L'Oréal S.A. ($OR)

Welcome to the conference call regarding L'Oreal sales at 31st March 2026. The conference is about to begin. I now hand over to Eva Quiroga. Ms. Quiroga, please go ahead.

Thank you, Sabrina, and good evening to you all. Thank you for joining us on this call for our first quarter 2026 sales. As always, I'm here with Nicolas Hieronimus, our CEO.

Good afternoon.

Christophe Babule, our CFO.

Hello, good afternoon.

And Laurent Schmidt, our Head of Corporate Finance and Financial Communications.

Good afternoon.

Nicolas will make some brief opening remarks, and we will then go straight to Q&A. Over to you, Nicola.

Okay. Thank you, Eva. So good evening to you all. As you could see in our numbers, we're off to a good start. Our like-for-like growth adjusted of all IT transformation impact between last year and this year was at plus 6.7% well ahead of the global beauty market, which we estimate to be close to plus 4. And we have been gaining share in all regions and divisions. It was driven by the further acceleration in our innovation rate as we launched several new products with blockbuster potential. This allowed us to further expand our market share in fragrances, hair care and makeup while starting to see some green shoots in skin care. And we continue to strongly outperform in e-commerce, particularly in emerging markets. Even if we are wary of the potential impact of the Middle East conflict, we are optimistic about the outlook for the global beauty market, which has shown no sign of slowdown to date. And we are confident in our ability to outperform it because most of our '25 and '26 innovations are off to a good start, and we have more to come. And because we have the teams, the means and, of course, the fighting spirit. So we are now ready for your questions.

The first question comes from Celine Pannuti with JPMorgan. The next question is from Guillaume Delma of UBS.

Are you having some technical glitches because we can't hear any questions.

Sorry. Ms. Celine Pannuti, JPMorgan is now on the podium.

So clearly, a very strong start to the year. You said that the market has continued to show a good progress at 4%. Can you talk about what you see -- you said you are potentially worry about the impact of the geopolitics, what you could see in terms of potential impact in travel retail as well as maybe you mentioned, I mean, Middle East seems to have been a small small weakness. And yes, that would be my first question. My second question on emerging markets. Clearly, it was a strong beat. Satin accelerated, and we also see that China did very well. If you could give us a steer on the durability of that growth? And maybe car my first question that I should have asked is whether what you see in terms of the momentum having started so well. I mean you were talking about acceleration at the end of last year. How would you characterize the rest of the year for [indiscernible]

Okay. Thank you, Celine. First thing because just to make sure my presentation was right, I didn't say I was worried. I said I was worried, which means...

Worried. Yes. That's what I said, but maybe my...

I'm conscious about the uncertainties that lie around this conflict. It's true that today, as far as the impact it has on our sales, it is -- it was absolutely manageable. It impacted our sellout in March in Travel Retail and indeed in the Emirates. But this region, the Middle East is less than 3% of our sales. And if we look at the situation over there, we see that, I would say, consumption has gone back to normal in Saudi, which is an important growth market for us. And as far as the Emirates are concerned, we see that e-commerce is back to more or less normal. The -- I would say, the local -- the neighborhood malls are also back to consumption, where you find still a real impact is on the big tourist malls of Dubai and Travel Retail. So overall, this has had an impact in March. And of course, we will see how things evolve in April, May. But we think it's overall manageable in the region. What we don't see, of course, what we don't know is whether durable inflation on gas prices will impact consumer behaviors. I must say that so far, and we are monitoring this very closely, -- we have seen absolutely no reduction of beauty consumption in our markets, whether it's Europe, North America or as you mentioned. So, so far, so good. But of course, we have to see. And then, of course, should the conflict last longer, this will have an impact on the cost of the price of the brands will have an impact on our sourcing, on our logistics, which is more a P&L impact than the top line growth. So I would say, like you, we're all waiting to see the resolution of this conflict. So that leads us to a certain level of carefulness. -- which leads me to the momentum.

I'm sorry to -- apparently, no one can hear the webcast. Only the people on the line can hear you, so no one can hear the webcast.

That's a big issue. So we will have someone fix this. I do apologize. So if it's -- the only one listening to our responses, that's a problem. So I will pause Celine to make sure we. I will probably have to start again then if you are the only one to give the answer. That's -- we seem to have had a few issues, which, frankly, I'm not very happy about, but with that later.

If it's from here or from the...

Apparently, there was an issue with intermediary. Let's wait I hope it doesn't take too long to fix we know whether it works...

I think they're putting a line that people can call on the website. I think we answered the questions. People will have access to the webcast. So I think we...

All right. So we continue with the questions. As far as the momentum because I'll talk about the emerging at a later stage. But as far as the momentum is concerned, I would say 2 things. The first thing is that Q1 was our most favorable -- our easiest comp from last year. So that has to be taken into account as well as the potential it's not -- if it's manageable impact of Middle East consumption. On the good side is that all the news we have today from our sellout are very positive. So we remain confident on the year, which is, as I said in the financial analyst meeting for the yearly results. We expect both the market and more importantly, L'Oreal to grow faster in the full year 2026 than it did in 2025. And of course, the start of the year is an encouraging news for us. And for emerging, you mentioned China in the emerging. So for me, it has emerged a while ago, but it's true that the market has continued to -- has confirmed this stabilization or slight rebound because it was at plus 1 on the end of last year, and it's now closer to between 1% and 2%, closer to plus 2%. So that remains pretty solid. But the good news within the Chinese market is really the fact that there's been a shift back to selective. So what's been driving the growth of the market is more -- the selective market with, I would say, a bounce back of the confidence of the Chinese consumers, especially more affluent one with the fact that the stock market in China is getting better. So of course, as we are overrepresented in our overweighting in our business on the selective market where we are gaining share, it is a very positive news. So we see China as continuing to -- which is now for us, including Hong Kong, is continuing to do well. And we've really very seriously outperformed the market in the first quarter as the market was, as I said, somewhere between plus 1% and 2%, and we were in mid-single digits in China. So really gaining share, particularly on selected divisions. And as far as SAPMENA is concerned, it's also -- it's been a good start of the year with a market that is -- that remains in the same level of dynamism at the end of last year and our sell-out is in line with our selling. So there's no inventory building with some markets that are very dynamic like Vietnam and particularly India is doing good, even though we still very small for us. So we are confident on something. The only emerging market that has slowdown in terms of market versus last year is Latin America, which was also slower in Q4. And so it's more in mid-single digits now in the beginning of the year, but we continue to outperform it, particularly in Brazil, in CPD, in hair care, where we have strong results. So overall, as you said, a good start, a very good start in sellout and a momentum that has to take into account the fact that Q1 was an easier comp.

The next question is from Warren Iceman of Barclays Bank.

So I've got one housekeeping question and then 2 main questions for housekeeping for Christoph. Can you just clarify the phasing issues. There's been a little bit of confusion just on the 6.7 and the 4.3. Just what is the actual real underlying -- that would be great. And then my main question, Nicolas, can you talk about the skin care market. At CAGNY, you said it was 1 of your biggest priorities to improve performance around [indiscernible] like Long Kong. It seems like there are some green shoots what's happening to the skin care market? And how happy are you with your innovations and attraction? And what can we maybe expect for skin care overall this year, given it's your single biggest category. And then the second one really is, could you maybe just outline the strength in Europe. It was very strong at the end of Q4 and that strength seems to be confirmed in the first quarter. What are you seeing? Is it your market share, your innovation is driving that continued outperformance? And do you feel good that, that can be sustained for the balance of the year?

Yes. I'll start with, of course, what hopping on the IT transformation. As you know, it's very important to create this common backbone. So we are going forward with this big project. And we have noticed that in the press release in the Page 2, we have put a new colon that gives you the adjusted growth. So the adjusted growth taking into account all the transformation that we have last year and this year. So that's why from the reported like-for-like growth of 7.6% there is a negative adjustment of 90 basis points, 9-0. And therefore, the underlying or adjusted like-for-like growth is 6.7% and this is linked to a minus 340 basis points from the IT transformation in Q1 because we started Australia, U.K., and we are starting for -- with the U.S. And last year, plus 250 basis points from the IT transformation of Q1 of last year. Net is minus 90, and you have it on the Page 2 of the press release.

Is that clear for you, Warren?

Yes its clear.

Okay. So as far as categories are concerned, skin care market is doing overall pretty good. It's one of the markets that is mid-single digits. I think we have estimated because at this time of the year, it's still an estimation that still with committed around plus 4%. And we indeed, the put in place are, I would say, our quick up or can tax plan, which has already delivered pretty strongly on LTV, as you can see, is growing our dermatological Beauty division is growing double digits. And it's both the continued strength of La Roche-Posay the return to growth of [indiscernible] and very good health [indiscernible] which, if you remember, has become our new billionaire brand in euros last year. But here, it's doing going very good. On the other divisions, we are -- when I say we're seeing green shoots is that a number of the launches that we've either put on the market at the end of last year, like Garnier Toque Seco, which was Brazil success and now is being rolled out in Latin America and Mexico, but also in Southeast Asia is issuing promising starts. We have new launches on L'Oreal tariffs, glaskin serum, which are starting well, too. And of course, if I take -- if I take luxury, we have two positive effects. One is the fact that the Chinese market -- selective Chinese market is more positive, so that's good for us. But the launches we've put on the market, energy cream, the new kills medicated and are doing great. And we just had the first initial sellout of our new longevity and [indiscernible] which is the new launch that has been developed with a new integrated supplement that really drives allows to act on all signs of longevity. And the first sellout are very good. If you add to that, the fact that mix continues to thrive the failures in the U.S., which one of our positions that had been a bit over. slow is also growing. Medicaid, our acquisition does well. And of course, and we will be starting the rollout of Dr. G, our Korean brands. So we have -- what I think today, it's very, very strong on LTV and it's you have promising signs on the other divisions, which have not materialized right now and strong overperformance of the category, but I feel that it should be good for the rest of the year. And our [indiscernible] is also thanks to China positive. So it's getting better. And I would say, the proof of the success of the strategy is really on the comeback on the NCD, which is really powerful. As far as Europe is concerned, we see the -- I think it's both topics that both explanations were right. One, the market is pretty resilient. It's a market that's growing mid-single digits, around plus 4-ish. So consistent with the global beauty market. And we are performing in all 4 divisions, very significantly in luxury, pretty good also on the mass market on professional [indiscernible]. And then DB is gaining share in the majority of country service become the #3 deal brand in Europe for the first time. So we have -- Europe is doing good. And I agree with you that some people are surprised, but we see, I think Europe for me is the absolute demonstration of what we call the lipstic effect of the dopamine effect of beauty because we're really seeing our consumer studies that even though consumers are worried and they have some [indiscernible] they may cut on high value items, but they use beauty as compensation for stressful climate and psychological puffer and will sit in several categories. So good performance in Europe is driven as previously by Southern Europe, but also our [indiscernible] business is so Germany, Austria and Switzerland is doing good. And the U.K., which has you compare it, it's not to a good start. So we say pretty solid in Europe. And so we expect the market to continue to be positive. I don't know bracket. And of course, we are determined to continue to outperform.

The next question is from Jeremy Fialko of HSBC.

Jeremy, HSBC. So a couple from me. The first one is maybe we could just go into Professionals. So that was just a massive pickup from where you were, I guess, over the last sort of 6 quarters or so. So perhaps you could just talk about what was going particularly well within that division. And again, any elements that you think might not be sustainable or whether you just think you've got a template that's working really well at the moment and can be sustained. Second thing is on carrying. So you've now got that in the portfolio. Perhaps you could talk a bit about your sort of first steps with that portfolio and whether there's any chance of getting your hands on the Gucci license a bit earlier than 2028.

Okay. Well, on Professional, indeed, it's been a very strong performance of the division now for, I would say, more than 18 months and it's really a performance that's driven by really a structural transformation of the division that has happened profoundly over the over the last couple of years where this division has really truly become omnichannel with on the 1 hand, an always confirmed, reaffirmed dedication to supporting, growing the sale market with new technologies kind of products. We just launched a new Redken, we just renovated Majirel. So we remain dedicated to supporting that channel. But the big step change is that after having built highly desirable brands for decades like Carol's Daughter or Redken, the fact that we have become omnichannel and that premium hair care brands are available in some selective outlets or online drive phenomenal growth and attraction. And this happens at the time when hair care itself becomes a much more valorized and sophisticated and demanded category all over the world, the hair is longer, whatever the age hair grows longer. Women keep their hair longer. People are concerned about hair loss and you have a more mixed population with lots of curly textured hair that are much more demanding in terms of hair count. So you have the combination of brands that have the science and the offer and the desirability that are now available to consumers even though they are premium and a strong consumer desire backbone. So the combination of these 3 factors is to perfect the equation for the growth of the professional division. So -- and I think it is sustainable because the underlying demand is growing and because we have more technology. And indeed -- and at the end, the weight of premium hair care over of the total hair care remains relatively moderate. It's one product out of 10 in mature markets. So there is room to grow. So I think it's a good combination. I'm pretty confident about that.

We still also -- we have to say it by a very strong e-commerce growth.

Yes, that's what I mean. We say omnichannel, it is available in a lot of platforms. And of course, consumers, young consumers are we creating for it. And we are just also expanding in emerging markets, this division, which is also getting some traction. So lots of innovation, lots of demand, coveted brands and availability online, while still protecting the professional support and the professional equity with specific innovations for this channel, which is also, by the way, served by our teams in a more digital way than before a more, I would say, efficient way. So that's for Professional and as far as caring is concerned, I'm afraid there's not much I can tell you. It's true. It's -- the deal has been closed. So it's ours since the first of April. So we are -- of course, we have met the teams. We will be hosting them in our offices. And of course, we'll be focusing on the brands that are number 1 will be Creed, which is already a significant business. And looking at the 2 beautiful brands that are Balenciaga and Bottega Veneta. And as far as the Gucci license anticipation is concerned, we are not having the discussions, it's a discussion between [indiscernible] and Coty. I assume they are happening, but I have no news to give you on that on that front. So it's just the beginning, but we are really, really excited. And when I look again at the performance we have right now on a excited the potential on carrying Beauty, which will have because of the step-up inventory which have a dilutive effect of the first half, which will come in probably our first half results. But really really excited about this prospect, nothing really new to study on Gucci.

The next question comes from Guillaume Delmas of UBS.

I've got one quick housekeeping question. I mean for the people that were not on the webcast and also because I missed the number, could you maybe repeat what is your initial assessment of the beauty market growth in the first quarter? And then my 2 questions. I mean, firstly, on North America because I think Q1 is your best quarterly performance in nearly 2 years. So could you maybe shed some light on this? I mean, particularly, what kind of market growth are you seeing? Any particular discrepancy between sell-in and sell-out in the quarter and then looking at the 4 divisions, I mean, where are you seeing the most significant outperformance? And then my second question, probably a question for Christophe. I mean, early days, but to what extent your commodity and logistics cost outlook has already changed. I appreciate you've got high gross margin productivity savings. So Historically, you've been really good at rapidly mitigating these headwinds, but could you also consider some pricing actions in the back half of the year should these higher prices persist?

All right. So Guillaume beauty market growth, and again, apologies for the glitch in the beginning. We estimate the markets in the first quarter to be shy of 4% growth, so slightly [indiscernible] something like that. But as you know, we don't have all the sellout data, but it's -- so more or less on the same pace than the second half of last year. So it remains dynamic. And as I said earlier, we have been paying a lot of attention on the recent weeks to see whether there was any impact on consumer behaviors of the increasing in gas prices or for people that they have to fuel their car tanks with, and we have seen absolutely no change in beauty consumption pattern. So that's the first -- the answer to your first question. As far as the U.S. market of North America is concerned, first of all, what is important, as you know, our growth is on adjusted of the IT transformation is at plus 7.6%. So it's indeed one of our best growth in a while and with a little bit of discrepancy between selling and sell-out because our sellout is actually higher than our sell-in. We clearly outperformed the market big time, I must say, CPD in sellout is really doing great because it's low double digits in sellout, which is great with hair care and fire and the reason why we're behind in sell-in, which is one of the explanation why our Consumer Products division is a bit below some of the expectations. The fact that we had kind of the perfect storm in the U.S. without play on words because we have, on the 1 hand, sellout that's really going really, really strong, particularly in hair care, but L'Oreal across all categories. We are building the inventory to our -- to prepare for our IT switch, which is going to be early June in the U.S. And at the same time, we had a snow storm on our big distribution center in Arkansas. So we lost some sales there. But overall, CPP is doing great. Professional is a bit like everywhere. I would say the good -- the good sign is that SalonCentric, which had been a bit lackluster last year is back to positive growth. So it's helped by the launch of [indiscernible] but overall, we see a little better situation in the [indiscernible] world. Luxury is doing good, thanks to fragrance and the recent launches in fragrances and -- and as use and LD in general are also doing pretty well because you have both the recovery of CeraVe in skin care and good performance in hair care and arouse continues to thrive. So overall, I think we are in a good -- very good sellout situation in the U.S., and we are managing this big -- it's our biggest countries. So this move to our new SAP in the U.S. is something that we work very hard on, and that had a minor but real logistic implications in the first quarter. But overall, that's one of the countries where our performance is really a very good. And Christoph -- on the...

On the impact of the first, let me give you also a flavor on the structure of the growth because it's important. So we have both growth in volume and value basically, volume accounts for around 40% of this growth. And therefore, the value is there also to protect, of course, our gross margin. And as you can imagine, first part of the half, we have a negative impact linked to the tariff. So this will have a negative impact on the gross margin for the first half, but we are trying, of course, to mitigate the the impact with different aspects. And on the other side, we have been computing the potential cost linked to the oil. So as you can imagine, we have, on one side, the negative cost -- additional cost on the logistics and also direct additional costs potentially on the sourcing of some materials, mainly on plastics. And when we add both of them, is the the oil stays at around USD 90 to USD 100 a barrel, then the additional impact tank would be in the range of EUR 90 million to EUR 100 million. Of course, all this is being calculated based on the evolution of the prices. We will see because the biggest risk at Diana will be the inflation that may come from this all increase. And if inflation, of course, goes up on the long term, of course, we may have to take some action on the pricing later this year.

Yes. We'll see if it lasts whether we need to do it. we also will have potentially some good guide on the tariffs in the U.S. in the second half of this year with the change in percentage we now have. So we'll see, we're monitoring. But as you know, we have this capacity to take prices up. And we have a lot of, I would say, opportunities in what we call revenue growth management where articulation of formats, product mixes, exactly high and promotions is also another way to protect our gross margin without necessarily taking prices up too much for consumers. That's how we did it post COVID and that's one of the tools we use to keep on recruiting consumers while protecting our P&L.

The next question comes from Sarah Simon of Morgan Stanley.

I have 2. First 1 is, just can you remind us, like-for-like, is that assuming that what you own now you owned last year? Or is it excluding the contribution of everything that's being acquired until you get to a year afterwards. I'm just thinking because, obviously, you've got some bigger M&A coming in. And then the second question.

It includes the what we acquired during the year.

So if Medicaid is growing at 100%, you would benefit from that in your like-for-like?

We would have -- if they are growing at 100%, yes. But we still have the sales in the base, we have the sales of that Medicaid out us last year. That has been great, by the way.

Well, I can see it, it's everywhere in the shops over here now. So second question was on mix and the rollout. Can you talk about how -- where that's been rolled out from a geographic perspective? And how much further there is to go?

Well, mix size, mostly today, it's mostly a European rollout. It's launched in dark and we are, of course, studying a few other European countries. But as always, at L'Oreal, when things start flying, you have a few countries that are beginning to raise their hand and becoming interested. So right now, it's mostly Europe. But we may have other candidates later. But this year, it's mostly a European play.

The next question comes from Olivier Nicolai of Goldman Sachs.

Nicolas, Christophe Eva. I might have missed this at the beginning on your remarks at the beginning, but SAPMENA was up 15.4%. Have you made any comments on the impact from the issue in the Middle East? And if like some of your peers in Luxury expect any impact in Q2? And then just one question going back to Derma and the growth of CRV which continues a nice turnaround there. You mentioned the growth of hair care in North America for CRV. Have you reached the full distribution for your hair care range compared to your skin care offer? And how much of CRV in the U.S. is hair care today?

I'm not sure I have all the details to the latter. I don't -- it has -- it hasn't reached full distribution, but more importantly, it hasn't reached full potential because it's very, very recent. It's growing month after month. And what's interesting in this line, you've got both antidandruff and I would say normal shampoo, and both are working very well. So it's totally additional for both for therapy and for us. it's still a minor part of the business in the U.S. but growing. And for us, what's really interesting is that service turnaround is also and mostly driven by the turnaround of skin care. We've launched an in an intense evolution on the back end of last year, which is doing really great. So it's really -- and it's true everywhere. And we are just launching on survey, which is not a U.S. story today, but we're launching -- we're just launching Suncare in Europe, which is a good complement price positioning and overall strategy to [indiscernible]. So it is promising, but the brand is back to growth, and that's for us a very because it had at some point, started plateauing. And now it's growing again. And I think there's a lot of potential. On the Middle East, so first of all, a reminder for everyone, less than 3% of our sales. And it had, I would say, a manageable impact on the month of March. It will have an impact on Q3. But I would say it's not as big as some of the other players you're mentioning, first of all, because it's smaller in our business. Second is that what we see today is that Saudi Arabia is back to normal consumption that e-commerce, which is, as you know, one of the areas we bet on is also pretty resilient. And even the neighborhood malls in the Emirates are doing okay. So it's really more both the tourists visiting the big mall, Dubai Mall and the Travel Retail. So it's going to impact more our [indiscernible] business than any other division. So I would say it will have an impact, but it will really depend on how long the conflict class, whether particularly tourists and travelers are confident to go back to this region. But as far as local consumption, it is -- it is, I would say, globally okay. And by the way, most importantly, all our teams are safe and working. And I think if you look midterm or long term, it remains a very strong area of growth for us because size of the population, the economy, the women that are more and more empowered. I would say I was last fall in Saudi and it was pretty exciting. So today, the impact exists, it will impact more Q2 than Q1, but it is, I think, overall manageable.

The next question comes from Charles-Louis Scotti of Kepler Cheuvreux.

I have 2. The first one on North Asia, the market is finally rebounding in China, and you are outperforming it. I'm just curious to hear your outlook for the year and to what extent you believe this rebound is sustainable. And that's the fact that the luxury beauty segment is driving the recovery confirmed that Chinese consumers are more inclined to engage in discretionary spending and trade up in your view? And second question is on the fragrance category. There are some of your competitors beauty in general and fragrances that are facing difficulties, and it seems to be fueling a new wave of consolidation? Or is it rumors of potential mergers for some -- are you still on the lookout to acquire some additional fragrance licenses? Or do you consider your portfolio sufficiently broad after the [indiscernible] deal?

So first, on the North Asian market, it's true that it is -- it has recovered. And for North Asia, the biggest part, of course, is China for us. It's 70% of the total. So it's really what is the absolute for parameter or thermal weather of the market. And indeed, China has come back to positive territory. It's not a massive rebound. It's -- we said it's somewhere between plus 1% and 2%. But it is positive. And indeed, it's more driven by selective premium products. It's true for our luxury brands, but it's so true for [indiscernible] skin ceuticals who are both very positive. And I would attribute it to 2 factors. One is that indeed there is -- thanks to the rebound of the stock market in China. -- there is a bit more discretionary spending. And there's also, as travel retail remains negative, especially in domestic, there is also probably some transfer of consumption from what used to be a Travel Retail to the domestic Chinese market. So overall, we are confident on the fact that China will grow. We have -- we are conquering new consumers. That's interesting because we were -- we've been for a while stuck to 100 million consumers in China and we've increased to 105 and growing 108 latest assumptions. Thanks to the penetration in Tier 3, 4, 5 cities, which are driving the growth, and that's the combination of a couple of door openings, but a penetration allowed by e-commerce and doing in particular. So overall, we don't want to get carried away and it is -- it remains a market which has not -- it's old growth rhythm, but it's positive, and our brands are really good, doing good. We are an expanding our future brands like Prada and there's a good response. ESOP is doing good in China. It's a brand that consumers values. So I would say that it is a positive news for us. It's a very competitive market, of course, and that forces us to be ever more innovative but confident on that. On fragrance, first of all, it's true that the market has had as some of the players said has slowed down a bit. It remains positive, single digit, but we are really growing much faster than the market. Very happy that Lee has become at the end of last year from [indiscernible], #1 feminine fragrance in the world. We have had a lot of initiatives earlier in the year, which -- whether it's the extensions of YSL [indiscernible] or Berry Crush or the new email fragrance from Armani and for our manpower review -- and Fine Fragrances are now many were always a bit of a challenge and this one is off to a great start. So we are really firing on all cylinders on fragrances. And frankly, to your question, we are just got the -- if I may use that term, we got the keys of caring beauty a couple of weeks ago, and we have to, of course, integrate the team, the brands and which have potential. So we are not on the lookout for more brands in the fragrance world. We have a lot to do with, and we are very happy with the way we're doing it.

The next question comes from Jeff Stent of BNP Paribas.

Just 1 question. In the earlier question referenced that potentially we're going to see meaningful consolidation in the industry. And my questions are, what do you think that says about the industry, if anything, and secondly, would you expect this to be the sort of first move and potentially a change of consolidation? Or is it your expectation this is a sort of one-off event?

Well, I obviously not comment on our predictions on the consolidation of the industry. What is true is that -- there has been a lot of either movements or announcements of movements recently. What is for me, what it says, whether it's decisions from Unilever or the discussion between Poch and stealer a few things we said that, first of all, the confirmation that duty is a very attractive category because some groups want to be more involved in that category. It's a category what again is proving right now, it's 1 of the best growing categories around the world. And the second is that -- sorry, scale and a good portfolio of brands is one of the winning factors. So -- but they're not the only ones. You have to have the innovation firepower. You have to have the agility because being big is not always compatible with being agile and that's what really we are very focused on keeping a L'Oreal. And then there's the company culture, and that's where whatever happens, move that our people are talking about having a company culture where people are aligned behind the mission, the way of doing things is also a retential success factor. So I don't know whether there's going to be more. But in the end, it's good for the BC industry to have players that invest in it, and it's always good for us to be stimulated.

The last question is from Robert Ottenstein of Evercore ISI. Please go ahead.

Terrific. I'd like to drill into the China market a little bit more and parts of your business there. I think you said that in the quarter, China was up 1% to 2%. And continues to show a rebound sequential rebound. Can you maybe just give us a little bit more detail in terms now of how that market splits between online and offline and how each of those channels is doing. You also then mentioned that prestige or what you're, I think, now calling selective was doing much better. Perhaps maybe just tell us how much better or at least how those -- how the market is doing in terms of prestige growth versus mass, which we think is down? And then my last question, again, related to China. I'd like to understand better the development of the Helena Rubinstein brand there. From the data that we've seen, I think it -- there was an initial Helena Rubinstein brand that started off very high price and then came down. But then you've, I think, launched another very high priced, very premium Helena Rubinstein brand. I think that's the PX 50. So maybe if you could talk a little bit about the strategy around Helena Rubinstein in China and how that's doing?

Okay. So on the Chinese market, first of all, in China, the majority of the market, a little bit more than half is online. And of course, then the way it depends on the categories, there's probably more offline on hair care and more online or a number of prestige products. And if we look at the market overall, most of the growth, if not all of the growth of the market is driven by online, which doesn't prevent us at L'Oreal from at least in Q1 as it was in the last 2 previous quarters, to be growing both online and off-line. Because, of course, we are -- because we are also the way on luxury, and that's where the importance of both lines to have consumers feel the experience of the brand, which, by the way, will tie to have an Rubinstein is very important. And indeed, you're right to say that the mass market is slightly negative and that the other, whether it's luxury or dermatology are growing more in mid-single digits. So in both cases, we are winning share and doing better. So it is a market that's indeed right now seeing a stronger growth of more premium products and more premium brands included, by the way, high weight of in recent months of Western brands and ours in particular. And so that's what we see today on the market. And we've had really strong momentum in luxury. And when I was referring to selective our prestige brands that was including in some of our other divisions like dermatological beauty or professional. We have brands that are more premium [indiscernible] or SkinCeuticals and they are doing particularly well in China. As far as Helena Rubinstein, there's absolutely no change in strategy or there was one a decade ago when we decided to reposition that brand, which was a brand with a multi-category, doing makeup and even fragrance into a brand focused on premium skin care and of course, with a particular focus on China. And we've never -- since then we've never changed strategy. Our -- the previous [indiscernible] night cream, which had 30% property land was the #1 selling cream in China in value in '24. And what we did bear you're bright, launched a more premium and on top, which is called PX 50 that has got 50% from Velan, which we launched in the fall of last year, and that cream is indeed driving the growth of the brand because this brand, which is really positioned on the most affluent demanding consumers is, of course, very successful when it launches very innovative, unique products that have no equivalent. And I was talking about off-line, Helena Rubinstein has got counters and stores. In all of them [indiscernible] is where these VIPs can get treatment, and that's also contributing to the desirability of the brand, which is paying now that the Chinese market is turning again positive and selective. So no change in strategy, just a confirmation that on brands a Helena Rubinstein you have to go with superior quality, superior service and demanding in Chinese and affluent consumers are trading for it. Well, I think this ends the Q&A Eva.

And can I just say that we are, again, apologizing for this technical issue and the webcast will be available in 15 minutes. So you will all have access to the full call in 15 minutes. Thank you very much.

Thank you. Bye.

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