Coty Inc. Class A

My name is Chelsea and I'll be your conference operator today. At this time, I would like to welcome everyone to COTI's third quarter fiscal 2025 question and answer conference call. As a reminder, this conference call is being recorded today, May 7th, 2025, at 8 o'clock a.m. Eastern Time or 2 o'clock p.m. Central European Time. Please note that on May 6th, at approximately 4.30 p.m. Eastern Time, or 10.30 p.m. Central European time, Cody issued a press release and prepared remarks webcast, which can be found on its investor relations website. On today's call are Sue Nabi, Chief Executive Officer, and Laurent Moussien, Chief Financial Officer. I would like to remind you that many of the comments today may contain forward-looking statements. Please refer to Cody's earnings release and the reports filed with the SEC where the company lists factors that could cause actual results to differ materially from these forward-looking statements. In addition, except where noted, the discussion of Cody's financial results and Cody's expectations reflect certain adjustments as specified in the non-GAAP financial measures section of the company's release. With that, we will now open the line for questions. If you would like to ask a question, please press the star key followed by the number 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star 1 to ask a question. And we'll take our first question from Rob Ottenstein with Evercore. Please go ahead.

Great. Thank you very much. Sue, I was wondering if you could give us a little bit more detail on the Q4 sales outlook? Is it a reflection of weakening consumer demand or changes in retail inventories or actions that you're doing just to better understand why you expect to see that sharp sales deceleration in Q4, please? Thank you.

Hello, good morning, Robert. Good morning, everyone. So it has not to do with, I would say, a worsening of the market conditions, not at all. This has to do a lot with our wish on the prestige division, while the fragrance category continues to grow solidly to clean up the baseline. At the same time, we are still seeing pressure coming on the prestige cosmetics market, mainly coming from Asia, travel retail, and from China, which are still under pressure. So this is really... in the prestige division about intervening actively to clean up the baseline, given how big is going to be the pipeline of innovation for fiscal 26. We wanted to play the role of, you know, stimulating the demand and coming back to growth as big as possible. And for this, you need a clean baseline. For the consumer beauty division, we see a continuation of the mid-single-digit decline in the cosmetics category globally. We also see some impact on our cosmetic sales from the marketing allocation and some headwinds in the growth to net, which should reverse next year. So, in summary, I would say that this figure is, you know, if we didn't go to that cleaning, this high single-digit decline would be rather a low single-digit decline without the cleanup. So, that's the way I would describe it. Still the same trends, strong dynamism behind fragrances, including in the U.S., but still amid single-digit decline in color cosmetics while our brands are continuing to fight for market share in both divisions.