Interparfums, Inc.

Greetings and welcome to Interparfums, Inc.' 's 2025 Third Quarter Conference Call and Webcast. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference call is being recorded. At this time, I'd like to turn the call over to Karen Daly, Vice President at the Equity Group and Interparfums Investor Relations Representative. Thank you. You may begin.

Thank you, Operator. Joining us on the call today will be Chairman and Chief Executive Officer Jean Madar and Chief Financial Officer Michelle Atwood. As a reminder, this conference call may contain forward-looking statements which involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from projected results. These factors may be found in the company's filings with the Securities and Exchange Commission under the headings Forward-Looking Statements and Risk Factors. Forward-looking statements speak only as of the date on which they are made, and Interparkrooms undertakes no obligation to update the information discussed. Interparkrooms' consolidated results include two business segments, European-based operations through Interparkrooms SA, the company's 72%-owned French subsidiary, and United States-based operations. It's now my pleasure to turn the call over to Jean Medard. Jean?

Thank you, Karen. Good morning, everyone. Consistent with what we started to see in the second quarter, sales continued to moderate in the third quarter as macroeconomic conditions remained uncertain. We are leaning further into innovation across our portfolio, focusing on product enhancement and new launches, that better meet the dynamic preferences of consumers around the world. These efforts are backed by compelling advertising and promotional support, increase brand awareness, drive consumer penetration, and strengthen our overall competitive position. As announced last month, first quarter and year-to-date sales were up 1% for both periods. with European-based operations sales rising 5% for the first quarter, building on top of last year's momentum, plus a stronger euro compared to the dollar, while US-based operations sales declined 5% for the first quarter, excluding Gambino. For our largest brands, Jimmy Choo fragrance sales surged 16% during the quarter, largely driven by the I Want You fragrance family, and also Jimmy Chouinard. In addition, the 16% quarter-over-quarter growth in coach fragrance sales was fueled by its established lines and the launch of Coach Gold. While Montblanc fragrance sales dipped slightly due to innovation phasing, and Lacoste fragrances are on track for 100 million in sales this year. I would like to note that in the first nine months of 2024, sales by US-based operations rose 11% with the addition of Roberto Cavalli into our brand portfolio, setting a high bar for this year. In 2025, we are further capitalizing on this newer brand through the successful launch of Serpentine, the new feminine fragrance from Cavalli. Additionally, we are seeing increasing consumer demand in denacaran fragrance adjacencies, such as a very popular deodorant. We also had new products roll out late in the first quarter that will mostly support fourth quarter sales in our US-based operation, which include Lamia Bellavita for guests, Sublime Leather from Ferragamo, two new extensions for DKNOI, a new sub-collection of Roberto Cavalli called Marvelous, plus the Just Cavalli duo, Give Me Magic, and Abercrombie & Fierce Reserve. We started phase three of the distribution of Fierce Rollout in May to additional countries, including the UK, and launched Fierce and Fierce Reserve together at nearly 50 different point of sale. We see the momentum accelerating and need to further the brand's reach. The third quarter was also a milestone for us with the introduction of our first ultra-luxury direct-to-consumer offering, the Tencent Solferino Collection. Our flagship boutique opened in the heart of Paris luxury district and we are now selectively building relationships with approximately 40 retail stores rolling out the grant for fully by next september we have set our site on 100 doors with a goal of product placement in 500 stores by the end of 2013. As we refine our craft in luxury and artisanal fragrance, we will leverage the insights we gain to elevate and better serve the other brands within our portfolio. We invite you to discover the passion behind Solferino that you can see on our website, our first fully-owned direct-to-consumer e-commerce channel. So fragrance sales are accelerating across digital platforms as e-commerce has firmly established itself. In fact, according to Euromonitor, fragrance has roughly 50% market share within the beauty category on Amazon. We are seeing similar trends as e-commerce platforms continue to be a bright spot for us. Our business on Amazon is strong Divabox and TikTok Shop allow us to market and transact smaller-sized products, increasing our visibility to consumers looking to play in prestige and luxury with more affordability. All told, the influencer magic of social media plays a powerful role in driving both traffic and purchases on Amazon. Another important but relatively small channel for us is travel retail, which grew 13% in the third quarter compared to last year, driven by Lacoste, Jimmy Choo, Coach, and Guess, as well as others in our portfolio. The popularity of our products across traveling consumers is helping us in securing more shelf space and expanding SKU presence at duty-free venues. we anticipate incremental growth in our travel retail business going forward. Turning to other key operational updates, we are always looking for ways to improve efficiencies and streamline our supply chain to help manage cost pressure and support long-term growth. We are confident in the steps we have recently taken, including transitioning to 100% first-party providers for packing, shipping, warehousing, and order fulfillment. We expect this to be completed by the end of the year. We are also actively shifting our manufacturing closer to the point of sale for certain U.S. products produced SKU, sold primarily in Europe and other regions. These operational improvements will help us navigate the ongoing geopolitical or macroeconomic uncertainty with more agility while allowing us to maintain strong service levels. Regarding tariffs, our view remains largely consistent with that of three months ago. We have successfully implemented many of the interventions we had previously identified to limit the expected impact for imports into the United States. Our immediate actions and strategic supply chain initiative have proven effective, and our last remaining step is to implement a more cost-effective approach, leveraging the first rule for the finished goods that we import into the U.S. that are made in Europe by our European-based operations. This will require additional IT development, which we expect to have implemented by the second quarter of 2026. As noted previously, we also began implementing pricing actions in August, and we are now starting to see the effects. showed that these higher prices will help offset higher input costs in barrels, but will still likely result in some gross margin erosion. We are also seeing more pricing in the fragrance and cosmetic market, namely in the US, where we saw unit prices increase during the first quarter by an average of 5.9% up from 1.2% at the end of June. During the month of September, unit price increases averaged 7.2% for the industry, indicating 5% to 6% pricing mix making its way to the consumer, which will likely slow overall growth. Of note, we have only taken pricing on select brands, mostly prestige and luxury, as lifestyle brand consumers tend to be more sensitive to price increase. At the company level, our 2% average price increase will continue to take effect through year-end and into 2026. At this time, we do not plan to implement any further pricing actions unless a significant change in the market occurs. On the inventory front, some retailers are using AI and other tools to optimize their inventory levels. While store-level sales have been growing, we are not yet seeing the same strength in reorders as sell-through, outspaces, sell-in. That said, we are ready to move quickly to make sure retailers have our products on their shelves should they choose to replenish. Before I turn things over to Michelle, I am proud to share some great news. Women's Wear Daily has named Interparfums its beauty company of the year in the public company category. This recognition is truly rewarding and reflects the strength of our brands, the creativity of our teams, and the enduring partnership we have built with fashion houses, distributors, and retailers around the world. So I was at this event. to accept the award on behalf of our talented team and leadership, and I look forward to continuing to explore new ideas and help shape the world of fragrance together with each of you. With that, I will turn it over to Michel. Michel?