Coty Inc. (COTY) Earnings Call Transcript & Summary

Good morning, good afternoon, Robert Ottenstein from Evercore ISI. I'm especially happy to be starting today off with Coty. Coty has been our top pick over the last year. It remains our top pick going forward. And frankly, it's probably the most exciting transformation story. I've had the privilege to follow perhaps my entire career, and I don't say that lightly. Driving that transformation, we have 2, the key actors on that. Sue Nabi, CEO of Coty; and Gordon Von Bretten, in charge of the -- Chief Transformation Officer.

So to start things off, Sue, year-to-date, you've delivered extremely strong results, you've raised the guidance for fiscal '23, which is coming to an end soon. But the market is forward-looking. Everybody's looking out now to fiscal '24. I'm sure you're starting to do that. Can you talk a little bit now about your priorities over the next 12 to 16 months?

Yes. Thank you very much, Robert. Hello, everyone. Good morning. So indeed, as you've said it, we're pleased, I've to say very pleased with both the momentum we have seen in our business and, of course, the steady and consistent execution. You've seen it through the delivering of 11 consecutive quarters of results that are in line to ahead of expectations. It's obviously too early as you can imagine, to comment on fiscal '24 guidance, which we'll provide when we'll report our results at the end of August. However, the priorities of the company remain the same and are very clear. First, demand for prestige fragrances globally remains robust, whether it's in the U.S., in Europe, in China, in APAC or in Travel Retail to name a few. This demand, which, remember, we refer to as the fragrance index is being driven by deep rooted structural drivers and changes in consumer behavior, which we have been discussing now for several quarters at the moment. And in this continued good backdrop, I've to say, we have a very strong innovation pipeline slated for the fall, including what we expect to be a blockbuster female fragrance launch under one of our key brands. So a top priority for us for this new fiscal year is to continue to fuel our momentum in fragrances, including securing all the necessary supply, implementing top-notch execution in store and online and, of course, making our brands the most desirable on the market. Number two priority, if you allow me is maintaining our strong progress in the other division, which is Consumer Beauty by reinforcing the brand leadership, specifically in clean beauty, as a key way to attract this younger generation, the Gen Zs consumers and reinforcing our leadership in what we call skinnified beauty and there towards Gen X consumers. And these efforts on Consumer Beauty, as you can imagine, will be coupled with a bigger push to forge relationships with more influencers and build stronger and bigger online communities behind our brands. which, as you know, it is critical to recruit the new generation of consumers. So as you can see, our first 2 priorities are all about maintaining and strengthening our existing playbook to fuel the famous flywheel of our core business. We have a third priority, which is about building the third pillar of our business. which is skincare. And this is, of course, very much tied to the build-out of our business in China. We've kicked off this effort in the last few months, but fiscal '24 will really be about establishing the foundations, incorporating the learnings of this second half of fiscal '23, tweaking our effort to get the right recipe for success, including things such as channel mix. This is evolving at the speed of light, messaging and how to tackle the fact that social media is more and more content driven. We'll continue to steadily expand the footprint of Lancaster doors and counters in China Mainland, in Hainan, in Asian Travel Retail. And we'll also ignite our radar with a newly announced omnipotent serum coupled with new door openings. So while the physical distribution expansion will be important, we continue to be laser focused on identifying the right channel mix with a very strong focus on live streaming by KOLs. This is really something that is booming since a few quarters with KOLs who have the right level of brand, understanding and knowledge, science expertise as this is for me becoming the key way to establishing credibility and trust with Chinese consumers. The third priority, as you can imagine, will, of course, take continued investment where the payoff is not immediate, but it is a critical part of our strategy to build this balanced portfolio across categories but also across regions. So altogether, there is nothing I can say today that we see right now, which would call into question our broader financial algorithm, including revenue growth at the upper end of 6% to 8% growth range and EBITDA growth of 9% to 11%, even, and this is important, even as we step up the investments we're making behind skincare in China.

Great. That's very helpful. So what I'd like to do now is drill down on one of your most important -- what I would call a work in progress, which is CoverGirl. Certainly, some progress, but probably not where you want it to be yet. So can you talk a little bit about what you've done? Why in some of the scanner data we see, particularly Nielsen, it's lagging based on kind of what we can see? How competitors are reacting, how that competitive dynamic there and what your plans are to complete and further that transition in terms of CoverGirl?

Absolutely. And again, the story of CoverGirl stays the same. It's a story we're perfectly on track. And again, yes, I need to explain to you why a brand that's doing above 20% of sellout is not yet gaining market share again. So let's start with some key points on CoverGirl's performance which, by the way, highlights the strong recovered health of this brand and that are not readily visible in the Nielsen data, as you can imagine. So first and foremost, and you can see it on the slide, we can confirm that CoverGirl's shelf space has been stable post the spring '23 resets and is most importantly confirmed stable for the full '23 resets. So any net space, some competitors are discussing, is coming from other brands than CoverGirl. This is very important as a point. Second, and very importantly, again, we clearly see in the household panel data that the only cosmetics brands that are gaining or holding household penetration are CoverGirl and e.l.f., only 2 brands having increased household penetration. Additionally, CoverGirl's purchase frequency is 2.3x that of the category and that of key competitors. All of this, I've to say, confirms our strategy, our brand repositioning, our brand communication and innovation plan, which is clearly resonating with this younger part of the consumption. Third, why some brands have been growing very strongly purely by recruiting and focusing on Gen Zs, which by the way, are the least loyal consumers, CoverGirl is focused on recruiting this younger consumer base, while at the same time, and this is very important, while at the same time, remaining as relevant as ever with a much more loyal Gen X and older consumer base. In fact, if we exclude e.l.f., CoverGirl sales are outpacing the cosmetics category. Now if I dig deeper into the subsegments. A year ago, remember the combination of supply challenges on Lash Blast Mascara line and CoverGirl historical under-indexing in lip meant the brand was losing market share broadly. In the last 12 months, the picture is very different. We've made very strong strides on both fronts. And as you can see on this slide, CoverGirl is now gaining share in 2 of 3 categories, which are lip and eye and growing sales in both categories with double-digit growth. And this is really best-in-class in the market. The third category, which is pulling down CoverGirl's market share performance, is face. And there, we have a strong turnaround plan for face which is starting right now, and this is absolutely on track versus what we've been telling you in terms of how we're reinventing the brand. This category is growth, as you know, it has been coming from more niche segments. I'm thinking about primers, I'm thinking about skin tints, which e.l.f. has been leading. We have a strong pipeline for the next 2 years to return to CoverGirl share gain in face through a combination of a more simplified portfolio structure, which always takes a bit of time, but it's happening now. Doubling down on clean beauty and on skinnified beauty, think Simply Ageless, and introducing a lot of face products with unique buzzworthy formats. On the next slide, you can see that if I want to give you more details on CoverGirl leadership in clean beauty, I can share with you that the brand continues to be the undisputed leader in this clean beauty in the mass channel. And this is clearly what consumers are looking for and which is growing the fastest. As we have mentioned during Q3 earnings call a few weeks ago, the latest launch from CoverGirl, which is called Clean Yummy Gloss. This is the first edible gloss. You could edit it -- you could eat it. There is absolutely nothing inside it that would be questioned by a health authority. So Clean Yummy Gloss has become the #1 in lip launch of spring '23 and is 2x bigger than the next ranking innovation in the U.S. market. At the same time, our earlier innovation still on the same line, which is called the Clean Fresh Tinted Balm, is driving here again the household penetration I was referring to earlier. And we're building on this leadership in clean beauty with our just launched Cleantopia Mascara, which is the first plant-based mascara launch in mass market. So in fact, one of our key retail customers, CVS, to name them, has named CoverGirl as its clean beauty partner. This says a lot how much the bet on clean beauty that has started to do in 2021 is and was and is still the right one and is about to even accelerate more. So finally, it's also important for me to highlight how we're evolving our communication strategy, having the right products is the basis, and we have them now. Now we need to adapt the communication about this new generation of products. And we're continuing to shift the CoverGirl media spend more toward digital and toward connected TV while maintaining, and this is very important, our traditional reach. In fact, I can share with you that the media spend for CoverGirl is already around 75% of digital spending, and the digital percentage will even increase further in fiscal '24. We're also leaning with -- leaning in with content and media to attract the famous growth audiences, which are Gen Zs and U.S. Hispanic consumers. And last but not least, we're stepping up our influencer outreach and relationship at all tiers, be it the macro influencers, the micro influencers, the nano influencers. In fact, I can share with you that in fiscal '24, we expect to triple CoverGirl's influencers partnership. This, I couldn't do it earlier because I didn't have the right offer. Now that the right offer is here and is going to even accelerate, it's exactly the right time to mobilize this army of influencers. So to summarize, I would say that the comprehensive launch that we have been executing on CoverGirl 2 years ago, has clearly without any doubt, reevaluated the brand, reconnected CoverGirl with its core consumers, while at the same time, recruiting the right new younger consumers. We're continuing, as you can imagine, to see strong positive signs on the health and potential of the brand, whether it's household penetration, which is really the name of the game, share gains in multiple subsegments, a growing online community. And of course, this leadership in an area that's very important in masstige clean beauty. And to finish on CoverGirl, I can tell you that the next phase of the brand growth and market share growth will be fueled by the recovery in the face category with collection of launches that you will see starting soon and a step change in our influencer outreach and social media activations. It was long, but it was important for me to share with you all the data we have in hand.

No, that's terrific. So let's quickly pivot over to what is your core business, fragrances. We've talked now for a couple of years almost of the renaissance in the fragrance market driven by more consumers, particularly in the U.S., in China, entering the category, using fragrances more often using more of them, but also driven by pretty significant premiumization, particularly in China, but I think also in the U.S. So how is Coty looking to address that premiumization trend and maintain its leadership position in fragrances in terms of innovation and premiumization?

Indeed, this is a very important question since, as you've said, this is a key business for Coty and driving the growth of the Prestige division. But first of all, let me remind that it's important to say again and again that this renaissance in fragrances that we have seen over the past, I would say, 3 years is clearly deeply rooted in real and fundamental changes in consumer base and consumer behavior which we believe are structural and therefore, they are here to last for the rest of the decade, if I may say. Rather than simply a gifting item or product use for social occasions, our studies show that consumers are increasingly turning to fragrances as a confidence booster, as a feel good factor, as a social connector, part of what we call the share of economy too with those around them and as a form of [ escapees ], which was fully at play during the lockdowns. The result of these fundamental changes is that we're seeing more users entering the category, particularly the younger part, Gen Zs, but also men of all ages. They're using fragrances more often than in the past and they are looking for more premium scents. And when they use fragrances, they use more sprays to be very, very down to earth. So as you can see on the slide that's on the screen, in the booming U.S. fragrance market, the fragrance penetration amongst men increased by 2 percentage points versus 2020 and the percent of heavy users among both men and women increased by 5% to 7%. This is unprecedented. And despite the significant fragrance demand growth we have already seen, we still see a long path ahead for further expansion. As shown on the slide at the moment on the screen, even with the U.S. Prestige fragrance market, which is now over 50% higher than 2019 levels, which I have to say is truly phenomenal and unseen, the fragrance penetration in this country in the U.S. is still below 30% to be compared to over 50% in Europe. And in China, where the penetration is still very minimalistic. It's around 4%. Even we start to see among younger urban Chinese consumers, fragrance penetration is now above 20%, which is a great leading indicator for the market trend and market potential. So just looking at this market, this represents a multibillion-dollar sales opportunity for the industry and for Coty. Now shifting to your question on how Coty as a company can continue to innovate and lead in this market, particularly on the premium part of the market. As you can see on this slide, for the second year in a row, we're introducing leading fragrance innovations to the market both on the big female market, 70% of the market. And on the male side, whether with Hugo Boss Parfum, Burberry Hero or Gucci Flora Gorgeous Gardenia. As we enter fiscal '24, we're very excited about our innovation pipeline, including, as I said it earlier, a major female fragrance launch scheduled for this fall. The test results on the juice, the packaging, the marketing concept, the positioning, the story are really outstanding for this launch. And our retail customers are very, I can tell you, enthusiastic about the potential for this launch. So while this launch will be in the premium part of the market, we're also actively pursuing the ultra-premium fragrance segment. And I can give you a few examples. But before this, let me frame the story, the ultra-premium niche fragrance market is still relatively small at roughly 10%, $4 billion, but it's growing very, very quickly. And our extension of some of our brands like Chloé and Burberry into this segment are already proving to be strongly successful. And of course, as you've heard it, we'll be supplementing this with our recently announced Infiniment Coty Paris fragrance brand, which is a brand we own, which we've developed in-house and that will be formally launching in calendar '24. So again, this really represents a return to Coty's roots as the fragrance pioneer that was founded 120 years ago in 2024, it's going to be 120 years anniversary, with now a new cutting-edge vision for fragrances which is patent pending for the first time in this business for both the juice and the packaging. So as you can see, as a summary, I would say that as a leading and driving force of the fragrance industry across key segments, brand territories, price points, this makes me remain very encouraged about the fragrance opportunity for Coty being a leader, we still have a lot of wide spaces, including in this core category.

Terrific. Sue. Thank you. So let's move over now to what's going to be the most important market for Coty over the next number of decades, most likely, and that's China. So a couple of questions related, what are you seeing in the Chinese market today? How is consumer behavior changing? Any early reads on June 18 and most importantly, you've got some very important brand launches, particularly Lancaster that we saw in Monaco that was extremely impressive. So maybe kind of -- if you can touch on each of those elements.

Absolutely. First and foremost, I've to say that it's important to reiterate again that the footprint of Coty in China is still very small at 4% of our revenues. So again, regardless of the slope of the recovery in China in the coming months and quarters, the expansion of the different brand presence, our distribution and our assortment in this country, all this means that this market presents a significant important upside potential for us while the potential downside is limited at the contrary of many competitors. So in that spirit, we can confirm that our China sales both in April and in May are up both year-over-year and versus also 2 years ago, which is very, very important. The second important point about China is that this market is very dynamic. In terms of channel preferences, brand preferences, competitive landscape and evolution, especially in the area of skincare. There, I could say that I would summarize what we're seeing in terms of changes as 4 big changes in the market. Number one, Chinese consumers are becoming more and more, if not highly knowledgeable and sophisticated regarding beauty products and particularly the science behind skincare products. In our consumer studies and even in-home visits I've done in March, and I'll be there in the coming 2 weeks, it was very clear that Chinese consumers want skincare products that are first and above all science-backed, and dermatologists approved. This is a big change versus what was done just 2 years ago. In some ways, this is also driving some fatigue with what is usually called heritage brand. Number two, Chinese consumers are less and less interested in buying beauty products and promotion in traditional channels like Tmall because the market is simply shifting to the target that is the normal target for premium skincare, which is 30-year plus because of the unemployment of the younger target between 20 and 30. So this clearly explains why we're talking now to consumers who are less sensitive to pricing and promotion and more sensitive to science and what your products indeed really do. So instead, they are, as I said, looking for engaging content, specifically scientific content. They're looking to be educated by these KOLs who have the authority, the understanding, the credibility to discuss the science behind skincare, and they are increasingly turning to channels like Douyin, which are called content-driven social media versus other ways of doing social media. So this is why we're here again for Coty actively accelerating our live streaming capabilities and building a funnel of scientific and mainstream key opinion leaders to drive sales for our brands. Number three, the still gradual recovery of international travel by Chinese consumers and the building up of Hainan has meant a repatriation of beauty demand to China. This is why we're actively building up our presence in Mainland China, in Hainan and in key destinations like Hong Kong and Macau. And finally, and this I think you heard about it, there are new regulations that are stepping up and up in terms of complexity introduced in the country around bigger transparency when it comes to product formulations and ingredient sourcing, which we believe will raise the barriers to entry for new upstart brands as only brands with the scale and the resources of large beauty companies will be able to both drive the business and navigate the cumbersome regulatory process. So I believe that all these factors that I've been sharing with you, the 4 elements are, in fact, quite favorable to Coty as we're are not burdened by an extensive stock footprint or over reliance on legacy channels like Tmall and our brands like Lancaster, Orveda have very strong unprecedented level of scientific foundation. On the next slide, you can see that we're very encouraged by the early results on Lancaster. This is the brand you were referring to. The skincare line called Ligne Princière that started to be visible in China 3 months ago. What I can share with you today is that Ligne Princière has reached the #1 spot in social buzz across social media in China. This is very important. It could look like normal but reaching the #1 spot in social buzz in such a noisy market like China is really a performance. Number two, consumers are now nicknaming our cream, the Kelly cream, after Grace Kelly, which is great, as you can imagine, as a halo and advertising campaign for Lancaster as this is bringing to the forefront growth, the brand connection with Princess Grace Kelly and the luxury halo of Hermès Kelly Bag. You couldn't dream of a better advertising campaign organically created by consumers themselves. Our leaning into live streaming also has been very, very encouraging and has been generating encouraging results as a recent KOL live streaming in Douyin, generated over 300,000 of sales in only 3.5 hours. And the conversion rates at new counters in Chinese mainland and Hainan are currently aligned -- in line, and sometimes ahead of the leading beauty peers with Lancaster Ligne Princière driving the majority of sales. So all the lights that are on my tablet bar, as you say, in French are green. Now what we need to do is to go to the second phase, which is to increase the traffic to increase the encounter between Chinese consumers and the mix of products and advertising, that's the right one. So in summary, I would say that we're very encouraged by the momentum of the business in China. We're excited about the significant wide space, endless opportunities that both China and skincare represents for a company like Coty.

Great. Sue. Let's move over to some of the numbers and some of the work that's being done by Gordon and his team. So just to kind of start off, Gordon, you've talked about that you're on track to deliver $170 million of savings fiscal '23. Can you just kind of maybe remind us what those particular projects are and how they're hitting the income statement?

Sure. Thank you for the question, Robert. So I guess, before we jump into fiscal year '23, just to restate again what this All-In To Win program is all about. So All-In To Win was launched in 2020 when Sue came on board, when I also came on board and then the rest of the team, essentially. And it's basically our end-to-end transformation program for the company. And as such, it's an umbrella that covers initiatives that relate to growth -- strategy and growth to cost and to cash. And so here, we're looking at the cost element of it. And basically, when we announced the program, we stated that we would deliver $600 million in cost reductions across fiscal year '21, '22 and '23. And in '21, as you will recall, we delivered $330 million in the first year alone. So it was quite sizable because we were quite ambitious in our cost reduction efforts. In fiscal year '24, we added another $90 million or over $90 million to that number, so leaves $170 million to be delivered this year to get to the $600 million. And at the end of Q3, we had announced that we're are at $130 million, so we're very much on track. It leaves $40 million to be delivered in this quarter. We just lost our lights here in the room. So we're almost at the $600 million mark and we're very, very confident we're going to get there. Now let's jump as you asked a little bit into where is it coming from. You see here on the left-hand side, the different major buckets that we kind of summarize the initiatives into. Having said that, behind that are dozens and dozens of initiatives and probably hundreds of line items of individual actions that make up these numbers. So let's go with the biggest to smallest, starting with fixed cost. You can see here, 30% or 31% will come from fixed costs. And these are things like depreciation. That was a big step down in depreciation coming still from the P&G acquisition. And that's run its course, and we have a major step down in depreciation. And secondly, there was quite a bit of work done on the distribution network. We did a network design study and decided to optimize. So we closed the site in Bucharest. We closed the distribution center in Cologne. And we're moving a lot more volume into Barcelona, which gives us a weighted rate advantage. So that's on fixed cost, then moving over to COGS, which is almost 30% of the savings. In COGS, we have done a lot of work on the procurement spend, both by doing value engineering, so this includes things like taking liners out of fragrance boxes in brands where that's possible. It's taking off metallization on certain plastic components, which is great from a sustainability perspective. but clearly also is a cost reduction. And we've negotiated with our suppliers in a time when it wasn't very easy to negotiate with suppliers. But if you leave inflation aside, we've gotten some structural negotiation savings out of our supply base. And then the other element of COGS, of course, is manufacturing. So we've done a lot of small initiatives and continuous improvement in our sites. And the big one clearly was the closure of the Cologne factory, which we're feeling the impact of in this fiscal year.

Great. Let's look over the next couple of years. Can you kind of talk about both the savings that you're looking to do over the next couple of years and then also combining that with the next phase of your transformation in terms of not just delivering savings, but also driving the growth enablers for the company, what does that mean? What are those processes that you're putting in place?

Absolutely. So maybe let's go to the next slide, here it's already. So fiscal year '24 and '25, we've committed to deliver another $165 million in savings. So this is beyond the initial commitment. And when you look at the buckets here, they are similar topics. So it's again, COGS, it's fixed cost, it's trade investment, it's structural A&CP and without going too much detail into each of the pages here, but it's similar drivers. So it's this value engineering and procurement negotiations on the COGS side plus continuous improvement in the sites. And then maybe to hit some of the topics we didn't discuss on the previous slide, trade investment is, of course, is working with our retailers and with the trade in the markets to optimize the spend. And this is a battle that you do market-by-market, and it's hundreds of initiatives. Examples on here would be that we want to reduce temporary price reductions in Travel Retail. We want to reduce returns and coupons being used on some of our brands to reduce that gross to net as we call it, all the trade investment. So it's a mix of different things that really makes up that number for the future. And then I guess, moving forward into one of the key priorities for the program. So when we started All-In To Win, we've always said that there would be multiple phases. And so in my mind, we're in Phase 3 now. Phase 1 was very much at the beginning, and we called it funding the journey. It was immediate cost cuts. And as you will recall, we cut off all kind of external spending in terms of travel, consulting, training, all of those types of things immediately in 2020. And we also had quite a sizable head count reduction program. Phase 2, which started at the same time, but is paying back now was around more complicated cost reduction. So it's things like change in the distribution footprint, outsourcing certain functions and doing some of these things that are more complicated to do and have a slightly later payback, and that's what we're seeing right now. And now we're really entering Phase 3, which is really coming up with improvement ideas in terms of capabilities. And these capabilities are being improved in order to enable growth. And you can see on this page, the first 2 -- 1 and 2 is still delivery of savings, which we've already discussed about. 3, 4, 5, 6, 7, 8, they're really all about enabling the organization to grow. And I know w're a little bit stressed for time here. But some of the examples here are fast beauty, where we're designing processes to work in a different way with external sources to source more breakthrough innovation to working with a different set of TPMs potentially. It's also building a fast track process internally. So right now, when a brand has a great idea, it comes to R&D, oftentimes, it goes to the back of the queue because there are so many other initiatives in the pipeline. But some things are more time sensitive to others. So our idea is to reserve a certain percentage of our R&D capabilities to this fast track process so that we can greatly improve time to market. Just one example, Sue has talked about digital already, where we talked about live streaming being a major thing we need to put in place and are putting in place as we speak. Using social media as a tool to unlock some of our growth in the consumer brands. That's a key one to name just a few. And then lastly, I wanted to touch base and maybe deep dive a bit on strategic revenue management, SRM, it's #8 on this page. And this is a capability we've built over the last 2 years in the U.K. So we've put a place and team of 15 people in the U.K. that do both trade marketing but also strategic revenue management. And many of you may know SRM as a tool being used in FMCG companies for a long time already. But in beauty, it is somewhat new. But in the end, what it is, it's basically taking external data, so trade and retail data and pairing that with internal data to assess how impactful were certain trade investments or certain promotional investments. And then armed with that information, we go to our retailers and basically have a discussion to say, look, when we paid money on certain initiatives here, it didn't really drive anything. But at the same time, we invested over here, it really drove a lot. And so the idea is to use that information to convince them to focus the money where it has the biggest payback. And I'll give you 2 specific examples. So one thing we did, for example -- these are the impacts. But some of the examples are mix, right? So we used to promote a lot of 30 ml fragrances. But when we did the analysis, we found that promoting 50 ml gives you a much better value. It doesn't give you the same volume, but it gives you much better value. So we changed what mix we're promoting. Similarly, on Rimmel, you may recall that on Rimmel, we have 3 different price tiers. And we used to promote all of them. But the bottom price tier has already such great value, it's not necessary to promote it. So we took the money right off it and we're now investing in Tier 2 and 3, just 2 examples. And then on this page, just very quickly, it shows you some of the impacts. On the left-hand side, these are U.K. examples over a 12-month period. It shows you the changes on the left-hand side in average unit price. And the change in average unit price over 12 months was 9%, 3% came from pricing, 5% came from SRM and only 1% in this case at that period because there were major launches came from innovation. So that really shows how important the lever SRM can be. And on the right-hand side, just to sum it up quickly. This is an example out of again, the U.K. in Consumer Beauty. It shows you what percentage of gross sales are being invested in temporary price reduction, so temporary discounting basically. And it's over a 3-year period and shows you on average that we were around 12% of gross sales went into temporary price reductions. This was fiscal year '20. And in fiscal year '24, we're planning only spending 8% with, of course, the same impact, no impact to top line as a result. So it really optimizes the way you spend your money and your dollar goes a lot further as a result.

Gordon. Very impressive. I think I've negotiated a couple more extra minutes so that Sue can wrap things up with her final thoughts on where Coty is, particularly given the very uncertain macro backdrop that we're facing. Sue?

Let me share a few messages. It's going to be quite sharp, but they are important. So number one, it's true that the current and certain microenvironment is pressuring demand in certain categories. Yet at the same time, we're not seeing any real sign of slowdown in the beauty demand. So for this region, we remain confident in beauty as a structurally very attractive category and the longevity of what we love to call the fragrance index. And in this very attractive market, I've to say that this company is poised to further outperform and this is simply given the significant wide spaces opportunities ahead of us, be it skincare, be it China, be it Travel Retail, be it the different pricings, be it the optimization of the spending, et cetera. We have -- see us as a notion of wide spaces. So in short, I would say we're very excited by the path ahead as we continue on our journey to transform this company into a true beauty powerhouse. Thank you very much, Robert, and everyone.

Sue, Gordon, thank you very much, and thank you, everybody, for joining.

Our pleasure. Thank you.

Thank you.