the price and inflation, case deep increase Monange do review I start because of the allowing mean, was you unlock open lot pricing the significant the also with we strength the apply a of starting strategy brands, Then we because So to we I brands, pricing. you really number

Brazil, Keep own own mind our was So our in that have have mix. also factory. indeed, in this pricing also we we R&D, really

we cost also absorption We additional need were and gain volumes. to significant really So to able procurement. with gain on improvement fixed

circle margin. able really in was many the boosting this that's then really really And that the invest explained We're the gross So we virtuous times. new opportunities. to

fiscal means it So for that 'XX.

Brazil even equation they fact, is for basis the faster in that are In fact, because points moving than gaining, the is additional accretive the company.

market, growth right shows we they it have platform. So engine their bring because bring and profit growth, the they that

Operator

next take with We'll question our Anna of from Lizzul America. Bank

Anna Lizzul

go wanted Beauty Consumer I topic. to to the back

couple doubling You the mentioned years. innovation, you're diving next into in of

mentioned of from here certain as Consumer side given of more view though, benefit expanding challenging mass Just is and seeing mass in competitors environment? opportunity. very space interesting you strength in to trade now the Are Prestige. the therefore, this do trading growth a a beauty from up, you And down in you entry-level consumer which Beauty, space, the more any

Sue Nabi

morning, is Sue. good this Anna, So

Do time. course, beauty opportunity? U.S. I market, what growth years. as beauty for job are me it the a more is see or we question someone not growth that understand a because say, Yes, again, X just same a we read the about, typing would we of let I doing last this where if as at of is Mass doing, So have been is see fantastic just the X the opportunity. mass we

-- probably the on front one seen in is of the that You've not the very in CoverGirl brand the is the resisting nimble side, some omni-channel very, of also recently most best that scanners in plus one but only slowdown vision recent heritage to competitors.

learning are we quickly. But

place to are putting place in needs in put be We what quickly.

this the you it. with advocacy As growth is are right destiny down the the are that on towards that light, right now is innovation who are goes market. changing beauty we visible it, this consumers leg, with a brand and already have agile right been making the suddenly the was which active. doubling And this But of really full Coty. second the heard marketing we It marketing of our with inside start-up adding

very, Now becoming that's looking team, I competencies sorry, something word the was for. multi specialized it's team, would I say,

mainly So cap in you but imagine these a e-comm, drugstore in can booming, that when together, X that that chains, market pressured, we are having even fact. in is the are brands you in

it's et that about explains would seeing the It's we cetera. say, certain slowdown mass in So beauty orders, is I that some, channels retailer not beauty mass in that are pressured.

So I the believe that look as innovative of Prestige. assuming feel to nimble, future, that mass with beauty the are continues have and we

number So one. this is

we this, we others Rimmel. the two, accelerating this to move of behind in division are the in market market the Rimmel Number same mass away X This we been I when fastest-growing is the accelerating are quarters category, playbook of fragrances. globally, U.S. equation. division color is cosmetics for and this also growing expected top on last in really the 'XX. among has be share fiscal category And worldwide. from are this market one gaining And our

there in nails, in we body around of huge and elevated we increase care accelerating the all penetration a care artificial accelerating nails, because is specifically are call body what in We world. in are

say a way we under one, market other will done should and in to coming massive or division in doing So the the highly a areas like competitive that U.S. thing have grow the we the right oxygen pressure the we I but of years. year in also and in coming are what another, continue to because is is be

Operator

Korinne from We'll take Wolfmeyer our question Piper Sandler. with next

Korinne Wolfmeyer

on to. level those you've I strong, on the this the I'd the bit sell you any guidance for like to and would in targets. share there's additionally, the prepared on and cadence you what to stake, with progress. off a repurchases confidence like love believe half the then Wella to you understand suiters fiscal conversations to provide going believe touch about the to. of potential color be talked the -- year It fairly you of on gives any have I there visibility remarks. seems year is back in you the into then if and you And Are on it alluded back half And can little updates have

repurchases around capital thinking commentary allocation any So great. share would on updated and be

Laurent Mercier

you, Thank Korinne.

first on guidance. So the

first mean, X%. indeed, are X% to algorithm is I for So all, our we so 'XX, confirming fiscal of midterm which

indicating, are and then key we around call also about to sequence as HX which in the is is We HX. comps. And improvement in QX, flagged last X% about X%. in during to this reason mean algorithm that X% earnings I the then indeed the sequential moving

you remember, last strong year, As very phasing. was there

plus ending then Our QX and QX and then XX% XX%, at the year QX was was XX% XX%. our

in and we into we high course, are our account of taking this So algorithm. have comps

starting definitely, the but supported Consumer will So sell-in And should by Then is our be now, aligned Prestige the piping that Beauty. HX. in, are on we and HX, mean, in this comps I both easier the in in we with continue are all on sell-out we course, are of modeling HX. our that innovation

there indeed, in elements, the are growth drivers, all captured of So sequencing the really are algorithm. which these

to remind without and And keep the is targeting that for really Xx is want really stake to Then I course, 'XX. of the divestiture. Xx imperative calendar I deleveraging Wella the just on towards of again again #X we company. And second any on your part of allocation. end mean, first that all, I capital want see that these

flow generation, important. okay? very a by cash and So organic So EBITDA expansion it's built that's really pure

definitely So on Wella now stake.

targeting -- end okay of calendar this divestiture keep really, it's 'XX. we So

in the of know, definitely Now as this KKR. you main shareholder, which is hands the is

on no specific news So this.

And our as towards really indicated, to I by 'XX. fiscal definitely, move count plan repurchase, again, share million XXX share end of on we confirm

this opportunity the need it are we an Definitely stake Wella is faster. agenda this to into and taking So is be in algorithm. divestiture what account do unchanged. we And will really

is So and the agenda algorithm our unchanged, remains same.

Operator

We our question from will JPMorgan. take next with Teixeira Andrea

Andrea Teixeira

in you you're So to launches understandably, so you [ have launches strong you have very last on going in that what that of And of comp comp holiday of we now obviously, have comp help with year. the wanted lot channel I the very look confident sounded in for strong distribution to ] can what that like holidays more the right of -- -- the visibility gained But can and confidence to us give the X/X you Burberry like Goddess quarter. you a and comparison season. we have that you through us the terms

for tough much I been. is tough in have and all the fragrances key last go, how of markets mean to going you're Understandably of [ the that how have the launches been to the how But wellness we thinking making But it's to think X cadence -- pretty to planning cyclical ]. are unfold understandably, given and you choices as oils offset body about that the comps see the you're you're the going the in. comps. category the I is consumer comps. gives reaccelerate fragrances important how that the understand a given second -- what are And in despite this confidence half this particular, then comps the in years. I

guidance believe, build fiscal understand that's [ sales And what back when I to you in increase that a you and very to, XX% it a margin as your X% number a guess give it number in mentioned ] EBITDA guidance. would increase let's out, a you I neutral for I your your fast you're for implying the much you would also perhaps revenue both. we question Thank of like mid-single-digit that for opposed for a guidance, EBITDA clarification, hitting actually close into that as given is you in say, higher 'XX. sales Laurent. than give

Laurent Mercier

Okay.

a start strategy is mean indeed launched let that and 'XX X I me going fiscal So put dropping, is we at innovation times in year so we on several key exactly we are mean then big explained that year and to that's really X I question, describe -- a all. that in it launches. not place not we

So this is exactly perfect is -- Burberry a example. Goddess

So it's contributed to which fiscal a great line success, top significantly. indeed, really 'XX

are going continue So we fiscal in 'XX. to

means continue are it also that to Burberry that your Burberry we about so comp. which Intense, adding really to on point So grow. And will Goddess it's going Goddess So is okay? come top, the

doing way. we in then are fact, on In manage franchise. the we top, And this this other

terms is But in the Jacobs started same, of range, mean same And already because the Wild, Marc we worldwide. it's flora This on #X really in adding We are is growth on here, the flora Marc -- of course, launching the this indeed flora I launched in range. Boss. March. and it Daisy the because is Gucci phasing, Jacobs, Flora Orchid and is a this very really it's part well the of again,

QX. impact we have QX So a in fact, full and now in in

avoid why we phasing only windows now X So are not is and that's launches during opened this We really phase we or also these element. so X that one comp that can the window year.

also question definitely part Consumer I same answer We the really that's So expansion. we the That's this doing. will are strategy. your on Beauty continue on of guidance. that definitely on to need our

we targeting are definitely, is So the really growth. what like-for-like monitoring

are on margin [ the is expansion. the that guidance giving. EBITDA is see dollar you X% our by So ] this to really we X%. underpinned that What's is important also value, really the And very indeed guidance

and -- modeling you're this is do. know So to a trying I

here. definitely it's impact, be higher the fine-tuning is of full could indeed give you year help is hard so see year indicating the this indeed will Of that what as is the we margin to definitely, But course, going. we margin, I some growth versus the think yes, also are ForEx to indications you

Sue Nabi

let maybe part what part just me Andrea, question on conclude the the the of us about And your second middle gives on confidence. quickly

our of launches time sustained continuing in and know, after other. one you As the over grow to

difference I and years is Coty the X think really between this the the of main ago of Coty today.

put time test have time. very important. going to is the That's to grow to place what over select We and in stand of way a

done And the launches big are brands, really only launch big behind specifically and the every we doing, east. are east

first We going to full year of but this high something for confidence, then down. be to is going confidence, high have level be the not that's and go

about I about to really here if at trends say with but say, of concept course, that for that moment, to the it's trends are may make the to It's addiction, trends the are that that next not are structural use, positive decade. fits this the that addiction. the So the sure concept

thing And trends catching of term doing that the up. blockbuster big this setting the juices instead now while we that are are second is for long

quite We with some playing are than a in of larger at that are parfum. becoming much we activating lot to Coty the piano The traditional other scenting Prestige. specifically entry going also formats, de these de with of touches is way, portfolio and activated [ of activated we very much or large. brands that that the beauty the more have brands are eau be also ] brands recently. have on not are brands positioned a strongly, eau tactical the tactical, we positively is playing the with a toilette scenting The And

of we together quoting with grow minutes that to was at fact elsewhere our ago, still in few business. U.S. a the that also just the is Brazil have to I altogether, So believe level the not only but fragrance room not we continue penetration

Operator

James. question Raymond Tong take We'll with from our Olivia next

Olivia Tong Cheang

of on build fragrances? end. price historically what And within is beauty more much wanted Even discretionary, to at what fragrances but historically be participated I clearly discretionary has one in category to around why that seeing you end low at from pretty a trade consumers the seem to you less it's discovery a though category, transitioning said of think willingness haven't sort been just the ultra-Prestige also to they Great. by in.

far similar level of more Are momentum fiscal are in fragrances. in contribution concerns And in So clearly, you there you 'XX a what in incorporating so is volatile is sounds it significant macros. fiscal as Prestige about 'XX? assuming like

Sue Nabi

Thank the question. you for

try there a cyclical in people some category, are this saying is other I fragrance hear me to let category. that some So answer. discretionary Again, is saying people

category. background, it from at at not category front COVID been ethnicities, industry before generation was in growing digits Hispanic that the are reinventing single more a then less to COVID. was the the a cyclical It consumers happened had where suddenly always a something community or And specifically a of been younger, has was who First, low of moment the from itself U.S. put full diverse decade genders, both that diverse in younger prior for

fragrance. encounter the that Coty destinies, And of longevity molecule of was really was [indiscernible] for et This more of category premium, latest about more users X collections, of ultra-premium, It patented extends the a exclusive layers. multiple creativity, itself quality, Concentration, not launch suddenly, just first cetera. a that the A technology, have Coty the and Prestige. the time. you encounter reinvented with entry

much performance. So a buying when discretionary end It's at of not buying. offer qualitative, the much anymore or a more an becomes more day, cyclical the

et life billions tools, campaign, life. a part People of part fragrances as structurally ask your advertising each boosters, as that's becomes are becoming believe It may other if fantastic also using the cetera. wear, of as mood builders, cetera, and the you that world, around I are fragrances et youngest connection say. what specifically of of the people escapism people And we

from seen So as something that was we moved gift. a

because If be than used It connect makes gift you better. intensity of with in it bigger choice the item it into buy about myself the is past. ever me the feel others. And U.S. me the quality makes to and for I'd think something

why So goods it's It's I that's category. reason is and beauty category the believe consumer a not discretionary a neither. a cyclical industry not not

the So very I that of your this occasion it's a question. state important very, at

Operator

take our Bolton-Weiser We from Linda will D.A. next with question Davidson.

Linda Bolton-Weiser

give second when It's recur flow. years, managing flow. curious if cash the benefits -- you usually about category, innovation. you about talk to retailers behind And cash then talk also be do seems number a you said quite big then my cash Consumer Beauty, XXXX, category cash innovation could something in technology that? why your on been Yes. being are I a early It innovation in think, that's I drain high. there's of the was big flow 'XX, and you a just what inventory. since kind I And big flow And on when what on if was worked anything very, with receivables seem with cash question few about there? 'XX has a Can very there's driver of to a in that FY quantify growth. the the in nail curious FY in is then won't going

Laurent Mercier

Yes.

-- So let cash start the me let me flow. with Linda,

of 'XX shared, pay cash million. a million. we free I definitely, was as cash there starting some fiscal we landing level this were indeed, our do year not $XXX repeat. So This really are tax. around that is I elements $XX at mean, to Definitely, are significant where flow

it's in that So are jurisdictions. increasing of driven a by and really ] improving lot I say we would [ sourcing

indeed, also as investments I Second, to related some implementation, and live S/XHANA year mid-July I and is successfully. as we which, very explained, we buildup inventory had explained this went

a it's strong for asset very company. the So

these So in fiscal headwinds repeat course, will are that not of 'XX.

low million management taking guiding are we inventory with are either or we to really account $XXX strongly funds Definitely, mid indeed, payment 'XX, cash, ]. volatility their fiscal Indeed, really focusing on retailers. on into Now now are retailers some we management. the seeing [

we tightly. So our embedded monitoring equation. really And definitely are in this have -- is we

working a that capital our are we building definitely working keep the optimizing we all those definitely, on and in So virtuous have opportunities we levers 'XX, all cycle. fiscal for really

in we cleaning would and 'XX. again, cash happened So fiscal 'XX, few elements explained, the starting phase positive a as really about are which say, where we Indeed, we are will are for confident 'XX confident recur right. absolutely year is in are, that our a were very I some and But cycle. fiscal in not fiscal I we there one-offs, also

Sue Nabi

answer your All globalize is offers indeed with doing we in U.S. our than above also to a is Linda, XX% moment, very of fantastically are Risqué may And more fantastic cosmetics share. question also bottle the from around a country, interesting hold XX% of share. the CoverGirl Sally category except nail nails, which we fantastic in the in the #X is nail Hansen Hansen. well, a believe at Brazil, of Sally undisputed position. where color benefiting I in of leader brand, having which market the very, technologies

a is key. this where innovation is right, category You're

seen about are wear a one an we big a it in be using area as few -- or on working consumer, wear this that to we haven't actively the years you with happened ago So the professional ago solutions. or because but that maybe the as non-UV-activated Technologies, it's increase innovation Gel decade in is still,

are of this energy also and intelligence lot putting a We how category. skinify into to

care You hair know happen in happening also nail. what's should in

not lip to kinds both least, for to but going really are what innovation we them. big innovative focus nails. are we consumers, rule last bringing X I and we talk is We into the very Special instance. to effects. company. it's area for is where This the least, is Last the this same also in on believe way of terms be And to need this also but And hard also of bring an the not that going of of are a are because working there artificial the game. bring super to special category, excitement call also are effects going we excitement

Operator

with take Carey next question We'll Securities. our Wells Fargo Chris from

Christopher Carey

to ask margins question one I category growth. about gross on wanted and

Regarding of gross year fantastic. ahead a plan, you're margin,

I Going well expansion? talk like filings. about favorability some think have also [ as some fiscal pricing, can drivers the but you'll into freight 'XX, for wrap-around you have of ] sounds conscious you margin It of I'm gross just from manufacturing,

driving about And now have maybe And going and just running this starting premiumize dimensionalize just whether you 'XX, your what's more in you pricing you ahead target going and how expansion talk it, as to maybe specifically mid-XXs think or be the use fiscal so can to you're confidence of for look much? over time. it was point you farther,

of solid, category from we've heard QX, if I then peers wonder sequential still year. you some you that clip an category you're Are just fiscal at And outperform a 'XX, would do stabilization? could, I category growth connected, Certainly, for beauty globally. some growth if maybe have there's your you just of deceleration expect some but expecting Or next to higher been that in for outlook seeing too. deceleration.

one growth. margin category gross So really, there's and X questions on there. One on

Laurent Mercier

Chris. Yes. Thank you,

absolutely with let you are So right. me start Yes, gross margin.

ahead a of are year We ahead, plan.

or that So place, means over-delivered. we put the delivered it I all mean, in actions even

to fiscal 'XX. So same we going into recipe are keep the

improve context So definitely on keep increase mean, moderate more a will as I pricing keep goods. inflation we our gross said, a see targeted we price where of as in lever I will doing using But still, we margin. cost to again, our a

lot examples course, mix divisions, we and big we across we categories. driver. a do gave think is a it of keep Then giving of all premiumization, all all And markets, of I and

of All-In the continue course, have next our productivity, $XX additional planned Win we program, a And initiatives. to this So year continue, course, million I we is must. we productivity that I productivity. of shared mean, for

of it's of is but productivity in volume, helping accelerate also really this to our with So course, procurement. it's productivity, part and factories

a the Fragrance scaling to a also power negotiate better definitely and And volumes, fragrance. is giving up heard some and Sue example continue when really are are program really We our mass scale And us simplify accelerating rationalize again, a to price. to components. also, specific have good portfolio that you indeed, from to we is we

from the Here, here the of benefiting fragrance. of Prestige course, are scale we

can are which that launch at already gross So it margin. a we high initiatives, means

mid-XXs game. is continue. to the I playbook the mean, And definitely, have not end we the So

So for acceleration. same continue with a mix and mid-XXs the big driver a we definitely will this will the go of beyond be, to recipe big -- course,

Sue Nabi

what growth and second the seeing. we take me is category which are let And around part, Laurent,

entering fiscal So 'XX.

that seen ahead the with what a have of fiscal all saw retailers, course, of inventory 'XX. and that resulting remaining closely drugstore manage levels, the crossover in tracking is sell-out consistent sell-in. in that we At retailers We same have which orders is the Prestige are demand we time, seen broadly trends

in the digits Prestige growth mass expand to and markets mature range below mid-single above in this demand beauty including range. growth fragrance this beauty anticipate we So

strong All and -- more e-comm, between by Xx than company. very supported which this is of faster the a very, growing

revenue call to growth in altogether to the which of rest Brazil, for channels approximately high-growth what do Arabia, thinking Africa, and business. to perform Travel X/X are account market. the this percentage for of same in few So backdrop markets. of within the Retail, market, we ahead at line Coty double-digit time, the to mature I'm a about as growth Saudi engine target such we we name LatAm, targeting Mexico, And

So of pipeline fiscal on this sorry, our innovation will be support, it. support top of 'XX will all --

Operator

take Steve Powers with next question We'll from Bank. Deutsche our

Stephen Robert Powers

the little bit, has engine long-term to your for ask picking a strategy. growth right market. the your engine now, but market, is growth of not specifically. largest of idea I which it up on China wanted guess, an been Sue, I market you Obviously a about in advantage part

for how year, what is, outlook planning Just is a on One your of couple you questions China that. for this it? are

what assume specific given is, on a are I is there Two markets. softer growth engine outlook China,

what opportunity? where ones up on You seeing you in you're a hope anything the of there then that the investment of And future terms to now is but are specific some that of medium- reallocating make to there? in gap a dollars mentioned some views you're few, market to altering China represents -- just long-term your

Sue Nabi

Steve. you, Thank

the mid around first, fundamentally, in that biggest beauty if believe is the the be of will biggest, China. one answer term. or to China the So to Clearly, long the we question not market

market, is is this has continue I -- culturally to grow country. is lot say to this because structural. to So And really Prestige is in this do really a rooted with would going something that this

company. this negative tell 'XX. you the with few And revenues the in are words It's will at still that growth about we coming the the China X% a time, at is quarters. of everyone Prestige just I'll moment But in the probably performance in the really of of country. let the are the playing same X the fiscal in China legs. now that in Now business is me in skincare continue what is trends, And seeing bright around we remind spot Coty fragrances specifically small.

continuing than fragrances, of leg really consumers fragrances are a Prestige play, and be doing brands. So category niche of have we or entry in is at terms of the better to premium, premium the any Chinese curve and adoption are right other with playing we which

starting Burberry, and also be has we China. preparing inevitably country, been in Recently, with back relaunch will this the for Klein Lancaster. pushing this doing say, Calvin skincare, same market. a in the doing in great are Chloé time, that And Lancaster -- would at growth fantastic has I been

the great year year-to-date share that have is brand results. with calendar 'XX, We almost brand the doubling fastest-growing market of in of points a calendar is with the in size Lancaster skincare also the seen both June and 'XX. in triple-digit gaining growth a quarter growth, X

Tatcha brand right and brands ranks and Elephant very a such ranked #X #X after strong on Lancaster Drunk as was Sephora, month. [indiscernible]. Lancaster June at

So is brand. aging this not It's the unique China. you usual photo the also in protection and blah-blah, DNA and all stem becoming And not strongly and that about a a positioning Lancaster is see et cells photo cetera. is skincare That's phenomenon. global hyaluronic transitional resonating may acid, that very clearly of

Lancaster Orveda, is this we will fragrances we summarize we are happen the in to readying to are where because China on are continue going will market when and back And believe brands, to the another. this we track, what at be So growth overdrive is on really seeing our and moment our or skincare is also that coming from.

to the other. one are we market from resources Now shifting

We constantly is there money where growth. and A&CP and resources putting are

in course, fragrances China, other the a is and Middle company is are Prestige are there. there so But this there the growth I the of U.S., Prestige say, growth behind we momentum. heavily fragrances seeing, over area, behind where in investing investing so is in also we in in also And would East, regions

Operator

next take Jefferies. Ashley with Helgans from We'll our question

Ashley Helgans

about fast goal the the the the then you the holiday? being you you kind you on quickly. then head today ideas how your what able center environment get to out Can can and expectations you get anything And products as us future? shelf can more into promotional and and So of on environment us tell innovation remind mentioned to is in promotional

Sue Nabi

X X living Thank is to very, maybe the years months the you X the launches we joined to which too we for already started ago. years, do could to were up and it when Indeed, take Today, question. X for ago, ago, world really years are years company, already. long XX we I living,

it between this from launch us take the Yummy as months as I'm Rimmel months. The as brands. that including took could Mascara, not from if and the wrong, latest something it's of X Gloss to us success X took Wonder'Bond months. CoverGirl, quickly X platforming innovation other X So of

need to So need X to months in months. And is is fit with faster of super the kind do fit The not because we is also retailers, a very go already this to more in, that their question shelves. we super, to is resetting fast. launches fast really is idea but of X is imperative very, something months because that X

know to do it. So how we already

Coty ability industrialize, the to going we this, focus are areas. Now on And X traditional on not we launches to are R&D put usually, months. going it I the market our to areas like that in if are may call

and overdrive months technologically quarters, It's attention. so the both of speed, we a are have R&D can to specific. also quantity. very, color we are that war the coming areas Coty doing but there a are lot is very And in cosmetics, areas that these the intend in but that

to exciting, war need the win you surprising, and this of products. right attention innovative efficient So with

Operator

from Stifel. next take with our Astrachan We'll Mark question

Mark Astrachan

questions. clarification of couple A

just of low in guidance like? end end into does clarification an your for high then puts revenue fiscal end reordering And for that was channel and 'XX? correct? cosmetics. the inventories growth that the Is looks about are think standpoint is, think on takes the more prestige hyperinflation factor demand So how from fragrance you sounds where the you how on retailer the of if guess also color side and what it it thinking commentary what's and about And the more do I how standpoint, a 'XX. Argentina like from baked fiscal for And

Laurent Mercier

Yes.

is I XX% to answer I last by mean, the you July. and cosmetics. Prestige Prestige fragrance mainly U.S. category fragrance yes, growing the here point I in management, order definitely, the category, retailer mean saw in dynamic. numbers category So remains on the is very mean

you pre-COVID. category fragrance and know is versus -- U.S. definitely So XX% that bigger

it's we in bringing definitely, and very U.S. dynamic, innovations So the which are well and very healthy, very resonates strong again

indicated hyperinflation, On 'XX in price fiscal increase. that Argentina, indeed, due indeed significant implemented really to I we

'XX really but are there more faced we for stabilization, level will we some Now fiscal modeling some fiscal in at okay? So 'XX. be not the as impact same

Operator

this at Sue questions any to further closing I'll no time. are remarks. for the Nabi call turn back There

Sue Nabi

much. very you Thank

to at you So to looking forward the of end talk QX.

Operator

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

at You disconnect time. may any

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