Coty Inc. (COTY) Earnings Call Transcript & Summary

Thanks for joining us for the next session. I'm thrilled to have with us at the conference, Coty; CEO, Sue Nabi, and CFO, Laurent Mercier. We're going to host this session by way of a fireside chat. But as we bring up certain topics, Olga, audiovisual extraordinaire, is going to try to do her best to weave in some audiovisuals that may help amplify certain topics. So keep your eye on the screen behind us, and that may help the conversation. Sue, let's just start with the beauty category. The attractiveness of that category. Why and how Coty is well positioned in it, both structurally as well as what is very top of mind for most in the room today, most of the conference today just through the uncertain macroeconomic prospects ahead. Just your perspective on the durability of the category.

So just checking if my mic works, everyone hears me we. Good morning, everyone. So you're right to ask this question. And you had part of the answer in the previous conference. This category is a one-of-a-kind category, I have to say. It's a category that's been a very attractive category, historically growing at mid-single-digit rate, very resilient to, I would say, economic cycles. That's a key element that I wanted to share with you. It's a high margin, high cash flow category. You know it, specifically the Prestige one, but now more and more the Consumer Beauty business, it's an emotional category, I have to say. And this is what makes it so unique is that it's an emotional category, and that's what makes it so difficult for a lot of people not coming from this business to manage this category. You have to understand the fine nuances of how people are thinking, how people are socializing, the back to socialization is clearly boosting the consumption -- the short-term consumption. As you can imagine, going to conferences like these, we put things on our faces, we smell better, things like this going after the conference to a dinner, you look for something else, different scent and different makeup. So clearly, this category on the short term is clearly back. And this, you can see it in the figures that were showed just before. For the medium to long term, I would say that, again, everyone is aware of the U.S. fragrance renaissance. This category has been in the U.S., if you can imagine. This is 30% to 40% above the level of 2019. So people are moving from this idea that the fragrance is a gift, to the idea that fragrances are daily items. The same way I'm wearing a shirt, I'm going to wear fragrance. This is a key element, and that's not just happening in the U.S. The second one is the rebound of travel retail. Everyone knows it, it's rebounding super quickly. For those who are trying to book planes or to book houses for this summer, honestly, it's too late already. Everything is already booked specifically by Americans, which explains, by the way, the back to growth of Travel Retail, but still below the level of 2019 because the Chinese and the Asians, I would say, travelers are not yet back there. So you can imagine the upside when they will be back because they will be back. China, structurally growth market. This was presented in the previous presentation. And this is fueled by one middle class, bigger and bigger, rising discretionary spend. And of course, spending per capita in the beauty part that are a fraction of what we see around the world. And globally, consumers more, specifically post-pandemic, focused on wellness, focused, I would say, on better-for-me products, and this global trend of premiumization. When it comes to Coty and you have the portfolio on the screen, we have probably -- and after the presentation of the L'Oreal guys just before, I think if there are two companies that have the most comprehensive beauty portfolios, you have them in front of you this morning. And you can see from products that can be sold like CoverGirl or Rimmel around $5 to $6 to Chloé Atelier des Fleurs or Wella skincare above $200, $400. So in terms of price tiers, you have all the different price tiers of the market, all the trends, be it clean beauty, be it, I would say, board beauty be it ultra premium beauty or affordable beauty, everything is on the screen in terms of categories, I have to say. And again, fragrances, makeup and now more and more skin care into Coty, even in skin care, and we'll say a few words about this, I guess, this morning, we have also this large possibility into the portfolio to speak to every trend from clean beauty, dermatological beauty or ultra premium skincare beauty. And last but not least, we have brands going from heritage from heritage brand. And everyone knows that in this, I would say, the disruptive moment. People are looking for trusted things, but also niche brands to grow. That's the way we would summarize the market and how we are positioned on this market.

Perfect. There have been -- I mean, you've both been relatively recently appointed your current roles relatively new in your tenures. But the company has accomplished a lot, both externally in terms of how it approaches some of these target markets, how these brands have evolved, but also, I think, internally how decisions are made and how the organization is structured. So can you just give us a little bit of perspective from your end as to what are the most significant, most material accomplishments that are going to set the company up for the future? And also, any material changes internally that should give investors more confidence that you can pivot and remain agile as the world changes around you.

What gives us, I would say, confidence. It's indeed based on accomplishments. We've had 7 quarters now in a row of at expectation or above-expectation results. We've been improving and Laurent will say a few words right after around this. Our P&L in a fantastic way, I have to say, increasing sales, selling more profitable things, which really nurtures the flywheel that we will explain to you. And you have on the screen, the latest market shares. You can see that on the Prestige side, specifically on fragrances, we have a brand like Gucci that's booming, Burberry, same thing, Hugo Boss back to growth, which is great because this is the moment for people to have the choice between entry premium Prestige or super premium Prestige. And last but not least, Chloé, which is, I would say, the next jewel of the company, already a jewel in Asia, that's growing its market share, specifically on the super premium part of the fragrance market. On the Consumer Beauty side, you clearly see that our brands are all either holding or growing market share, including CoverGirl, remember, we had a few supply issues recently that had nothing to do, by the way, with the backdrop, it was decisions that were not made 2 or 3 years ago. But now we are back in stock on the best-selling mascaras at the U.S. market, which are CoverGirl mascaras and the latest Nielsen, which is end of May, shows this continuity of market share gains that we are seeing behind CoverGirl, also behind Rimmel, behind Max Factor, or Bourjois. One thing to keep in mind is that we have built what you are seeing right now with what we had enhanced 1.5 years ago because I joined this company and Laurent was promoted to CFO. So just 1 year ago, 1.5 years ago. We've done things at the speed of light. But what you're going to see is the result of things that are new that are going to be new innovations and it's going to be very, very heavy. On the P&L side, maybe Laurent, you can add on, on this one.

Yes, absolutely. I mean talking about accomplishment. I mean, we are quite proud of the results we have delivered over the last 7 quarters, be delivered and even over-delivered. Most importantly, this is what Sue mentioned is really the shape of the P&L. It's very healthy. It's really the virtuous cycle that we built. And to illustrate this, I mean just remind the Q3 year-to-date results where you can see on gross margin, tremendous improvement on gross margin above 64%, more than 450 basis points gross margin year-on-year. And definitely, we are using this money to fuel all the key initiatives that you just saw in the previous slide and really to deliver consistent growth, 17% like-for-like in 3 quarters. So that's really the flywheel we are building and at the same time, continue to deleverage the company. We made commitment to be -- to move towards 5x end of calendar '21. And you can see that at the end of Q3, we are at [ 4.7 ]. So this gives full confidence in our ability to deliver results. So that's why this morning, we confirmed our full year guidance definitely with a low double-digit growth on Q4, which will bring us to the high end of low to mid-teens growth in fiscal year '22, $900 million EBITDA; EPS, $0.23 to $0.27. And we confirm at the same time moving towards 4x leverage end of calender '22. So as you can see, healthy P&L, healthy equation that we continue to build.

And we'll get in -- I want to get into some of the strategies behind some of your key initiatives. But am I right that are there changes that have taken place internally from a decision-making standpoint from a structure of a leadership team that are new and that bolster your confidence, should bolster our confidence that you can execute going forward?

Absolutely. Yes. And again, today, I would say that the team is probably one of the best experts of this industry, and this is clearly new to Coty, if I may say we have from the top of the company to any level, people who are knowing beauty, understanding beauty, bold in terms of vision and in terms of culture. We just issued for the first time inside the company, our first purpose vision and values, which is a 10-minute video that you may one day discover about what this company should stand for, in fact. And today, there is I would say, a very, very strong consensus that this company has to be the forward thinking company. We are going to be as innovative as possible hopefully the most innovative beauty company in the world. This is number one. Number two, we are putting what we call kindness, but I would qualify it as fairness kindness at the heart of the way we are doing things. And we are putting co-creation at the center of this company. So this is clearly something that shared today, but every person joining the company, including the recent people who joined the company most recently, like Dr. Shimei Fan, who is one of the best skincare expert on earth, who joined us from Nivea, Unilever, Shiseido, recently, to run our R&D and our sustainability footprint. So this is one. The second thing I can share with you is that we've seen at the speed at which we've been transforming this company. In fact, I wouldn't have bets, including just a few months ago that the speed of execution would happen so quickly and that's, I would say, the great news. It's the quality of the work, but I think it's also the power of the brands we do own at Coty. You've seen the collection of brands from CoverGirl to Gucci to Chloé this, we've executed things super quickly. And in fact, we've reinvented a company in the middle of a pandemic. So if there are people who are looking for confidence into ability to react immediately in a company in terms of nimbleness in the middle of a different -- difficult moment, sorry, we've done the demonstration a few months ago. And we will continue, of course, to adapt.

Great. So over the course of time, Consumer Beauty and efforts to stabilize Consumer Beauty, CoverGirl, Rimmel, Max factor, have been a priority for Coty have alluded, right, in terms of an achievement. Why is this time different, for Coty? And if we go into a softer demand environment, potentially recessionary environment, is Consumer Beauty advantage or disadvantage in that environment?

Yes. So again, if you look at the leading positions we are holding in the key markets, you have here 4 key markets: the U.S., the U.K., Germany and Brazil. You can clearly see that we have strong brands, CoverGirl #3 in the U.S., Sally Hansen the #1, nail, I would say, brand in this market, Rimmel #1 more than ever brand of the U.K. market; Max Factor, Sally Hansen, again, in the U.K. brands; Manhattan, which is the, I would say, the German Rimmel that's held in the fifth position, Max Factor again. And rescale the #1 makeup brand in Brazil. You think also, of course, of body care and fragrances with brands such as Adidas or Bruno Banani is strong in Germany, or Monange that's quite strong or so #2 position in Brazil. So number one, we have strong brands and strong and trusted brands are the name of the game specifically at the moment where people are totally disrupted by the, I would say, the environment. The second thing is we have IPs. And again, the difference of many other companies who have been researching on many, many things. Fortunately, Coty has been putting a lot of money behind 3 or 4 key bets in R&D. They are under your eyes. The first one is what we call long ware, long ware that goes hand-in-hand with UV protection, and this was researched, thanks to the know-how coming from P&G when we acquired CoverGirl, but also with the Lancaster brand. That's known as the best UV protection brand on earth. These two elements of owning and having the ability to innovate on long ware and UV protection makes us clear for what's happening around us. You've seen the heatwave going to start tomorrow. There is nothing else tomorrow to use than long ware products, be it fragrances, makeup or even skin care. And of course, UV protection becomes the name of the game. The second thing is that one of our key brands invented skinification. It's called CoverGirl. The first CoverGirl Foundation born in 1960 was called clean makeup, and it's still on the shelves today. It was the first time you mix foundation with ingredients coming from skincare. At that time, it was an Noxzema ingredient. So skinification is clearly part of the DNA of the company, and I'm putting pushing like crazy to make it our staff. I mean, and that's a key element. Last but not least, because clean beauty, [ skinified ] beauty is never to know how consumers are in the beauty world. They have a tendency when you give them too much of something to look for something else. That's why we are also putting a lot of focus behind what we call transformative bold beauty, and you start to see a lot of things specifically during this month behind Rimmel new mascara launch behind this element of bold beauty. So in a way, we are prepared to do this. The other element that gives me the confidence is probably visible on the next slide, which is market share gains. We've been gaining market share for the first time since 5 years across all the brands. You've seen it just a few minutes ago. And this happened since several months in a row. So that's also an element of confidence and all the brands are growing market share or stabilizing market share, which is, again, the first since at least 5 years if I can say it. Last but not least, the second part of your question was about are we considering that Consumer Beauty is an asset in terms of economic slowdown? It's clearly an asset. And this was demonstrated by our peers a few minutes ago, having two divisions is an asset. It's a richness. And if -- even if we do not see any trade down both on perceiver consumer, but still, we do have the brands that can answer each and every beauty need at each and every price level.

Very good. On the other side of the business historically has been luxury fragrances, which the entire category has gone through a boom. We talked about it earlier this morning with Estée Lauder. What is Coty doing to leverage that category momentum and maintain its leadership position in an evolving category?

So again, this is -- again -- yes, that's the slide that summarizes most of the things that are happening at the moment. So again, this demand is continuing to boom. I said it during the introduction, 30% to 40% growth in the U.S., fastest-growing category just before lockdowns in China, strong recovery in Europe, strong recovery of this category in travel retail and this clearly is based on 1 U.S. and China, very, very good momentum again. We're going to say a few words about how do we explain this American momentum. Second, growing e-com and return to brick-and-mortar. You have to imagine that e-com is 2x bigger than higher to the pandemic in 2019. And the return to brick and mortar is holding the category growth at around 8% to 9%. The premiumization of this category is a key element. I think some of you have seen the recent acquisition of one of the key niche brands of the market at multiples that are usually multiples of skincare. It was acquired at $1 billion of this brand versus sales probably around $100 million. And I said several times that I do consider fragrance as the new skincare in fact. And this acquisition demonstrates not only the fact that the industry is betting on high-end niche fragrance lines on the mid to long term, but that also this category is becoming the darling category of the beauty industry. And last but not least, social buzz. We recently got one of our sense, Burberry Her, that was, I think, the 5 or the fifth or sixth line in the U.S. that moved to the third position with no media just because TikTok influencers started to share the fact that they love this fragrance between them, and this took the fragrance from the fifth position to the third position in a market like the U.S. So for me, this is the way I see things. In the U.S. specifically, it's clearly 3 targets. And that's why I do believe this is clearly structural. We are talking about penetration. We are not talking about the same number of people spending more, we're talking about new people spending into the category. Number one, Gen Zs, 3 points of increase in terms of penetration; number two, Hispanics, be it male or female at any age; and number three, which what I consider as the most loyal consumers in our industry, which are men, who are seeing a growth of this part of the business, that's 1.2x the growth that you can see on the female side. So I would say last but not least, we have also two other pieces to share with you. The premiumization of this business. And again, I said, I spoke about the example of this brand that was recently acquired. And Chloé for us is clearly the brand that's going to take us to that level. It's growing super fast, 2x faster than the market, representing 8% of the market. And in China, it's growing 3x faster this part of the business that we are targeting. And the last element is also included in mature markets. We thought it was interesting to share with you that on mature markets, the shift from eau de toilette to eau de parfum is very, very clear, and this also is another element that explains I would say the stellar growth of this market. So it's not just about people who have decided to spend at that moment. It's structural in terms of penetration, it is structural in terms of reaching high-end categories that are becoming big key categories in terms of growth. And last but not least, even those who are users of eau de toilette they are ready to go for eau de parfum for a simple reason. They're not willing to spend more money. They are just understanding that specifically in a global warming world, the fact that this category has to do with long wear eau de parfum stays more on your skin than eau de toilette to make it very simple. So this slide was something we wanted to share with you. For the first time we're sharing it, think of the U.S. So at the top, you have U.S. and at the bottom, you have China. Penetration in the U.S. is right under 30%. The European levels of fragrance penetration are more around 45%. This creates an additional opportunity for the U.S. market if it reaches these levels that are the case in EU by $6 billion. And for us, it's $800 billion -- million opportunity, sorry. And of course, if you think about China, there, the usage of fragrances is super, super low. It's under 3%. Just by thinking that it could reach 10% and we see this penetration increasing quarter after quarter now. This is a $3 billion opportunity for the market, a $200 million opportunity for us. So for Coty, as a company, this renaissance of the fragrance market, be it in the U.S. or in China only is a $1 billion opportunity in the coming years. So that's the way I want you to look at this market and to look at Coty in fact.

Very good. Very good. On top of Consumer Beauty, Luxury fragrances, you've added a push into Prestige makeup and a push into skincare, both Prestige and at the mass level. What gives Coty right to win in those already crowded and competitive environment?

Yes, you're right. That's a good question. Again, two things: The trends. And this is a very, very important slide. So as you can see, this goes from 2014 to 2025 with, I would say, the latest data in 2019. You can see what we call Couture brands on the left and then Indies brands in the middle, Makeup Artists brands, you know these brands. and what we call Established brands, you can imagine, makeup done by brand that does skincare, all those categories. So you can clearly see that in 2014, everything was behind Makeup Artist brands and Established brands, 31%. These two parts of the market has been the parts that have been decreasing the most. And the two rising parts are Couture and Indies. And we do have Gucci and Burberry Couture and Kylie Cosmetics, we have it in Indies brand. So we are very well positioned on these two categories. The second thing that gives me this confidence is that we are already delivering again. If you think about the revenues behind the brand like Gucci, 2x year-on-year growth, behind this brand. And this with a very limited number of SKUs. We are just starting our journey in the Prestige makeup area. To give you an order of comparison, a brand like Chanel or around 600 to 700 SKUs, we are around 200 SKUs. So there is a lot of room. We are not going to go there because we need to keep it very, very productive. And the other thing is that we are in a very few number of doors. So if you do the math in terms of opening more doors, productive doors, specifically online, growing number of SKUs behind the key brands, that's what explains the success. And to give you one last example, in China, 1.5 years ago, we were a fragrance company thanks to the portfolio of brands. If you think about the Gucci brand today, it's 50% fragrances and already 50% makeup. So it goes very, very fast. That's what I wanted to share with you today.

And what about skincare -- what about skincare, both at the Prestige level and some of your early efforts with CoverGirl on skin care at the mass level? How -- what's the time line? And how does the skincare become a more material part of Coty's portfolio?

Yes. So in skin care, again, I wanted to share with you this pyramid that give you, I would say, a sense of how comprehensive is the portfolio today. We entered 2021 with 3 skincare brands. We are getting out of 2022 with 6 skincare brand, we just announced, and you've seen it probably in the news, the SKKN BY KIM line that's launching on June 21, yes, exactly. We have the Arvida acquisition. That's a brand I know very, very well. And we have, of course, the CoverGirl for into skincare. And this gives us this ability to really target each and every price tier but also each and every trends and each and every skincare needs because skincare is about this. It's about either you are a clean brand, you're a natural brand, you are a regeneration-focused brand. You are a dermatological focus brand or you are at this top of the market as an ultra-premium brand where you can see some of the famous names. So we do have these brands, I would say. When do we -- when are we going to see the first results? Again, this is going to be clearly for us a Prestige story, skincare at Coty, number one. Number two, you'll start to see fantastic things coming from, I would say, Lancaster in fiscal '23. And then, of course, fiscal '24, Lancaster, Arvida specifically and more brands to come. But clearly, we are going to make 2023 the year of the first results behind skin care. And of course, already in Q1 is going to be the case with SKKN BY KIM, that's starting at the end of the quarter. So skincare is clearly an area where we've been investing talents. We have the right IPs. I have made the demonstration earlier. We have great cookers, if I call it like this, because skincare is about creating great formulations. We always speak about technologies, but the basic is to create formulation that people would prefer on a daily basis. We've made recent blind tests against the leaders of the market in China to take one example. And our Lancaster 365 Serum beats the best serums of the market, which demonstrates that we already know how to formulate winning skin care products. And now we are plugging on these great formulations, the right technologies. And remember, I spoke about UV protection, but we also are very good at what we call vectorization. Vectorization is the ability to take an ingredient that everyone owns but to make it more efficient through vectorization. And this is the story of Coty that you'll see more and more behind the different brands of the company.

Great. The Lancaster story specifically is very reliant on China. And given what we've seen of late in terms of just volatility in China, with all the uncertainty around, does it change at all your viewpoint on the opportunity in that market or your investment strategy and prioritization there?

No, not at all. Honestly, I do consider, and I think it was said quite broadly in the presentation right before. This is going to be the #1 beauty market in the world, quite soon, I have to say. This is the number one opportunity for Coty as a company, of course, as you can imagine. And again, the white spaces we have in this country are huge. So for us, it's going to be the growth, growth, growth in China, very profitable growth. The gross margin of our Chinese business is 10% or more higher than the one of the average company. So it's going to be a very, very profitable growth for the coming quarters and coming years. And last but not least, something new versus this discussions we had about China and Coty in China just a few months as a go, is that the fragrance business is the $3 billion opportunity in this market. And we've seen that if we have our fair share, it's a $200 million business extra for us. So super confident in China, honestly.

Right. Okay. We're going to give Sue a break and get Laurent into the conversation. I mean it's I think less of an issue front and center for beauty companies, but across the conference, supply chain bottlenecks, inflation is clearly a pervasive theme. How do those challenges affects your business today? What are the levers you're pulling to offset them? Give some perspective there so we can dive deeper.

Yes, absolutely. So I mean, similar to our peers, indeed, we have experienced in some shortage or some supply issues. I mean, either from component standpoint or freight standpoint. So I think this is what we are all facing. So despite this context, we reach service all in the low 90s. And definitely, this is -- we are overperforming our peers. So it means really the work that we have described several times, with tight work between supply chain and commercial brings really to these results. So it's very tight monitoring. But indeed, this is delivering, at this stage, good service level, and we have here and here, indeed, some issues as we shared a few times. Now talking about inflation. Of course, it's a reality. We shared in Q3, it's an impact of about 150 basis points in our gross margin. Having said that, you just saw the results after 3 quarters, our gross margin is improving by more than 450 basis points. So it means that we have the ammunitions we need to offset and even over offset this inflation. How we are doing this? Number 1 is mix. Sue shared very quickly that all the strategy is really on profitable growth and accretive in gross margin. And you saw a few cases, skincare, China, e-commerce. Number two, pricing, pricing didn't come as a surprise. We are pricing of this in Coty, started to work more than a year ago. So it means that at this stage, we are in the low single-digit price increase. And after summer, we will be in a mid-single-digit price increase. And number three, we continue the cost-saving initiatives. So this is what we kicked off in the all in to win. We did some strong initiatives on manufacturing. We announced last year closure of one factory and we still have some initiatives to monitor and offset this inflation.

Great. And coupling the reiterated guidance today for '22 and all of the strategic initiatives that Sue walked us through, you have compound annual growth targets, looking at the 25-plus 6% to 8% on the top line, 9% to 11% on the EBITDA line. Why are those the rate, right, CAGRs for the business? Are they still the right CAGRs for the business given the backdrop that we're all concerned about at the moment? And ultimately, do you think you can get the leverage consistently down 2x or lower by fiscal '25?

Yes, absolutely. And I fully confirm the algorithm that we shared a few months ago. Just to give a little more detail. I mean, 6% to 8% are -- is built with realistic assumptions. And just to give you more details. On the first part is really we are starting on our existing categories. So Prestige, we are taking assumption of category growing mid-single digit and assuming no market share gain. And you just saw from presentations that currently, I mean, this category is growing much faster, and there is still huge potential to grow faster. Consumer Beauty indeed low single-digit market growth, but you are seeing also that we are gaining shares. So here, again, we are taking some cautious assumptions, okay, balancing risk. And then the second part is about white space, a white space. And we confirm and Sue has just shared, is the huge potential that we have in China in skincare and in e-commerce. So again, when you combine both and taking a balanced approach, we are absolutely confirming the 6% to 8% growth CAGR. EBITDA is released always this flywheel, gross margin expansion, discipline on fixed cost and fueling the growth and delivering this 9% to 11% EBITDA. Last but not least, absolutely, we confirm deleveraging and reaching 2x by calendar '25. This is, I mean, the imperative.

Got it. And how should we all think about optimal leverage long term and how that plays into capital allocation inclusive of portfolio construction evolution going forward?

Yes. So before I move forward, I just want to remind you what we have achieved over the last 2 years. So strong reduction of the leverage. So as I mentioned, now we are below 5x. Number two, we extended our debt maturity. So now until '25 and beyond, so in more than 3 years. And number three, we simplified our capital structure with elimination of most of our preferred shares. So this is really where we are. Now moving forward, definitely #1, as I just shared, we continue to build this flywheel and invest, okay, in the growth engine. Number two, reaching the 2x leverage by calendar '25. And number three, we are starting capital returns and investment in Coty. To explain you, and you can see on the slide, really to give you a few numbers how we are going to do this. The assumption is that we are starting with $400 million free cash flow delivery per year at a minimum. And this is, again, a prudent approach. On top of this, indeed, we are expecting Wella Divestiture more than $1 billion. So this brings about $2.2 billion free cash flow in the coming years. And we are locating 75% of this cash in the deleverage, so reaching the 2x. And we are locating 25% in capital returns which is about $500 million. And you saw what we announced last Friday. This is the first step where we announced this equity swap, which, in fact, is a hedge for a buyback of $200 million. And again, there is a lot of value doing this because with a low stock price, investing in Coty is definitely the best investment. Last but not least, just to remind that it's with no M&A, okay, we confirm there is no M&A in this agenda until we reach these 2x leverage.

You have the brands you need?

Sorry?

You have the brands you need?

Yes, absolutely. Absolutely, you're right.

Okay. Sue, sustainability, diversity, inclusion has been a big part of the branding, that to the corporate branding that you put forth. What is Coty doing kind of behind the scenes to become a leader in those areas? And how is it being integrated into day-to-day operations?

So one thing we are doing is to make sustainability visible into our products. Again, that's one of the key things and the rebirth of CoverGirl in the U.S. and now of Rimmel around the world with Kind & Free line or Clean Fresh for CoverGirl is clearly a great demonstration that creating sustainable cleaner lines not only is better for the planet and for everyone, but it's the way to gain market share. So it's the clear demonstration that the positive impact you can have on your products has a positive impact on your market share and therefore on your P&L. This is one. So clean beauty is something the company is driving ahead of our peers, I have to say, a bit on CoverGirl, on Rimmel, Bourjois, Max Factor, and you see great things happening behind adidas soon, which is a brand that we haven't talked about in the recent months that you'll hear us talking more and more about this brand in the near future. So this is one. Second, as a leader in Prestige fragrances, we had to do something that was innovative with a strong impact. So we are replacing quarter after quarter the alcohol that's used in our fragrances by carbon positive alcohol. We use biotechnology from a company called LanzaTech, which transform waste from factories into alcohol, and we put it into fragrances, which is really the best example of what we could call up cycling. So it's not only carbon neutral, but carbon positive, I have to say. Three, we have across the company a very strict plan in terms of lowering the weight of things. When you lower the weight of your plastic or gas packaging by 10%, 20%, the impact on the carbon footprint is, by definition, much smaller, sorry. But also when you fly these goods from one place to another, it doesn't consume the same number, I would say, of carbon. Refills, if you look at the SKKN BY KIM, you can see how refill can be taken to a level of Prestige and this is outstandingly well executed, I have to say. We have two factories recently who have become carbon neutral the two biggest factories of Coty, in fact, the Spanish one that does most of our fragrances. And the Monaco one, that's the factory specialized in our skin care products. And last but not least, this new [ PVV ] that puts inclusivity and difference at the heart of the culture of Coty, you'll see it having a lot of impact on the rest of the organization.

Very good. We've about a minute left. You've laid out a lot that's on the agenda. When we reconvene here in a year, what are the milestones you want to be able to report out on?

I think I would love that you -- I would love you to be -- to continue to be surprised by our speed of execution, I have to say. And this is our obsession. That's my obsession. That's the way I usually work. So I try to put this space into a company. I'm a very ambitioned person. So -- but at the same time, I've built things, left-hand, right-hand. So number one, executing on growing Consumer Beauty, accelerating Prestige business, specifically in fragrances, female fragrances, building skin care, specifically in Prestige, building prestige makeup. And the other thing I would love to hear you say is, thanks God, I bought Coty's share last year.

Very good. On that note, we'll disband. Thank you so much.

Thank you so much.

Thank you very much.