Coty Inc. Class A

Good morning and good afternoon, everyone. My name is Madison and I will be your conference operator today. At this time, I would like to welcome everyone to COTI's first quarter fiscal 2026 question and answer conference call. As a reminder, this conference call is being recorded today, November 6th, 2025, at 9.30 a.m. Eastern Time or 3.30 p.m. Central European Time. Please note that on November 5th 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 Nobby, Chief Executive Officer, and Laurent Mercier, Chief Financial Officer. I would like to remind you that many of the statements 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 star 1 on your keypad. To leave the queue at any time, press star 2. Once again, that is star 1 to ask a question, and we'll pause for just a moment to allow everyone a chance to join the queue. And we will take our first question from Rob Rottenstein with Evercore. Please go ahead.

Great. Thank you very much. I've got a few questions all around the Gucci topic, if you will. So, you know, first, can you talk a little bit about how exiting the Gucci license will impact your overall portfolio, how you're thinking about it? And then does the curing announcement, along with L'Oreal, actually have any influence at all on how you're thinking about your overall licensing model? Any tweaks to that? And then finally... Is it at all possible that Kearing will try to take the Luke Geechee license back before its expiration? And can you come to a deal with Kearing in terms of an early license termination? Thank you very much.

Good morning, Robert. Thank you very much for giving me, again, the opportunity to speak about this important topic. So let me start with the first question, which is around how this is going to impact Coty's portfolio. So with the public announcement that the Gucci license will no longer be part of our portfolio after its expiry, as you can imagine, the focus of Coty for the next several years will be on, number one, will be overdriving the brands with the biggest long-term growth potential, Number two, we will be building, and I should even say amplifying, the new licenses and brands we have recently added to Coty's portfolio. And number three, in parallel, we will optimize the Gucci brand during its remaining term, while, of course, fully respecting and operating within all of its term. In fact, and it's important for me to have the occasion to say this, the uncertainty over the last few years around the fate of the Gucci license, resulting from the public comments of the licensor, were a challenge for the Coty organization and the Coty reputation, including whether to build the brand in a strategic or a tactical way, and also its role in our overall portfolio. And now, as there is full clarity on the brand direction, we now have a fantastic opportunity to grow the rest of the portfolio with a bigger sense of focus, especially on the ultra-luxury part of the business with a comprehensive portfolio of ultra-premium brands. I'm thinking about Atelier des Fleurs from Chloé. I'm thinking about Burberry Signatures, Jill Sander Collection, Infini Moncote Collection, and upcoming Etro and Marni Collections. So even without the Gucci license, it's important to state that we remain firmly in the top three for total global fragrances and for prestige fragrances. And with this clarity on the fate of Gucci now, we will work to optimize the brand in a more tactical way until the last day of the license, while focusing on accelerating the rest of our portfolio. As a reminder, and you have seen it probably in our prepared remarks, we have already grown some of our biggest brands at a fantastic pace in the last five years. Burberry by 140%, Hugo Boss by 33%, Chloé by 70%, Marc Jacobs by 50%. And we can now focus even more on further expanding these brands. while in parallel building our next stars with brands like Swarovski, just like we have built Gucci. You may recall that we grew Gucci by 60% over the same period at constant currencies. Now I would like to take this opportunity, Robert, if you allow me, to stress that some of the delusional media rumors from recent months about Coty potentially exploring the sale of some of our key fragrances are categorically false. May I repeat, categorically false. We are committed more than ever to solidifying our position as a prestige beauty company with an emphasis on fragrance and scenting across price points with cosmetics and skincare best-in-class capabilities. And as you can imagine, our long-term fragrance brands are the backbone of this strategy. Now moving to the second part, which is a very important also question, which is around the impact of these events on the licensing model. I think that we can say that everything that happened confirms that the winners in beauty have been and will remain specialty beauty players like Coty. In housing, beauty remains incredibly complex, incredibly costly for non-beauty players which reinforces the appeal of the licensing model. May I remind everyone about why this licensing model is really a strong model. It offers strong return on investment with no material upfront license or renewal costs, while established grant equity increases the probability of success and of payoff. Again, a successful licensing business depends on portfolio diversification and on minimizing the license duration risk. In recent years, as you have seen, we have proactively renewed and significantly extended many key licenses, including Hugo Boss, Marc Jacobs, Adidas, Davidoff, and all these for an additional 15 years plus. So today, I would say that 85% of our portfolio is either an own grant, a perpetual license, which we view like an own grant, or a license with very long-term remaining duration of more than seven years, 85% again. So for our core beauty portfolio, it remains also a very long term in terms of nature, with approximately 80% of the brands either being owned or under long-term license. We also have been very prudent, as I said it, for many years now, that no single brand in our portfolio accounts for more than approximately 10% of our sales. Now I'm going to answer the last part of your question, which is around, you know, an early exit from the license. So, again, there is no change to Coty's existing license on our ability to operate the Gucci Beauty license. All contractual rights remain in place and continue as agreed. Coty will continue to manage and operate Gucci Beauty under the same structure already in motion. Overall, we continue to solve this amicably with caring. Last part of your question, which is around a potential deal. As you can imagine, we are always open to evaluate any proposal, if and only if this creates real value for the company.