Interparfums, Inc.

Greetings and welcome to Interparfum 2026 conference call and webcast. At this time, all participants are on a listen only mode. 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. I would now like to turn the conference over to your host, Mr. Devin Sullivan. Thank you. You may begin.

Thank you, Rob. And good morning, everyone. Joining us on the call today will be Chairman and Chief Executive Officer Jean Madar and Chief Financial Officer Michel 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 Interparfums undertakes no obligation to update the information discussed. Interparfums consolidated results include two business segments, European-based operations through Interparfums SA, the company's 72-owned French subsidiary, and United States-based operations. It is now my pleasure to turn the call over to Jean Madar. Jean, please go ahead.

Thank you, Devin, and good morning, everyone, and thank you for joining us on today's call. We are very pleased with our performance at the midpoint of the year, which reflects the appeal of our global brand portfolio and the strength of our underlying business, and also the disciplined execution and also the continued dedication of our team. Despite the challenges that persist in our business and industry, these results give me confidence in our ability to deliver on our full-year objectives and continue on the path towards creating long-term value for our shareholders. So we delivered a 2% sales growth in both the second quarter and first half of 2026, supported by strong performance from several of our leading firms and a strong rebound in our United States-based operation of an admittedly weak corporation. Excluding the world-related headwinds, Organic sales advanced 4% in the quarter and 1% year-to-date. And we maintained a robust financial position while continuing to invest in product initiatives that position us well for the balance of the year and beyond. Consolidated sales growth in the first half of the year reflects strong brand execution and service performance in select regions, partially offset by macro and regional headwinds. North America, our largest market, was up 5%, propelled by a health category, a steady cadence of new extensions, and, most notably, from Coach, and marketing investments that are clearly paying off. Asia-Pacific was highlighted, up 14%, as initiatives supporting Coach and Mont Blanc took hold. Guess extended its footprint in Australia and New Zealand, and our new Korean affiliate, got off to an excellent start after several years of uneven results in the region. We are also encouraged that consumers across Asia are increasingly embracing the fragrance category and we are moving quickly to ensure that opportunity. In India, for example, we recently teamed up with a and all of our other brands back to one of the world's fastest-growing beauty markets. Also, South America rose by 15% behind the continued success of Coach for Women and Men and Montblanc Legend Lines. Partially offsetting growth from this geography, a few regions declined in the first half. Eastern Europe slipped 3% on softer consumer demand. Eastern Europe was down 7% amid operational difficulties in certain markets, which weighed most heavily on long-term costs. and, of course, Middle East and Africa fell 24% as the war in the region continued to weigh on our results. Even with these pressures, our diversified footprint allowed us to grow overall, which speaks to the resilience of our model. Looking at our brands, Momentum in the first half was broad and several of our largest properties finished the second quarter with real strength. Coach grew 10% in the first half, driven by strong performance in the U.S., its primary market, driven by continued demand across most existing lines, and by the launch of new extensions in the coachwoman and coachman franchises earlier in 2026. Montblanc advanced 6% in the first half of 2026 due to horrible exchange rates and the ongoing success of the Montblanc Explorer Extreme line and the strength of a legend franchise. With sales holding firm in the second quarter and the first franchise arriving in 2027, we see plenty of runway ahead for this brand. Dimitriou was up 10% for the half year, capped by an impressive 23% jump in the second quarter. The brand's fragrances are winning over more and more customers. in the U.S., thanks to the enduring popularity of I Want Shoe and the very successful debut for Jimmy Choo Man Parfums. Guess, the largest U.S.-based brand, rose 11% in the first half, including 1% in the second quarter. The iconic franchise keeps delivering, now altered by iconic blue for men, and the newest Amore extension, Amore Napoli, which was launched in the second quarter. The brand is rich, keeps widening as well. Today, for instance, Guess stands among the top 15 fragrance brands in Australia. Let's talk about Ferragamo. Ferragamo sales jumped by 41% in the second quarter, bringing first-class growth to 17%. and others. Growth was geographically broad, with the Serena and Ceragamo lines performing very well, elevated by their latest launches introduced in late 2025. We rolled out a commercial innovation program across the brand's franchise in May, which further enhanced the brand's growth, including our newest extension and Fiamma Assoluta, which has seen very positive feedback so far. During the second quarter, Chinese singer and actor Carrie Wang joined the Ferragamo family as the brand's global fragrance ambassador. As mentioned earlier, Asia Pacific is increasingly embracing fragrance. We are hopeful that Carrie's association with Ferragamo and further elevate the brand in this burgeoning market. Donna Cara-Diquiero climbed 12% in the first half, punctuated by a 28% increase in the second quarter, with healthy demand across categories and franchises and e-commerce becoming an increasing burgeoning for the brand's growth. The Kashmir Mist deodorant remains a fixture on TikTok, Shop, and Amazon. Roberto Parali grew 8% in the first half, fueled by this year's introduction across several franchises, among them the unisex scent, Marvellous Cypress, and several other fragrances launched earlier this year. Serpentine continues to be a massive success for brands globally, The war in the Middle East is certainly impacting this brand, and Cavalry is our largest brand in the region. Notwithstanding the war's impact, our conviction and excitement for the trajectory of a brand remains strong. A few brands faced Deeper conversions. Lacoste came in 16% below last year when a string of heat launches lifted first-half sales to 44%, and conditions in Eastern Europe added pressure. We introduced L-1212 Bleu for men during the second quarter. And with major initiatives lined up for 2027 and 2028, we believe the brand's best performance lies ahead. Recognition keeps coming for our fragrance as well. The La Blanca from Oscar de la Renta took home the Best Eau de Parfum at the Marie Claire Fragrance Awards 2026 and Tagamo Signorina Romantica was honored as the Best Sensual Gourmand Fragrance at the Who, What, Where Fragrance Awards 2026. and others like this celebrate the artistry of our team and partners and add to the desirability of our portfolio. Even as consumers remain increasingly selective about how they allocate their products, the United States fragrance was once again the fastest growing beauty category in the first half, owing to its status as an affordable indulgence and Daily Form of Self-Expression. The market has normalized after several years of exceptional growth, but opportunity remains attractive. For us, opportunity is very clear. We share with brands that have personality, quality and global reach. Across our portfolio, we have many ways to speak to consumers and that diversity is one of our greatest strengths. Beyond success and innovation from our core brands so far this year, we also made significant strides in developing and expanding our newest portfolio brands. I think we are is rebuilding momentum in high-end fragrance, with existing consulates having resumed distribution and reopening of Paris boutiques. We are also preparing the launch of new fragrances in 2027. Lastly, newly created Holy Oran Solferino, extended to 100 total points of sales at the end of the first half of this year. And we plan to launch an 11th fragrance to the initial collection in the second half of this year. And we are also preparing for the first launches of new fragrances for Longchamp and Off-White in 2027. Longchamp have the potential to become our next 100 million brand and Off-White represents another step for us into the high-end category. Here, the top of that is the extraordinary rise of digital commerce, which has been a growth driver for us in the second quarter, highlighting Amazon and TikTok shop. Amazon now sells more beauty products and many more. We will stay ahead of the curve to identify Evolving behaviors continuously adapt how, where, and when we engage. So we meet consumers not just where they are, but where they are eating. Consumers are also making friends, personal layering scents, assembling fragrance wardrobes, and turning to AI-powered recommendations to guide discovery. However, they choose to find us on social media, on the major marketplaces or in stores. We are meeting them with storytelling that carries across every channel and delivers an immersive, consistent brand experience. Ultimately, this business is about inspiring desire, offering consumers an entry point in the world of an iconic fashion house or celebrity, and we work every day to keep the desire burning across each of our brands. Travel retail remained a steady contributor, once again accounting for roughly 7% of total net sales, in line with prior periods. New York is where the tunnel is strongest today, with conditions softer elsewhere, including, of course, the Middle East, and we see steady growth ahead of this business. I will touch on tariffs, even the newest round implemented under Section 301. As a reminder, our manufacturing is based primarily in Europe. The rates under this latest wave are largely in line with what we were operating under, so we don't expect to see meaningful changes to our cost structure going forward. That said, we are not standing still. We are increasingly working to position our distributors closer to the point of sale, with We are also working on cost-saving initiatives to help