L'Oreal Co Eur Ord

Welcome to the conference call regarding L'Oréal sales at 31st of March 2025. The conference is about to begin. I now hand over to Eva Quiroga. Ms. Quiroga, please go ahead.

Thank you very much, Alessia, and good afternoon to all. Thank you for joining us for the presentation of our first quarter 2025 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.

Hello, good afternoon.

We know that for many, this call is the last thing that stands between you and the long weekend. So Nicolas, we made just a few brief opening remarks before we go to Q&A. And with that, over to you, Nicolas.

Yes, good afternoon, everyone. So a few comments on this first quarter. As you know, Globally, it's been a real roller coaster of economic and geopolitical challenges with daily announcements. And in that context, I'm very pleased that we delivered organic top line growth of plus 3.5% in line with our projections. Growth was boosted by 100 million euros, which is the net impact of the IT-related inventory building between 24 and 25. As always, there were some good surprises and some not so good ones. The US were more challenging. than anticipated, and China was slightly less bad than expected. Europe was once again our single best growth contributor. Emerging markets remain dynamic. Last year, we told you that we would step up our innovations in 2025, and I'm happy to say that our beauty stimulus plan is off to a very promising start with strong contributions from our divisions and brands. including a few products like Gloss Absolue from Kerastase, PTOX from SkinCeuticals, Make Me Blush from Yves Saint Laurent, as well as the very aptly named Elsev Growth Booster by L'Oréal Paris. Its impact will only continue to increase as we extend our innovations into new markets and continue to launch more new products. Fragrances and hair care remain our two best-performing categories, and our makeup stimulus plan is starting to bear fruit in a market that's unfortunately subdued. Besides our obsession with growth, one of our key priorities in the current environment is to manage our P&L in order to mitigate the impact of tariff hikes, and it goes without saying that our truly global manufacturing footprint and our very healthy gross margin positions us relatively well versus our peers. And we will, of course, continue to put the right fuel behind our 37 global brands to further reinforce our global leadership. This makes me confident that we will continue to outperform the global beauty market and achieve another year of growth in sales and profits. And with that, let's go to the Q&A.

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

Thank you very much and good evening all. Hello. If I may, some housekeeping first. Christophe, can you maybe remind us what kind of tax rate you expect for this year? And also if you could give us the Q1 like-for-like by product category. So that would be the housekeeping category. And then my two questions. So first on the outlook for the beauty industry in 2025. I mean, at the time of the fully resulting early February, Nicolas, you were talking about 4% to 4.5% market growth with some gradual acceleration through the course of the year. Is it still the case? Or given the increased geopolitical volatility, has it become much more difficult to forecast the development of the beauty industry this year And as a result, probably better to be cautious. And then my second question, it's on your restructuring effort this year. I mean, should we anticipate a more pronounced, a more significant focus on restructuring relative to the past few years? And how should we view this? Is it defensive, so very much an attempt at protecting margins? Or is it more L'Oreal going on the offense as well and trying to free up resources to support this beauty stimulus? Thank you very much.

So, Guillaume, I'll go first maybe with the first question. I think it was related to the corporate income tax. So what you can expect is, of course, it will depend on the mix of our sales by region, but basically more or less the same ratio. corporate income tax percentage of last year, except that this year, as you know, we expect this exceptional corporate income tax to be of around 250 million euros. So that will be the exceptional burden for this year.

So on the other questions, first on the categories, so as you've heard, our quarter has a benefited from this extra $100 million from inventory building, which I have not calculated by category, so I will give you the numbers by category, including this inventory building, which probably is a bit more skincare-skewed because it was a China IT that was reset early April. But by category, we're... in mid to high single digit on hair. We are low single digit on makeup and skin care. And we are in mid teens on fragrance. So it's clearly fragrance, as I said, fragrance and hair care, which are really driving the biggest part of our growth. And it's, by the way, global. It's across all markets. As far as the market itself, the growth of the market itself, I said indeed four to four and a half. As I said in my opening statements, the market did not exactly start as we were hoping because the American market has been slower than expected. And even though China has been a bit better than expected, getting too flattish when it mid-single digit negative in Q4. The start of the year is not exactly what we hoped for, but as I said in the annual results conference, most of our hope for this four to four and a half year lies on the second part of the year. And of course, it's very hard today to predict what will be the impact of this international turmoil and tariff wars on consumption itself. But I would say that today I see no strong results or no hard facts to change my prediction. The only thing I would say is that, and by the way, I'd already said it from the get-go, that I see the market more on the lower end of that prediction than on the upper end. But we'll see. We'll see. It's really too soon to tell. I mean, I guess that, like me, you're seeing changes every day. But today I see no real hard facts to change the prediction, rather just more on the low end. And on restructuring, there's no real restructuring as you may hear in some other companies. At L'Oreal we are constantly reorganizing, doing, we have this big one L'Oreal project that relies on this IT transformation where we share a number of resources between our countries or between our divisions with one clear objective, which is to combine the scale, the power of the scale of L'Oréal and sharing resources, IT backbone, methods, market analysis, more than we ever did is a strong asset. And at the same time, we want to keep our agility, particularly in markets, because in today's world, agility is of the essence. Yes, it does free resources to be more active in supporting our launches and to be more agile at market level, but there's no restructuring per se. We are just sharing more and more things at global level and leveraging more and more data to empower our businesses globally. Thank you very much. You're welcome.

Next question is from Charles Scotti, Kepler Chevrolet. Please go ahead.

Good evening. Thank you very much for taking my questions. I have three questions. The first one on the U.S. market, we heard several retailers blaming Amazon Premium Beauty to expand their stocking in a week. How to look for 2025? You mentioned channel expansion in your press release. How are you positioned on this accelerated online shift in the U.S.? And do you think it can eventually disrupt your business with brick-and-mortar partners? The second question is in the U.S. I think a bit less than 50% of your sales are made locally and over 30% from Europe. Is that correct? And by how much you need to raise prices in the U.S. to offset tariffs? And will you have eventually some room to grow your local productions if tariffs stay in place for longer? And finally, I'm just curious to hear, you know, you know, the secret sauce behind your meeting growth for fragrances because we have seen some of your competitors releasing fattish, if not slightly negative, organic sales growth in Q1. So I guess it's mostly market share gains, but I'm keen to hear more granularity on your performance on this category. Thank you.

Okay, so several questions. First of all, it's true that overall, I mean, it's not a U.S. thing, Overall, in the world we live in today, online is growing faster than offline. It's true everywhere. It's true in Europe, it's true in India, it's true in China, and it's true clearly in America and even Latin America. Our strength in digital is a clear asset for us. It's a way to penetrate markets where we were struggling to penetrate like India before. And in the U.S., which is a very big market, it's a way to reach our consumers. And also sometimes, you know, to clean the market because if I take a great – I think a good example is because you're referring to the potential impact of being online on our brick-and-mortar partners. I would take one very straightforward example, which is the professional division, you know, hairdressers, which are and still are selling our Kerastase shampoos, but we have opened – Redken or Matrix to Amazon and Kerastase to Sephora and Sephora.com. And in all instances, our partners, our salon partners were grateful for us to do so because being on this channel officially allowed us to clean the gray market because you have to be totally clear that most of the brands are present online and on Amazon. The difference with being officially there or unofficially is that you have better control of the image, of the price, and our consumers expected us to be there. Today, if I take a brand like Kerastase, it's growing very strongly online in selective and offline in salons. It is, of course, something that has to be managed carefully. It means that if I take the The luxury brands that are on Amazon in the US, first, not all of our brands are there. We just opened Kiehl's last year. We had Lancome, a few fragrances. But it's also a model where it's, I don't want to be too technical, but it's a 3P model, which means that we are operating the site. We are controlling the aesthetics and the price at which we sell. So we are contributing to Amazon, having the the most complete selection, but without creating unwanted competition with our offline retailers. Overall, as always, it's a subtle balance between making our brands, putting our brands in the hands of consumers, but at the same time protecting the image and the growth of our historical partners. We have no complaints. of any of them. I think it's a system that works as long as it's managed professionally and carefully. I'll speak to fragrance and then I'll go to the tariff questions on production. On fragrances, you always have to be humble with fragrances because I think of all the categories, it's the one where It's as much art and intuition as it is science and consumer research. And I must say that I'm blessed with a team that does a phenomenal work at combining both. I think we have, to be fair, we have great brands, brands that are hot, Prada, Yves Saint Laurent. Now we haven't started yet, but we are about to launch our first Miu Miu product. fragrance um and there are you know i could quote several brands ralph lauren has got exciting projects so it is uh i think we have great brands and the capacity of our both our uh fragrance creators and marketing teams uh doing a great job uh on this so i'm saying we have to be humble because it's never guaranteed and by the way we still have areas of of opportunities in the most premium part of the market, the collection and niche fragrances. But overall, I'm pretty pleased with what I see, and I have an extra advantage over you is that I know what we're about to launch for fall, which is prior to the big holiday season. Several of our brands, and there are very exciting launches to come, and I hope they'll have the same positive fate as the ones we have we have put on the market so far. Going back to the tariff thing, today, the numbers you mentioned are, the assumption is right. The numbers you mentioned are correct, considering the U.S. Indeed, as a weight of After turnover, it's a bit shy of 50% that is manufactured in the U.S., and 30% comes from Europe. The rest comes from Mexico, Canada, and a few other parts of the world. First of all, most of our CPD brands are manufactured in North America, so what is exported is mostly luxury. uh and to answer your questions uh we indeed there are several ways to mitigate these uh these tariffs impacts which we hope not to to be withheld but if they are there are several ways to be for these to be mitigated uh one is price increases because that it's on categories that are in the luxury sector you have a bit more pricing power uh of course we had built some inventory prior to the, because we couldn't say that these tariffs were unannounced, even though the magnitude has been a bit higher than expected, but we have built inventory on several of our brands. So whatever is confirmed will mainly impact our second half in terms of margin impact. so we can take prices up we have built inventory and yes we can relocate some of our productions but of course we don't want to make the good thing that we have factories in every basically in every region of the world but we don't want to take any you know measures that on something that might be temporary so we are watching carefully what's happening and trying to trying to figure out what will be the end game. And then if, according to what's decided, we can take relocation measures.

Thank you very much.

Thank you.

Next question is from Céline Panuti, JP Morgan. Please go ahead.

Hello, Céline. Hello. Hello, hello.

Celine Panuti, your line is open.

Yes, I hope you can hear me now. I have two questions. Maybe same on the U.S. Could you say, I think you grew 0.5%, whether there was any destock within that or, in fact, stock build as well benefits maybe some of your retailers' profits? loading some of the European luxury brands. And if you could help us as well understand the trends within the quarter in the U.S. and what, I mean, from a category perspective, where you saw the most weakness versus your expectation, which, Nicolas, you mentioned at the beginning of the call. That's my first question. My second question is to try to understand as well the guidance so you are – When you said that progressively improvement in growth rate, what is the base that you expect of Iran? Should we look at the 1.5 or the 3.5? And on the market growth, which I believe was probably around 1% at the start of the year, and I understand it may be difficult to predict yet what second half will be, could you help us understand maybe market growth in the U.S. and Europe, where you say that both of them seem to have slowed? Thank you.

Okay, so in the U.S., there's no particular inventory building. The only thing that we might have had a bit of, first of all, there was no inventory reduction, aside from the comparative of last year's IT sales, of course. There was no inventory reduction and no inventory building either. There was clearly one of the divisions where we had the The biggest new product intensity was luxury. So that's probably the division where we invoiced a bit more than we sold through in the U.S. But overall, I think we're fine overall in terms of inventory. And in terms of softness of the market, where the market was in terms of compared to expectations, where the market was slower than expected, it's mostly make-up. makeup was, whether in mass or luxury, was really, I don't know if it was affected by the lack of morale right now, or also because right now, as always in makeup, the trend is more in what they call the me but better trend. So with a bit less makeup on and less colors, that's always a cyclical thing. So that makeup was the category that was the most below our expectations. Haircare was pretty steady. Fragrance indeed slowed a bit, but not us, so that's the good news because we increased probably our market share gains in fragrance. And in skincare, as we've seen in prior quarters, the Derm market slowed, had slowed in fragrance. in the U.S., even though, depending on our brands, La Roche-Posay continues to do good. SkinCeuticals bounced back, and CeraVe remains, right now, a challenge. Overall, as I said in my opening statement, we are more or less in line with our projections, slightly on the lower end of our prediction for the market. nothing really changing in our projection for the future. Our estimation of the market for Q1 is closer to plus 2 than plus 1, which is why, again, depending on what's happening on the second part of the year where the comparatives are significantly lower, I still believe we can – be not too far from that plus four growth rate for the market. And by regions, as I said, right now, Europe is still holding quite well overall. Maybe France, with the exception of France. Southern Europe continues to be pretty dynamic. Eastern Europe, too. So in the end, there's not... A lot of new things since last time we spoke. The only thing I can say is that I went both to China and to the U.S. over the last couple of weeks, and I felt, indeed, an American market that was less dynamic than expected, and some categories make up in massive and negative. And on the other hand, it's just come back from China, where the market was – overall flattish on Q1, which is not great, but compared to the, you know, the mid to high single-digit negative on the second half of the year shows an improvement. And by the way, we did beat that market overall. So, yeah, so we are, of course, there's no certainty looking ahead considering the the context, but we are moving according to plan.

Can I just say on China, there was an article recently where your head of the country spoke about a 5% aim for China, L'Oreal Research, a new conqueror.

Yeah, I don't confirm. I called him because, you know, as I just came, we had just had a meeting together. And, you know, I challenged my team. I said, guys, the president of China gave an objective for his own growth at plus five. You have to give yourself ambitious objectives. So he probably came out of the meeting with me with a little bit of... of boost, and he commented on that number. We never give such accurate number, but what is for sure is that I expect my team to have a positive growth in China this year, and that's what they are expected to do. We have new brands. We are opening in new cities, and again, some products and divisions are doing great. We're above market in Lux. We're very significantly growing in Derma and Professional. And the one division that remains slightly below market in China is CPD. Even though L'Oreal Paris is doing a good job, but overall there's a stronger competition in mass, so that's where it's a bit harder. So no, it was a bit, my Chinese CEO was a bit euphoric. But overall, we have to be positive.

Thank you. Next question is from Jeremy Fialkow, HSBC. Please go ahead.

Okay. Hi. Good evening. Thanks for taking the question. So I've just got a couple more on the U.S. So the first one is, I know you've given us quite helpfully the detail on some of the kind of categories in the U.S., but can you talk more generally about the consumer in the U.S.? Were there any particular categories income groups or demographics or just any things like that you could talk about as to where the slowing was most pronounced within the period. And then the second one is on this whole question of tariffs. Now clearly there are going to be competitors who might actually rely more on imports or more on imports from China than you do. So is there anything you've seen in terms of competitors having to raise their prices more quite a lot in order to offset the tariffs or anything like that that you might be anticipating that could actually give you some degree of competitive advantage in the market when other people are forced to price up and you're not?

So in terms of demographics or in terms of consumer behavior in the U.S., the only thing I can say, which I've read, like Hugo probably, is that The latest numbers on consumer confidence in the U.S. have gone down, and they're lower than in Europe right now. So we know that usually it affects spending on any category and in ours, and maybe the growth on makeup or the lack of growth on makeup has been impacted by this. You know, then there are things that have, heard other people say, but to be honest, I haven't seen any hard facts on that. I've heard some people saying that the Latino consumer, considering the anti-immigration situation, was a bit more shy in terms of its shopping habits and going to stores. But frankly, this is hearsay, so I can't really endorse these facts. It's just some things that we're that people were saying, but it's clear that the climate right now in the U.S. is a bit less positive than it was, at least in people's mindset, than it was a couple of months ago. So we'll see how things evolve. If the morale of people follow the curves of the stock market in the U.S., you can clearly have a few highs and a few lows. And going back to the tariffs thing, we haven't seen anything, you know, short term because obviously, I guess we're not the only ones to have had some inventory. But what is true is that in the world of indie brands, very clearly, many of them are, you know, have been relying a lot on China. If I take, you know, one of my favorite brands, which is NYX Professional Makeup over the last couple of years, We've really worked at reducing the exposure of NYX to Chinese imported products that ignite around 20% of, which is not nothing, but it's only 20%. And we know that some of our very direct competitors are closer to 80%. So at some point, if tariffs and particularly the tariffs against China are confirmed and stand, it will indeed benefit some of our brands and make up in particular. but it's too soon to say, too soon to see anything anyway.

Thanks very much.

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

Hi, good afternoon, Nicolai, Christophe, Laurent, Eva. Hello. I'll stick to two questions. So just following up on the U.S., I think you were losing market share in makeup last year, particularly in H2, mostly around the Maybelline brand. It doesn't seem to be the case from what we could read this afternoon. Could you give us perhaps a bit more color on what you've done to reverse share losses and if Maybelline is now back in line with the rest of the market? And secondly, on Brazil, that appears to be contributing very nicely to L'Oreal growth, mostly through hair care. How much upside do you see on Brazil and what do you think you are in the journey there? Thank you.

So, on makeup in the U.S., we are indeed in CPD, because that was really, we had done a better job on Lux, but it was mostly through Saint Laurent, and I still think we are, we still have to win share on Luxury, because some of our indie brands are not doing, or ex-indie brands are not doing as good as at once. On Mass, it was clearly a loss of market share last year. and this year we are winning share. So it's a bit everybody. NYX continues to be very strong. L'Oreal Paris is doing great on makeup in the wake of the Panorama mascara launch, which is already a year old but continues to thrive, plus a few new products. We have a new mascara launch that's called the Big Deal, Lash Paradise Big Deal. So I guess between Elsev, Growth Booster, and Big Deal, maybe we are creating positive omens for our brands. Maybelline is in a recovery mode. Some of the new products we've launched, Teddy Teens, et cetera, are doing good, but I would say Maybelline is more on par with Marquette and not really gaining share at this point. Of all the makeup brands, it's the one that still has some ... It's also the biggest one, so it's probably the one that's most affected by the Marquette difficulty right now, but it's improving. So, great on NYX, great on L'Oréal Paris, and getting better on Maybelline. And on Brazil? On Brazil, on Brazil, hair care is a fantastic success story. I must say we have, and it continues, by the way, the interesting thing on Brazil right now is that we have a, I would say finally because it's been a long and winding road. We have a break in Garnier Skincare. We've launched a new product from Garnier, which are moisturizers with a very impressive breakthrough formula from our lab, which is a formula that's both very moisturizing and super dry on the skin. It's called Garnier Toque Seco Dry Touch Moisturizer. And the thing seems to be really flying off the shelves and really loved by the young generations of Brazilians because precisely it's the ideal cream for all those who hate moisturizers because it makes your skin greasy in the sun. And that's its, you know, they come out of summer. That's a good start. So I think we have... We have good, the only part of our catalog, which is not doing phenomenal today in Brazil, which was already very big, is Dermatological Beauty, but we have strong plans coming back in the second half. So overall, I think CPD, to take your expression, CPD has a lot of potential. I've had room still to grow because we've only really made it in hair right now, and I think we can do great in skin.

Thank you very much.

Next question is from Sarah Simone Morgan Stanley. Please go ahead.

Yes, thanks for taking my questions. First one was just around phasing. In terms of the benefit in North Asia, should we expect all of that to be reversed in the second quarter or will it spread across the year? And just back on what Celine had asked about, in terms of the progressive improvement, I'm assuming it's fair to think that given you'll have this headwind from the unwind of North Asia and that it's versus the underlying growth that we should expect improvement through the year. And then the second question was just on Walmart pushing more aggressively into beauty. Is that significant for you? I mean, did you benefit from that in Q1, or would you regard that as just part of the usual kind of retailer movement? Thanks.

Well, first of all, on the growth over the year, I think the... we see the acceleration really more a second-half story than necessarily a quarter-by-quarter acceleration. And, indeed, it has something to do with the North Asia comparatives, and also it's the beginning of the slowdown of the value effect in our own numbers and in the market's numbers. So we always faced our year with – a slower, at least in our planning, in a slower first half and a stronger, better second half. So we see how things unfold. Of course, you know, you have new products. Some will be great hits that will allow us to go faster, and I hope they all are, but I don't know yet. But it's more a second-half story. We also have – we will have – we'll be entering in the second half – Of course, the comparative is North Asia, but within North Asia, it's travel retail because the story of travel retail is that travel retail Asia remains very negative and set out today. Both Hainan and Korea, which were what we call the downtown stores in travel retail, have really lost traction with the reduction. the healthy reduction of Daegu's and its small airports over the world that are driving the growth of travel retail. But the second half of last year, we were already in sell-out in negative territories, in strong negative territories for travel retail, but that will be part also of the easier comps. So that's what I can tell you on the – On the progressive acceleration. I'm sorry, what was your second question? Oh, yeah, Walmart. Yeah, well, on Walmart, you know, I wouldn't say that we benefited from their acceleration into beauty. We are actually encouraging them a lot to focus more on beauty. But there are today, if I look at the situation, there are some positives and negatives. The positives is indeed they are wanting to accelerate in beauty, and they are one of our strongest partners in North America. And, of course, we are absolutely determined to support them in their own desire to accelerate in beauty, particularly, of course, for our mass products, but also for our mass medical brands, such as CeraVe or even La Roche-Posay. But on the other hand, if I'm sincere, I visited a very beautiful Walmart a month ago, and right now they have taken these anti-theft measures where they have locked under windows makeup and skincare in their stores. And of course, that has a very negative impact on the sell-through of beauty. And if I look at... you know, year-to-date, the sell-out in Walmart is not positive. So the good thing is that there were some Canadian retailers that gone that same direction a couple of, you know, last year or two years ago, and we've proven to them that it was, you know, in the end, it was more detrimental than beneficial. So right now, yes, Walmart is more into beauty, but if they want to sell beauty, which is partly an impulse purchase, having to call sales assistant that comes from the other side of the store to sell you or to give you a lipstick is not necessarily the best way to accelerate beauty. So that's part of the discussions we have with the Walmart team and I must say they are very positive about working on these issues and developing the category because it's a big potential for us and for them.

Great times. Next question is from Thomas Sykes, Deutsche Bank. Please go ahead.

Yeah, good evening. Thank you. Just firstly on the IT transformation, could you say whether for the full year you expect IT switchover to be positive, negative or neutral? And how much of your global revenues are currently on the new system, so how much have we got further to go? Sorry, I guess in addition to that, you didn't quite answer the phasing of when this quarter's benefit would reverse, so any view on that, please? And then just on FX, you've given the FX at the end of March, but obviously things have moved quite a bit then. I don't know whether you could give a view on the spot impact at FX and perhaps importantly the net financials number. I don't think you've given a guide on that yet. Presumably that's impacted by derivatives in there. Yeah, please.

Okay, so I'll take both questions. The first one is on IT. I can tell you that the implementation of our new IT system is going quite well. We just launched China. That was early April, and it was a very successful one. We have a couple of big countries yet to come by end of this year, UK and Australia. So, difficult to assess exactly what will be the net impact, but I guess it will be minimal. So, for the full year, we should not see any big discrepancy between this year versus last year.

Usually, it reverses the following quarter. We never put like a six-month inventory, so... It's always...

a small two to three weeks inventory, so it disappears after one or two months. Then, regarding ethics, of course, very difficult today to predict because US dollar was at 1.03 just a couple of weeks ago. Today, it's close to 1.15. I've done some simulations, basically, when you look at the sales. If, for example, we keep the current exchange rate at 115 versus the US dollar for the full year, then probably the impact will be at around 250 to 190 basis points on the net sales, negative impact. We will see. It's very volatile, so I will not reach any conclusion as of today. But of course, we've hedged our internal... And as you know, of course, our internal transactions are fully hedged, so of course, we are pretty well protected on the P&L. So no impact if the rate keeps the current situation.

The net financials, sorry, impact of FX, I guess there's derivatives in there, sorry.

What I can tell you is for the time being, when I look at the FX impact, so I compare the current hedge rates of this year versus last year, we have a negative impact. So this has been factored already when we build the budget. So we have a negative impact actually. which is in the range of $50 million, and mainly impacting first semester.

Okay. Thank you very much.

Final question is from Ashley Wallace, Bank of America. Please go ahead. Good evening. Thank you for taking my questions.

I actually have three from my side. The first one is on mainland China. You mentioned that the beauty market growth in mainland China was closer flat in Q1. I was wondering if you can share how L'Oreal performed in that context, both from a sell-in and a sell-out perspective. I think last year in Q1, you still had a pretty tough comp on sell-in. And then maybe any color you can give on value versus volume trends in your China business in the quarter. The second question is just on U.S. distribution. That market has seen pretty dramatic change over the last couple of years, especially if you think about, I guess, Amazon taking share versus drugstores losing a lot of share. Can you maybe help us contextualize what percentage of your business comes from, say, like Amazon drugstores and the specialty beauty retailers at the moment and how that compares to a few years ago, even if there's like broad comments? And then the third question is more of like a math question on the IT phasing. I think last year you had 130 million benefit from IT phasing. So it was like a headwind this year. And you're saying that the net benefit in total this year is 100 million so far in the first quarter. So the gross benefit to the first quarter 25 being around 230 million. I think when I read the statement from a regional perspective that ties into 850 basis points benefit to Asia. However, when I look at it from a the perspective of the divisions, you say 300 basis points benefit L'Oreal Lux, which seems to only account for half of the benefit of the IT phasing. And I was wondering if you can help us understand where the other half of the phasing benefit is accounted for from a divisional perspective, or if my math is wrong. Thank you.

All right. So on the mainland China, indeed, the market is a was flattish and slightly like, I don't know if it's like minus 0.2 or minus 0.3 or something like that. And we are roughly one point above that growth in sellouts. And as I said, we are above the market in pro hair with strength of carastas. significantly above the market in derma with double digit growth on on our derma brands we are above market by one point on luxury where as you know we are very very strong leaders and i have to say i was very pleased to see that we increase our share and our share on the on the global, on the mainland market, is now significantly superior to our share in the travel retail world, which is something that is very important for the health of our business. So we are gaining share. I think we are also benefiting from the serious work we've done to protect our luxury business in mainland China. And as I said, we are below market in China. in CPD where the market is slightly positive and we're slightly negative so overall we win share and we win share both online and offline knowing that the online market is positive whereas the offline market is negative so that's I think that's the important information talking about selling is a bit complicated because as you mentioned it yourself there is a significant chunk of the selling which is the inventory building of our neo-transformation project, so it would not be, I would have to recalculate by division brands, et cetera, which we haven't done. So what is clear is that we've put a little bit of inventory that will phase out on Q2, and we continue to, the important thing for us is to win share in sellouts, but the most important news for me is clearly the fact that the market seems to be more stabilized. The phasing of some of the holidays, Valentine's Day, was a bit beneficial this year. So we'll see whether it's confirmed in the second quarter, the big 6-18, 18th of June promotion. So we'll see on China. But I would say the teams were... When I went to China, I met several officials of the Chinese government, the Secretary of the Guangzhou Province and then the Secretary of the Shanghai Province. What was interesting is that they were both talking a lot about boosting consumption, about the fact that the real estate crisis was, according to them, again, a bit more behind. I felt, if not confidence, at least real determination to boost local consumption. Of course, that was before the tariff hike, so I don't know what all this will generate, but there was at least a focus on boosting consumption from the Chinese authorities. On U.S. distribution, I'm not going to give you all the details, but clearly the weight of e-commerce has increased for us. The U.S., as I've said several times, is one of the rare countries where our share of online was below our share of offline, and it still is. But we are progressively catching up with, of course, the development of Amazon, but also working with the you know, Walmart.com or Sephora.com. So online is accelerating in the U.S., and it's very positive for us. And clearly drugstores, as you mentioned, are lowering in the weight of our business because they are struggling themselves to be successful in the U.S. markets. I don't know if you want to add anything, Christophe, on that topic.

No, maybe I can answer on the third question because you wanted to know a bit what is the split by division. So, of course, a big impact on luxury. And then the second division that is most impacted when you compare the IT implementation in 2024 and 2025 is, of course, our professional product division. where here the growth is impacted and it's nearly 800 basis points. On the remaining two divisions, it's marginal.

OK, thank you.

OK, Ashley, I think you were the last one. So we are wishing everyone who's still on the call a happy Easter and hopefully Well, hopefully we will be speaking to you in a couple of months.

Thank you very much, and happy Easter.

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