L'Oreal Co Eur Ord

Welcome to the conference call regarding L'Oreal nine-month sales. The conference is about to begin. I now hand over to Eva Quiroga. Ms. Quiroga, please go ahead.

Thank you very much, Judith, and good evening to all, and thank you for joining us for the presentation of our nine-month 2024 sales. I'm here with our CEO, Nicolas Hieronymus.

Good afternoon.

Our CFO, Christophe Bavule.

Hello, good afternoon.

and our Global Head of Corporate Finance and Financial Communications, Laurent Schmitt.

Good afternoon.

Nicolas will make a few brief opening remarks before we will open up to Q&A. And with that, over to you, Nicolas.

Okay, let me grab the mic. So, good evening and thank you for joining us on this call regarding our nine-month sales. I'm pleased to report a solid like-for-like growth of plus 6% for L'Oréal despite the multiple external turbulences that impacted the third quarter Some expected, some less. The expected headwinds were the continued normalization of the beauty market growth in Europe and North America as inflation-related pricing continued to ease. The less expected, or should I say worse than expected, turbulences were in North Asia, in the Chinese ecosystem where markets turned even more negative, particularly in luxury, both in the domestic and in travel retail where traffic did not convert into purchases. We were encouraged recently by the government's stimulus measures and hope that they will result in a gradual pickup in consumer confidence. What was also unexpected was this summer turbulent weather, which led to little replenishment and therefore negative selling in sun care for LDB. Despite all these external turbulences and a few others, we delivered a solid growth at plus 6% in the first nine months, once again outperforming the global beauty market. And that, after multiple years of strong and broad-based outperformance in share gains. There are several highlights or bright spots that I would like to stress. First, underlying growth trends remain robust in Europe and North America, as well as in emerging markets. Globally, beauty units are growing, including in China, demonstrating the resilience and potential of the beauty category. The contribution from value and volume for L'Oreal was well balanced, illustrating our capacity to both valorize and recruit. Our fragrance and hair care businesses continue to grow strongly, while makeup is pursuing its gradual recovery, fueled by new product launches that were unfortunately quite backloaded this year. We are gaining share in three divisions out of four, mass market being around market level. Our business remains pretty good in Europe, North America, and emerging markets, despite the summer slowdown. In mainland China, three of our four divisions outperformed the market. In mass, L'Oréal Paris resisted well, confirming its position as the number one beauty brand. Entering the fourth quarter, conflicting forces should make it quite consistent with Q3. On the one hand, we are entering the holiday season where our strength in fragrances will play in our favor. But on the other hand, we don't see any change in the macro landscape and Q4 is when China weighs the most in our turnover, notably with the big double 11. All in all, we remain confident to outperform the market this year again and deliver growth in sales and operating profits. Fast forwarding into 2025, we expect the global beauty market to continue to grow at pre-COVID levels. We are in the process of preparing our own beauty stimulus plan. Beauty is an offer-driven market, and innovation and creativity are crucial to stimulate demand. We have prepared a truly incredible roster of new launches across all categories and divisions for next year, and we'll continue to roll out this year's blockbusters. Add to that the agility and passion of our teams and our unique ability to reallocate resources towards new growth engines, and you can see why we are convinced that we will deliver in 2025 another year of growth and outperformance. With that, let us now open up for questions.

Ladies and gentlemen, if you wish to ask a question, please press star and 1 on your telephone keypad. Please use your handset before asking your question and set your microphone on mute once you ask your questions. The first question is from Guillaume Delma, UBS. Please go ahead.

Thank you very much and good evening all. Good evening. Two questions for me please. The first one is on the dermatological beauty division because Even after adjusting for the €57 million one-off, I still get to around 4% like-for-like sales growth in the third quarter, which is a marked slowdown compared to the first half, and I think your weakest performance since Q2 2020. So maybe could you shed some light on this deceleration? I mean, particularly the main drivers behind it. Is it all about sun care or some region's brands that are worth highlighting and I guess importantly I mean do you see this mid single-digit like for like as just a one-off or could dermatological beauty be a bit slower for longer and then my my second question is on the beauty stimulus plan you are preparing for 2025 I mean anything we should read into into this because I Correct me if I'm wrong, but L'Oreal has always been trying to stimulate industry growth. So are you signaling something different for next year? I mean, maybe the magnitude of your investments or the number of new product launches that would be greater than usual? And if so, I mean, any margin implications from this that we should expect? So any call on that would be helpful. Thank you very much.

Okay, thank you. So I will start with, of course, the question on L'Oréal Dermatological Beauty. So I think there are several elements. First of all, your calculation on the reality of the growth, it's indeed without the Vichy insurance correction, it's a mid-single-digit growth, so it's lower than the previous quarter's without a shadow of a doubt. A few explanations on that. First of all, there was a realignment between sell-in and sell-out, which was augmented by the sun care effect, but not just by the sun care effect. We were ahead of our sell-out, and particularly as sell-out slowed down over summer, notably in the U.S. market. So the biggest... culprit of the slowdown of dermal cosmetics is the U.S. Everywhere you have a little bit of this value effect reduction that affects all markets in mass and in mass medical, but that affects all markets. But it's really the U.S. market that has slowed down. We continue to gain share on that market. By the way, you know, CeraVe has got a 19% share on that market. So there's a value-driven reduction. There's a few consumers in the U.S. that left the dermo sector to mostly young Gen Zs that went to try a few other brands, so it's up to us to recruit them. We have to say that we didn't have on CeraVe in particular, we haven't had innovations for a while, which is changing now as we are launching a new intensive body care with Urea and about to launch our anti-dandruff shampoo line. And then in the U.S., you also have the fact that the distribution channel of drugstores is more under pressure than other parts of the distribution. So all in all, after years of extraordinary regrowth of the dermocosmetics market, particularly in the U.S. and particularly driven by CeraVe, it has slowed down a bit. What is true is that the appetite for dermatological beauty has not really changed. It's true that many brands have tried to tap into that trend, but we see, I'm looking, I was in China, Cerave is at plus 29, Cerave is at plus 25 in Sapmina, it's going in the 20s in Europe. So it's really, I think, in the U.S. where we just need to bring new stuff to get consumers excited to get that brand to accelerate again. La Roche-Posay is doing fantastic. Mela B3 is doing great too. So all in all, a reduction in the U.S. mainly, a little bit everywhere else with price, a lack of innovation on CeraVe in recent months, but no inflection on the trend on dermatological beauty, which we see both in pathologies and visits to the derms as well as in appetite for everything related to aesthetics. On the sun care in particular, just to give you a number, at the end of Q1, LDB was at plus 40% because last year was a slow start and we shipped a lot of products in Q1. And considering the weather, it was minus 6% in the Q3. So we've unfortunately shipped a lot of sun care and had negative setting in Q3. But, you know, that's what sun care is all about. So you have yours with and without. So I'm not worried at all on dermatological beauty. I'm just encouraged to take more initiatives as the success of Mela Bay 3 shows. And that's a good segue to your second question on the beauty stimulus plan. You're right to say that every year we try to stimulate the market and we prepare launch plans. I think what's new, and that's why I put it in my quote, is that for the last three years the market has been boosted First, by the revenge buying post-COVID and everybody going back out. And for the last two years, boosted by inflation and everybody valorizing. So, yes, we did have to innovate. But let's say we had a tailwind that allowed us probably to be a bit less aggressive. Now that we see that the market has slowed down as predicted and as announced, I've asked all the teams of L'Oréal to... to increase both the quality and the quantity of their launches for next year, because we see that the brands that win, and we have many brands that have spectacular results, including some very big ones, with L'Oréal Paris being double-digit or YSL, and every time it's driven by great innovation. So it's about now having all cylinders on fire, and that's what I ask to the team. And as it relates to margin, no, we are not announcing a desire to reduce our trend of regular improvement of operating profits.

And, Guillaume, coming back to the LDB, you know, yes, you can consider Q3 as a one-off. As you know, we don't run the business on a quarterly basis. We look at the whole-year growth, so we can be – confident and we are on the capacity of course to keep delivering high growth on LDD.

Thank you very much.

The next question is from Ian Simpson, Barclays. Please go ahead.

Thank you very much. Just a couple of questions from me if I could. Firstly, I wondered if we could dig a little bit into what's happening in emerging markets ex-China. So when I look at SatMina, SSA, and LATAM, there's a sequential slowdown there, which I'm guessing is also why your consumer business was a little bit weak because I think those divisions are largely consumer-led. So it would be helpful if you could give us a little bit of a walkthrough what happened there. And then secondly, I just wanted to dig into one of your opening comments where you talked about, if I heard you correctly, 2025 market growth returning to pre-COVID levels. And I think you've previously talked about you know, cosmetics market globally growing 4% or so long run. So I wondered if we could, if we should interpret that as you thinking about 4% market growth for next year. Thank you very much.

Okay. So, uh, I'll start with the, uh, the last question because the answer is, you know, with everything we, uh, that isn't certain about the future, our estimation based on what we see today is indeed, uh, market that would go back to the growth rhythm of the pre-COVID growth rhythm, so somewhere 4 to 5, considering that, of course, the speed of recovery of the Chinese market has to be taken into account. Today, what we see, for example, if we look at North America, it has slowed down to a level that's slightly above pre-COVID. Same for Europe. And China is, by definition, very much lower than pre-COVID. So it might be a different mix, but that's what we plan our year on. But again, it's our role, as well as the one of other players, to stimulate that demand with exciting innovations, because we see that that works pretty well. As far as emerging markets, first of all, as Christophe said, again, we're trying not to... to comment a single quarter. Overall, the dynamic remains pretty good. We've had a few specifics in Latin America, where you have really Argentina, who's taking the overall market down. Brazil remains very dynamic, and we are winning share. And Mexico slowed down a little bit post-election, but again, there we're winning share, and we have a spectacular performance, by the way, from CPD. In Sapmina, well, Sapmina is a zone that's a mixed bag of countries. Actually, you've got Australia and Sapmina, which is a pretty big part of the country in that zone. And Australia and New Zealand behaved in terms of markets the same way as Europe and North America, i.e. less value in the market, implying the slowdown. And then we have the growth and the market share gains in most markets remain in line with the the beginning of the year, with one exception that we already mentioned but had not gotten better during the summer is the impact of boycotts on Western brands, boycott calls in actually two countries, mainly Indonesia and Malaysia. So this has impacted our growth in that region. The good news, if I may say, is that we'll be entering in the months to come the anniversary of when all this started, so we'll be resuming from a better base. But overall, the performance in that region is great in luxury, excellent in LDB, and CeraVe is really accelerating. It's good in PPD. And on CPD, we have a pretty good performance in skin care, and we are struggling in makeup because of our back-loaded launch plan. So we are just launching, as we speak, a super gloss and blush on Maybelline that is called Teddy Tint, and we have a few other things. And it's true that, to be honest, I would have preferred to have these launches sooner in the year. And that's part of the things we are correcting for next year is that we can't afford make up to wait for a second half to have launches because it takes time for them to take off. So that's a tool. I don't know if I forgot anything, Christophe, but that's more or less the situation in emerging markets, which remain today 30% of our growth and still a very big objective. for CPD, but for all other divisions, because I think in terms of penetration and share, we can still do much better in this part of the world, and we have been doing it this year.

Thank you.

The next question is from Olivier Nicolai, Goldman Sachs. Please go ahead.

Good evening, Nicolas, Christos, Eva. One question, first of all, on fragrances. Could you comment on the current growth rate that you see in fragrances in E2-3, and how should we think about Q4, which is obviously the key selling period there? And do you see any sign of slowdown there? And just to follow up on the previous comment you made, I think you initially said that you were expecting Q4 trends to be similar to Q3. Was it for the group, or was it for China? I'm not sure I got that part. Thank you.

Frank, to be honest, I wish I could give you, again, the very accurate vision of Q4, but my comment was more for the group because, I mean, of course, if all coins fall on the right side, it's going to be a great fragrance season. We have makeup kicking in, but it's also by a couple of hundred basis points a quarter where China is overweighted in the business of the L'Oréal Group. So one thing could be balancing the other. At the end of this year, and that's, I think, part of the thing that should make us ambitious for the future, is that the weight of the Chinese ecosystem in our business will have dropped 200 basis points this year. So the more we move, the less we'll be dependent about the... the climate and the Chinese turbulences and have the possibility. If, you know, consumption there re-accelerates, we'll benefit from it, but we can plan even considering the current situation doesn't get better. As far as fragrances are concerned, I have only good news. I don't see any slowing down. I was... The numbers in... It's just the market and our rankings... We have right now multiple products that are positioning themselves in the top five, even top three. At some point, we may have three feminine fragrances in top three in Europe. We'll see how the year ends. Our brands are doing great in America. It's not always the same, by the way. Valentino is doing fantastic in the U.S., whereas in Europe, it's Lancôme, Prada, and YSL. YSL Men is doing great in America. So really, no worries and no slowdown. We see this market going double digits. It's one of these things, again, people, the affordable luxury, the access to couture. Even within our brands globally, the couture brands are doing great overall, even in makeup. So there is appetite for that. And just to give you another insight, two weeks ago, I did a trip in China and Japan, two markets with right now different dynamics. But in both countries, I was struck to see lines of people queuing outside fragrance stores and counters. Ours and some competitors, of course. But it was quite spectacular. And I must say that I had not seen that. Even Japan, which was quite remote from fragrance for years, we see this trend everywhere. really developing amongst young generations. So I have to say, you know, you can always be wrong, but I do not see any slowdown. On the contrary, I see great potential in countries where fragrances were underdeveloped, and that's also our growth, our acceleration in emerging with L'Oréal Luxe is also coming from fragrances, so that's something I'm pretty excited about. And by the way, we'll be starting with Miu Miu from January 25, so it's another addition to our roster considering how hard this brand is with young generations. I hope we can have the same track record that we just did with Prada and Valentino.

Thank you.

The next question is from Sarah Simon with Morgan Stanley. Please go ahead.

Yes, afternoon. I've got two questions as well. Sorry, Nico, can we just go back on the SunCare within Derma? Did you say that you had sell-in of 40% in Q2 for SunCare?

In Q1.

In Q1. And what was it in Q2 then?

It was flat and then minus 6 in Q3.

And do you think sort of sun care inventories are now normalized?

Well, I think we have a little bit of inventory, not much, on dermatological beauty. We don't have any in mass because it's a different commercial practice where we take returns. But nothing material. But it's true that we wished we had, aside from business, I think we all wished we had better summer. I don't know where you were this summer, Sarah, but it was a bit of a nightmare. But that's what I can tell you about the sun care.

Okay, great. And then, sorry, the second question was, you know, the market's obviously returning to a more normalized rate of growth. When you think about your marketing spending, that obviously rocketed when it went up significantly faster as the market grew faster. So how do you feel about marketing as a percentage of revenue in the context of a kind of more normalized growth outlook?

Well, you know, I think it's, first of all, it's a good question. I think the straightforward answer is that we want to continue to increase our spending behind beauty with no doubt. And as we said, It may not be the case, always the case, in terms of percentage of net sales because we are seeing with our BetIQ system that we are rolling out progressively. It's a bit slower than I wanted, but still it's already covering around 40% of our AMP, and we see every time real increase in ROI. means that we can get more efficacy for the same amount of money. So overall, the vision is we want to stimulate the market and our growth with more fuel, which is going to be shared differently probably between different media, social networks, advocacy, et cetera. I think we reached very high percentages of our net sales last year in particular, so now I think we can control that a bit more. I don't know if you want to add something on that, Christophe?

Yes, we keep investing in our brands, and I think it's very important in the current context where we need to stimulate the market. So definitely our model is growth, and we're still increasing the amount, the dollar amount of our investment, and of course being extremely agile depending on the on the regions where we feel there is elasticity in terms of sales, or in the categories, like Nicolas was mentioning, we are doing extremely well in provinces, so of course we are preparing a very rich Christmas party when it comes to supporting our brands.

Okay, thanks. The next question is from Jeff Stent, a BMP. Please go ahead.

Hello, Jeff. Hey, good evening. Two questions, if I may. The first one, just a housekeeping question for Christophe. If you could comment on the proposed changes to sort of the French tax regime and what that may imply for L'Oreal. And the second question is, could you maybe just put a little bit more light on sort of market growth in mainland China and also Hainan? So what you've been seeing there and how your sell-out compares versus the market. Thank you.

Okay.

So I'll let you talk about the French tax, Chester. Yes, French tax. So as you know, there are still discussions ongoing, so we don't have yet the final, final picture. But for the time being, based on the information that we have, there will be an exceptional tax that will come for 2024, and we estimate the amount to be in the range of $250 million. euros on additional tax.

Thank you. Okay, so on China, I'll start with, but it's broadly consistent, whether it's in Hainan or China. But let's say that overall, the market, our estimation of the market, which is quite reversed, that the market was overall slightly positive in Q1, then moved to mid-single-digit negative in Q2, and a higher mid-single-digit drop in Q3. And within that, the part of the market that dropped the most in Q3 was the luxury part which was negative mid-teens. So that's really the overall trend of the Chinese market. The only sector that was slightly positive in Q3 was mass markets, where there was a number of consumers probably shifting from luxury to some of these brands. Overall, the market was quite negative. Year-to-date, the market is cumulatively low single-digit negative, and we are, if we take division by division, we are gaining share in three divisions out of four, which is selective. So we are doing better than a very negative market, but it's not good enough to have positive growth. Better in dermo and better in professional. And we are below the market in mass with our makeup brand struggling and with L'Oreal Paris overall doing pretty good. Actually, L'Oreal Paris gains market share in every single channel but has a slightly unfavorable mix effect. So overall, L'Oreal Paris is resisting well and confirming, strengthening its number one position on the market. And as far as Hainan is concerned, if I take Hainan duty-free, we have the confirmation of what we announced and discussed during the half-year call, is the fact that the sell-out remained in the minor 30s in Hainan. So there's a lot of traffic, a lot of tourists. There were a lot of tourists during Golden Week, but they do not convert to our categories or any other, by the way. So it remains very negative on the year that was negative again. So there is really this reset of the travel retail market in Asia is taking longer than we hoped. And that's why I was talking about unexpected turbulences because this is the one that I was hoping to improve over the summer.

That's great. Thank you very much.

You're welcome, Jeff.

The next question is from Celine Panotti, JP Morgan. Please go ahead.

Yes. So two questions for me and a follow-up. So first of all, Chyna, can you try to help me unpack a bit the point why at the group level was I think more than 5% and reaccelerating Well, it seems that China was probably down double digits. So if you could help me unpack where luxury did much better in the rest. And any comments that you may have on how the pre-sale 11.11 has been in China. My second question is on the U.S. market. You said it has slowed. You mentioned Burma. You talk about the overall market growth in the U.S., where, I mean, some of your peers have been speaking about as well a slowdown, especially in makeup. So if you could talk about that. A follow-up on the tax points that you made. Is it as well for 2025 that you will have that extra 250 million? Thank you.

Well, I started answering to the last question, Celine. No, it's for 2024.

Thank you.

And I will start in the U.S. and then I will... The communication was not really good on your first question, so I may ask you to repeat it, but I will answer to what I got. The first thing on the U.S. market, we see indeed the market normalizing. It started sooner than Europe with the effect of price, and what we see today, it's normalizing around the 5%, so mid-2040. with single-digit growth, which is slightly above pre-COVID. Within that, there are indeed some categories that are struggling more, makeup. There are some categories that are booming, like fragrances and hair care. I mean, hair care is doing phenomenal, both for L'Oreal, for Kerastase, for Redken, and there's really a strong demand for hair care. And skincare is somewhere in the middle. So all in all, again, we see the American economy being quite strong. It's true that the mass market was more impacted by the slowdown than the selective, probably because people with lower incomes had a harder capability to afford some of these products. But overall, the market, as I see it, is around 5%. You know the reason why maybe we do not have the same take on the u.s. Then some some of our competitors is precisely because we have this wide portfolio of brands white price piano and We see Amazon being very dynamic the bread the luxury brands we put on Amazon being a local or kills are Doing good and and actually a reaccelerated kills which was struggling a bit in in mass we have Nix is doing fantastic and Maybelline's been struggling for lack of innovation. Haircare is good. So we have different price points, different stories. Our fragrances, YSL has become the number one fragrance, masculine fragrance brand. So not SKU, but the brand overall has taken the leadership. We have Valentino doing great. So overall, I think we can navigate the moving equation of the U.S. market. Yes, and... In the end, we are very confident in the economy. We do not think that the result of the elections will affect the American consumption one way or another, so we continue to be ambitious on this market. Then your first question was... Can I repeat? Yes, please.

My question is on China. If you could help me understand... I believe that luxury was down double digits, and yet at the group level, luxury was up more than 5%. So could you explain where luxury was celebrating? And any comment that you have on 11.11 at this stage? And, you know, profitability in China?

Okay. So on luxury... luxury is globally, first of all, luxury is significantly beating the luxury market. The luxury market is around, we estimate it to be around 3% globally. We are at mid-single digits with L'Oreal Luxe, and we've been penalized for L'Oreal Luxe with our, you know, our destocking and overweight in China, but the division is accelerating. So, There is good performance in most, if not all, countries, to be honest. We're doing great in Europe. We're doing great in Latin America and emerging with double-digit growth. We're doing great in Japan, where L'Oreal Lux has become, year-to-date, the number one foreign group in Japan. We have brands like Takami that are doing phenomenal. The new couture brands that we launched in China are doing good also, by the way. So it's really China and travel retail that are negative. And then we are doing good in the U.S. So in the selling of the third quarter, part of it is a pipe of the holiday season for our fragrances. So I think we are probably there slightly ahead of our sellout. But we have lots of new initiatives, new flankers on Libre, on Avier Belle. So it's mostly fragrance-driven and a good recuperation on makeup. We are not happy with our skincare performance, which of course is very impacted by the weight of China. As far as W11 is concerned, it's very, very early. What you probably know is that the length, the duration of W11 has been extended. It's going to be the longest W11 ever. It's been increased by 10 days. And it's just starting now, so it's a bit too soon to say. What I can tell you is that we are broadly in line with our targets. But we see how things unfold very too soon. What is true is that we are determined to have our brands in the top rankings of this event. And if we take L'Oréal Luxe, just to give you our growth, excluding China and travel retail, Asia, it's double-digit. So it's really where, as we say in France, in French.

Hello? The next question is from Charles Scotty. Please go ahead.

Hello, good evening. Thank you for taking my questions. I have three. Just a quick follow-up on North Asia. Is it possible for you to give us more precise numbers on your performance across all divisions in mainland China and the Asian travel retail channel so that we can break down the 7% life-or-life sales drop in Q3? Secondly, I suppose that a stronger innovation pipeline next year could potentially require higher ANP spending, especially considering that fragrance is quite ANP intensive. But in the meantime, we are still guiding for still margin improvement. I guess raw materials are heating up. which could help on the growth margin. But are there some cost savings actions being implemented to defend the profitability in the second half? And then the third question is, again, on taxes in France. I think that the bulk of the exceptional tax increase will take place in 2025 and then to a certain extent, 2026. So should we expect an even stronger negative impact for 2025 and 2026? Thank you.

Okay, so I'm not going to give you more details on the performance per brand, per division, per country in North Asia. I think we have already given quite an extensive level of information. Overall, I mean, the main information is that we are gaining share in Lux, LDB, which is really accelerating, by the way, both in China and North Asia, and PPD. and that we are below markets in mass market, mainly because of China. The rest is, you know, we're gaining share in travel retail, but it doesn't mean anything because we're gaining share on a very negative market. Frankly, it's good, but it's not going to be helping you a lot. So that's the first part. On the margin protection, because you mentioned second half, so you're talking about this year, I guess. So overall, first of all, we continue to invest behind our brands and support our frequencies over the holiday season. Clearly, as we do over time, and we had a meeting on that two days ago, we reallocate our fuel and our monies where growth is and where there is a strong potential. So that's clearly both regionally and category-wise and regionally. We are managing our P&L, whether it's SG&A, headcounts, always adapting to the reality of the market. So we are not one of these companies that announces big revolutions, but we are in constant transformation, optimization of the organizations. We have several projects that have unfolded or are unfolding, whether it's clusters of countries, whether it's reorganization of the sales force for CPD in North America, whether it's the organization of our luxury brands. So there's lots of constant re-engineering of the organization to make sure that, indeed, we have free resources to fuel our brands, be it in 24 or even more so in 25. And I hand over to Christophe that was on the French...

Yes, in the French tax, there will be an impact accounting-wise in 2024 and 2025. And, of course, on the cash flow point of view, it will be 2025 and 2026. And, again, I'm still prudent because things are not yet being voted by the Parliament.

We are following what's happening in the Parliament on an hourly basis, and it's quite hard to really figure out what's going to happen, but we are planning for it anyway and are ready.

Thank you very much.

The next question is from James Edward Jones, RBC. Please go ahead.

Thank you. Good evening. You said you expect to outperform the market in 2025, but that's not included in your outlook statement for 2024. Should we read anything into that? And second follow-up, could you just give us a number for organic growth in hair care for Q3, if possible, please?

I will give you a growth number for hair care for the nine months because I don't have it, first of all, under my eyes for Q3, which remains good, but we are double-digit in hair care year-to-date. So Q, I don't remember where I was at the end of the first half, so it's probably slowed down a bit in Q3 because for the very same reasons that we discussed in terms of alignment of selling and sell-out, but it continues to be very, very dynamic in sell-out. Again, in all countries I visit, we see hair care, and most importantly, premium hair care, growing steadily. So that's one of the categories, like fragrance, where you have a strong underlying demand, which is both fueled by the... the growing length of hair and the growing mixity of hair types, racial mixity, which creates more demand, and people are using more treatments, more serums, and of course they keep on using a lot of shampoos, so that the market remains positive in mid-single digits, that's including hair color, by the way, it's a bit higher in hair care, and we are We are doing good. And I'm sorry, I did not get your first question.

Just about your outlook statement didn't include the usual, we'll outperform the market this year. You said you're going to outperform the market in 2025. Oh, it did, did it? I missed it.

It did. We are outperforming the market here today, and... As we enter holiday season, we are confident that we'll outperform it again this year. And, of course, we are aiming for it in 2025. But, yes, yes, it was in the statement. Maybe I said it too fast, but it's part of the motivation and it's part of the reality here today.

I apologize. Thank you.

It's okay. It's my bad.

The next question is from Tom Seiker, Deutsche Bank. Please go ahead.

Yeah. Good afternoon. Good evening, everybody. First of all, just on China, you have a very high level of non-permanent staff in China. So given what you were saying about the seasonality and the strength of Q4, are your hiring plans the same as they usually are coming into Q4? Or are you already starting to look at reduced headcount at all in China or indeed any other longer-term mobile changes at all or channel changes in China? And then just referring to your comments before about the US and the sell-in, some of the shipping data would suggest that the peak shipping dates were a month or two earlier this year. I just wondered whether that sort of fear of Red Sea, retailers wanting to make sure they had inventory, did that at all help Q3? And is there any seasonality difference with the growth of Amazon as well in the market?

So on both questions, on the US, as I said, there was anticipation in selling of our luxury division. which is a mix of our own organization and probably desire from trade to make sure they have inventory. There's no major impact to my knowledge of Amazon, so it's something that benefited Q3 for Lux. But again, as the market is very hot on fragrance, I think it's good to have it in the trade and be ready to sell out. As far as China is concerned, the P&L of China is super flexible. Because indeed, you're right, we have lots of beauty advisors, but it's a highly flexible workforce. And I can tell you, and that's probably one of the questions of Celine that I did miss answering, The profitability of our Chinese subsidiary is very, very well managed by the teams at all levels. Of course, in terms of adapting our level of ENP to the reality of the market, but also adapting the reality of our workforce to the growth of the market. All the more as right now, the best performing channel in China is really online. whereas offline is struggling more. So you have, of course, to adapt to that. Considering, on the other hand, that we continue to open a new tier 3 and 4 cities, which is part of our China consumer conquest. So all in all, we have a strong financial control of the structure of our P&L in China, and there shouldn't be any worry about this slipping.

And we are relocating also some kinds of resources. You know, we have a very strong growth on many of our brands in luxury in China. I've counted seven of them with a growth of more than 30%. We are rolling out Valentino, doing very well, Prada, opening boutiques for Esota. So all in all, we have absolutely no problem with our workforce in China.

Okay, thank you.

And the last question is from Rob Ottenstein, Evercore. Please go ahead.

Great. Thank you very much. Two follow-ups. First, can you give your assessment of roughly where retail inventories are in the U.S. now and the mindset of retailers there? You know, we're hearing from a lot of companies that they're really, you know, continuing in other areas to take inventories down into the end of the year. So just your sense of what that dynamic is and how the retailers are looking at their inventories in beauty in the U.S. And then second, kind of stepping back and looking at the emerging channel structure in the U.S., you know, you've been in Amazon now and Lancome for a while. You've spread to other brands. Love to get your sense of the learnings of being in Amazon at this point. What being in Amazon has added to the Lancome brand? Is it getting younger consumers, for instance, or different demographics? And then tied to all that, given your learnings in Amazon, how do you think about more medium-term products you know, the mix of your route to market in the U.S.? Thank you.

Okay. On inventory levels, we clearly have, you know, American retailers who have been, you know, more conscious about their inventory, particularly in mass, I must say, and, you know, the drugstores channels to the CVSs, Walgreens, and the likes. So that's part of the, you know, part of the realignment between the CPD sell-in and sell-out is linked also to this. On, but then again, it depends on the categories. Clearly, on fragrance, there's a FOMO sentiment, a fear of missing out, and I guess they are happy to have the best-selling fragrances. So it really differs on the channels. Same in the professional division. It's true that salons are more cautious, whereas as hair care is very dynamic in selective retail, we haven't felt specific pressure on this category. So once again, it's a tale of several cities. But it's clearly in the mass environment, there has been more pressure on inventory. To my knowledge, we do not have excess inventory that we should be worried about in North America. As far as Amazon for luxury is, for the brands that have started in the U.S., we are very happy. First of all, we are very happy because it's really been a win-win partnership in terms of the quality of presentation of our brand, in terms of the way it's managed. It's a 3P model, so in terms of prices, it's much more controlled. In terms of quality of exposure, it's much more controlled. And it has allowed us to indeed recruit new consumers, some that were new to new to Amazon and to the brand, some that we're buying the brands on the, I would say, secondary market that was existing on Amazon and no longer exists. So it's a healthier business. And it allows us to push, you know, more some categories that were a bit underserved in some of our selective retail. I'm thinking about skincare for Kiehl's or even Lancôme. some of the makeup best-selling items like mascara. So overall, it's very complimentary. It hasn't been cannibalizing our long-term and good partners at Macy's or Ulta or Sephora, but it's positive for the brand. And overall, when I look at the performance of L'Oréal Luxe in North America, we are, after years where we were below market, The last couple of periods, we were above market growth, and thanks to the combination of our, I would say, a more complete distribution strategy without ever, of course, taking any risk on the brand equity. So as far as the future is concerned, it's always a question of aligning on the way a brand can be expressed and whether there is an alignment between Amazon and ourselves. It's been the case recently with Kiehl's. And, you know, it's possible that there will be other brands, but nothing is a setting stone because as everything with our retail partners, it's always a question of negotiation and alignment. But in the end, it's a very positive move. We took time before doing it because we wanted to make sure we had the right conditions, but now we have them and it's working. Okay. So I guess this puts an end to our call for the nine-month results of L'Oréal. I wish you all a good evening or afternoon, depending on where you are, and I guess we'll see you in February for the annual results. Thank you.

Thank you very much.

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.