The Estée Lauder Companies Inc.

Good day, everyone, and welcome to the Estee Lauder Company's Fiscal 2026 First Quarter Conference Call. Today's webcast is being recorded. For opening remarks and introductions, I would like to turn the call over to the Senior Vice President of Investor Relations, Ms. Rainey Mancini.

Hello. On today's webcast are Stephane de la Fabrie, President and Chief Executive Officer, and Akhil Srivastava, Executive Vice President and Chief Financial Officer. Since many of our remarks today contain forward-looking statements, let me refer you to our press release and our reports filed with the SEC, where you'll find factors that could cause the actual results to differ materially from these forward-looking statements. To facilitate the discussion of our underlying business, the commentary on our financial results and expectations, is before restructuring and other charges and adjustments disclosed in our press release. Unless otherwise stated, all organic net sales growth also excludes the non-comparable impacts of acquisitions, divestitures, brand closures, and the impact of foreign currency translation. You can find reconciliations between GAAP and non-GAAP measures in our press release and on the Investor section of our website. As a reminder, references to online sales include sales we make directly to our consumers through our brand.com site, and through third-party platforms. It also includes estimated sales of our products through our retailers' websites. Throughout our discussion, our profit recovery and growth plan will be referred to as our PRGP. During the Q&A session, we ask that you please limit yourself to one question so we can respond to all of you within the time scheduled for this webcast. And now I'll turn the webcast over to Stephon.

Thank you, Rainy, and hello to everyone. It is good to be with you to discuss our first quarter result and share the great work our teams are delivering across the action plan priorities for Beauty Reimagined. Let me begin with the first quarter. We delivered organic sales growth of 3%, a significant sequential acceleration from the 13% decline in the fourth quarter. We are pleased by the diversity of our performance. As mainland China contributed nicely to a return to growth, the rest of our markets in total improved sequentially, including high single-digit growth in our priority emerging market, led by Mexico, Turkey, and India's double-digit growth. And travel retail grew on a favorable comparable compared to last year low base. We also got off to a strong start to the fiscal year with significant improvement in operating profitability. This result reinforced the confidence we have in our fiscal 26 outlook, a pivotal step towards restoring sustainable sales growth and rebuilding our operating margin to solid double-digit in the next few years. The first three action plan priorities of Beauty Reimagined, accelerate best-in-class consumer coverage, create transformative innovation, and boost consumer-facing investment, are increasingly amplifying each other to drive accelerating retail sales growth in key markets. In China, we significantly outperformed Prestige Beauty as our retail sales increased double-digit ahead of industry up five single-digit. seven of our brands grew double digit, with Le Labo nearly triple digits. We gained share in every category, as well as both brick and mortar and online. Impressively, we have gained Prestige Beauty share in five of the last six quarters, which is unparalleled among the biggest Prestige Beauty players. In U.S. Prestige Beauty, our retail sales Growth accelerated sequentially. In the quarter, we grew 8% in skincare versus the category up 6%. The ordinary drove our share gain in skincare, while we also gained share in hair care led by Aveda. All told, we maintain our Prestige Beauty Share calendar year-to-date. The Estée Lauder brand achieved its third consecutive quarter of overall share gain in the U.S., thanks to excellent uptake in innovation. This quarter, it gained share in each of skincare, makeup, and fragrance. Impressively, we delivered strong unit share gain in U.S. Prestige Beauty, demonstrating our strategic actions of driving new consumer acquisition. In several of Western European markets, prestige beauty continues to see slow growth, in some cases negative growth. In France, the biggest category in prestige beauty in Western Europe, we gain share in France and Spain. For the UK, the largest market in the region, and where prestige beauty is much more resilient, industry sales growth re-accelerated to nearly 10%, and we realized a strong sequential improvement in our retail sales trends. We still have much work to do in the UK, but we are moving in the right direction. Our improving retail sales performance in many key markets around the world is a testament to our team's incredibly strong execution of Beauty Reimagined, starting with accelerating best-in-class coverage. We are advancing with speed to reach consumers where they are, capitalizing on the learnings that we have had with Amazon in the US, Canada, and Japan. We opened Amazon Storefront in Mexico with Clinique, The Ordinary, and Estée Lauder, and the UK with The Ordinary. We announced our presence on TikTok Shop, launching clinic MAC and Dr. Jha in the U.S., as well as The Ordinary in Malaysia and Singapore. Impressively, MAC was awarded TikTok Shop Top Brand Campaign Award for 2025 in Personal Care and Life, recognized for the stellar grand opening and tremendous initial success. Our newest TikTok shop has served to strengthen the performance across channels given how consumers discover, engage and transact. This collective action in our online consumer coverage complemented first quarter growth from our existing presence on fast-growing retailers like Tmall, Jelly, Douyin and Notino. As a result, Global online organic sales growth accelerated to double digits from mid-single digits in the fourth quarter, leading us to believe we outperformed Prestige Beauty in this strategic channel. For our European travel retail business, we made great progress in expanding our consumer coverage in France through new retail activation, new doors, and upgrading the existing fleet across our luxury portfolio. This strategic expansion contributed to our double-digit retail sales growth for France across several of our major retailers in the region for the quarter. We also drove similarly strong retail sales growth in the Americas travel retail for France, in part from our own new distribution with Duty Free Americas. Looking at innovation, new nests from Tom Ford, Killian Parrish, Joe Malone London, and RME's kicked off France's rich pipeline for fiscal 26. These launches, some of which created a low benefit on existing products, combined with the Le Labo outstanding growth, made France our best performing category, rising 13%. We continue to expect France to be Prestige Beauty's fastest-growing category for fiscal 26, driven by luxury, the largest mix of our France business and where we are the leader, as well as over the next few years, driven by both domestic markets and the travel retail channel. On that note, We are thrilled to have opened our new France atelier in Paris, where our team will blend state-of-the-art technology, data-driven intelligence leveraging AI, and olfactive expertise to craft the next generation of extraordinary scents, all while innovating much quicker than we have in the past. Skincare further drove our organic sales growth in the first quarter. We had an exciting slate of innovation in high-growth subcategory and across prestige price tiers, including breakthrough launches in high, acne, and longevity targeting all age groups. These introductions, coupled with newness from earlier in the calendar year, contributed to skincare's growth. We continue to boost our consumer-facing investment to drive new consumer acquisition, focusing on high ROI opportunities like our brand-building freestanding stores and demand generation media activation. We opened 14 net new freestanding stores for our finance portfolio, including a row of new boutiques in New York City's Seoul District for Frederick Mall, Tom Ford, Jo Malone London, and Killian Paris. We introduced stunning new campaigns from Tom Ford's debut of Black Orchid Reserve to I Only Wear Mac and La Mer Gives Skin Life. And we are re-engaged in creating new consumer experience across travel retail corridors. To fuel our first three action priorities, we made great strides delivering on the promise of PRGP, which Akhil will describe in more detail. Finally, we are especially encouraged by the momentum we are building as we reimagine the way we work, our fifth action plan priorities. Our new executive team is fully in place. Our four newly reorganized regions are fully operational, and throughout the organization, we are empowering faster decision-making. As you will recall, we committed in February to increasingly collaborate with partners in areas of business where they can support us to become the best consumer-centric prestige beauty company in the world. We are therefore thrilled to announce our new partnership with Shopify to modernize and scale our direct-to-consumer business in a phased approach. creating a best-in-class omnichannel consumer experience globally. Looking ahead, for the balance of the fiscal year, we continue executing on our action plan priorities, including investing in exciting holiday activation and expanding consumer coverage. As announced yesterday, this includes Mac entering U.S. C4, spanning select stores as well as online stores, and Sephora, of course, which allows us to better connect with younger consumers and accelerate market turnaround in the U.S. Before I close, I want to share a few accomplishments from our just-published fiscal 2025 Social Impact and Sustainability Report. Since we announced our first set of public goals in 2019, we are proud to have achieved several of them across climate, water, waste, sourcing, ingredient transparency, and impactful social investment. In introducing additional 2030 goals, we are re-emphasizing our focus on women and girl advancement, guided in spirit by our founder. with a new commitment to contribute $50 million to support health, education, leadership, and entrepreneurship. In closing, the first quarter marked the beginning of our return to growth, as anticipated for our fiscal 2026 outlook. While the macroeconomic environment globally continues to be dynamic, with a variety of headwinds and tailwinds, We remain vigilant and focused on achieving our ambition for Beauty Reimagined. I am incredibly grateful to our employees around the world who delivered a strong start to Fiscal 26. Onward and upward. I will now turn the call over to Akhil.