Puig Brands, S.A. (PUIG) Earnings Call Transcript & Summary

Good evening, everyone, and thank you for joining us as we discuss our sales update for the third quarter and first 9 months of 2026 that ended on the 30th of September. Today, we are joined by our CEO, Jose Manuel Albesa; and our CFO, Miquel Angel Serra. Jose Manuel will share some brief remarks, and then, we will open up the line for Q&A. The presentation and press release are available on our website, and you will also be able to access a replay of this recording on our website after the event. With that, I will hand it over to Jose Manuel.

Thank you, Varenya. Good evening, everyone, and thank you for joining us today. I am pleased to be speaking to you following another strong quarter for Puig. In the third quarter, we delivered record sales with like-for-like revenue growth of 5.6% or 7.2% on a reported basis, reflecting continued momentum across our businesses and the strength of our portfolio of brands. These results demonstrate the quality of our business model, the desirability of our brands and innovations and the disciplined execution of our strategy by our teams around the world. As we move into the final month of the year, we continue to be focused on executing against our priorities and remain confident in our outlook for the full year. We also look forward to welcoming many of you to our Capital Markets Day next week, where we will share our strategic priorities and ambitions for the next phase of Puig's growth. With that, let me share more details on our performance during the quarter. During the first 9 months of 2026, we generated net revenues of approximately EUR 3.7 billion, representing like-for-like growth of 4.8% ahead of the premium beauty market and 4.1% on a reported basis. Performance was broad-based across the business with all segments delivering positive like-for-like growth and particularly strong double-digit performance in niche, makeup, dermo-cosmetics and Asia Pacific. We are still in the process of collating the global sell-out data for the quarter. But from early results, we can see our sell-out in fragrance in the U.S. was very strong. We are also seeing growth in the European top 5 markets. Similarly, very strong sell-out trends for [indiscernible] across the U.S. and key European markets, supporting the strong results that we have been sharing. The third quarter marked a record quarter for Puig with net revenues reaching EUR 1.4 billion. Like-for-like growth was 5.6%, while reported growth reached 7.2%, benefiting from favorable currency movements during the quarter. This performance reflected continued momentum across all geographies, with particularly strong contributions from Fragrance & Fashion and Makeup. The quarter reflects the momentum we have continued to build through the year with third quarter growth improving to 5.6% from 4.1% in the second quarter. Let me share some more color on the performance of each of our business segments. Fragrance & Fashion continued its steady performance, generating net revenues of EUR 2.7 billion in the first 9 months of 2026, representing like-for-like growth of 3.8%. The segment remained the largest contributor to our business, accounting for 72% of Puig's net revenues during the period. It's noteworthy that all our Niche Fragrances brands grew double digit for the first 9 months of 2026. In the third quarter, net revenues reached EUR 986 million, with like-for-like growth of 3.9%, in line with the first half. This performance was driven by the continued strength of our Niche Fragrances portfolio alongside another strong quarter from Carolina Herrera, both of which grew double digit. After 5 years of exceptional growth, during which Rabanne and Jean Paul Gaultier multiplied significantly in size, the recent quarters have been a period of normalization. Recent innovation are now beginning to reignite growth, giving us confidence in the next phase of their development. 1 million Black from Rabanne entered the top 10 fragrance line in the U.S. and in European key markets in its launch month. La Favorite, Jean Paul Gaultier's first feminine fragrance in 10 years, has entered the top 15 feminine fragrance line in France following its recent launch. Early results are encouraging. The segment remains steady, and we expect similar performance to continue into Q4. Makeup was the fastest-growing business segment during the first 9 months of 2026. The segment generated net revenues of EUR 628 million with like-for-like growth of 12% and represented 17% of Puig's total net revenues. In the third quarter, Makeup delivered another excellent performance with net revenues reaching EUR 270 million and like-for-like growth of 16.1%. This strong growth was supported by healthy sell-out trends across the regions, continued market share gains, innovation and selective distribution expansion. Innovation remained a key driver of growth, including launches further strengthening the Airbrush franchise from Charlotte Tilbury. We were particularly pleased with the momentum in the category during the quarter. All current sell-out trends remain healthy. Following the strong performance delivered in Q3, we continue to expect sell-out growth to be in line with the first 9 months. However, we expect Q4 sell-in growth to be measured against a very demanding comparison base. As a reminder, in Q4 2025, the segment delivered 26.5% growth. Turning to Skincare. The segment generated net revenues of EUR 414 million in the first 9 months of 2026, representing like-for-like growth of 1.3% and accounting for 11% of Puig's total net revenues. In the third quarter, Skincare generated net revenues of EUR 135 million, representing a like-for-like decline of 0.8% or 0.6% positive reported growth. Dermo-cosmetics is an area of strategic focus for Puig, as reinforced with the recent announcement to acquire the remaining 50% of ISDIN. This part of our skincare segment continued to perform strongly in Q3, delivering another quarter of double-digit growth led by our dermo-cosmetic brands, while premium skincare continued to be soft during the third quarter, reflecting underlying trends in North America. The continued outperformance of dermo-cosmetics reinforces our confidence in the long-term opportunities within the category. Let me now turn to our performance across geographies, where we delivered growth in all regions during both the quarter and the first 9 months of the year. EMEA continued to deliver healthy growth, generating net revenues of EUR 1.9 billion in the first 9 months of 2026, representing like-for-like growth of 3%. The region remained our largest market, accounting for 52% of Puig's net revenues during the period. In the third quarter, net revenues reached EUR 728 million, with like-for-like growth of 3.8%. This performance was supported by the continued strength of niche fragrances, dermo-cosmetics and medical as well as distribution gains across the region. We are also pleased to see that the disruption experienced in the Middle East during the first half of the year did not have meaningful impact on the region's performance in the quarter. In the Americas, net revenues reached EUR 1.4 billion in the first 9 months of 2026, representing like-for-like growth of 3.8%. The region accounts for 36% of Puig's net revenues during the period. In the third quarter, net revenues reached EUR 507 million with a like-for-like growth of 6.2%. This strong performance was driven by Fragrance and Fashion and Makeup, more than offsetting a demanding comparison base from the prior year. APAC remained our fastest-growing region during the first 9 months of 2026, generating net revenues of EUR 430 million and like-for-like growth of 17.9%. The region accounts for 11% of Puig's net revenues during the period. In the third quarter, net revenues reached EUR 157 million, representing like-for-like growth of 12.9%. This performance was supported by strong momentum across categories with particularly notable growth in Niche, Fragrances and Makeup. With 3 strong quarters behind us and continued momentum across the business, we reiterate our confidence in delivering against our outlook for 2026. Before we conclude, let me highlight a significant announcement that we made last month. On the 14th of September, we announced an important step in our long-term strategy. We reached an agreement to acquire the remaining 50% stake in ISDIN, which will bring our ownership of the business to 100% upon completion. ISDIN is a highly attractive brand at the forefront of skincare, photoprotection and photoaging [indiscernible] in medical credibility. It brings a strong track record of growth, innovation and category leadership. The transaction further strengthens our position in dermo-cosmetic, a category where we continue to see significant long-term opportunities. We'll share more color on this next week at our Capital Markets Day. Under the terms of the agreement, Puig will pay EUR 900 million at closing, expected in the first quarter of 2027, together with a deferred payment of EUR 300 million payable in the first quarter of 2029. I also want to highlight some events from the quarter that embody the spirit of Puig as a home of creativity. Our brands continue to demonstrate their cultural relevance and creative strength. During New York Fashion Week, Carolina Herrera celebrated its 45th anniversary with an acclaimed Spring/Summer 2027 show, while Good Girl, our leading feminine fragrance franchise, marked its 10th anniversary. We were also pleased to see that Dries Van Noten's Spring/Summer 2027 collection received strong recognition from leading fashion media with frequent mentions in the top 10 shows of the season. Before I conclude, we are very much looking forward to having you join us for our Capital Markets Day on October 28. It will be an important opportunity to share our strategic road map and the key drivers that will shape the next phase of Puig's growth and the long-term value creation. With that, thank you for your attention. I will hand it back to Varenya.

Thank you, Jose Manuel, for your remarks. Those interested may now register for the webcast of our Capital Markets Day at www.puigcmd2026.com. The presentations will begin at 13:00 CET on October 28, and we look forward to you joining us. Let's take our first question.

The next question comes from Aron Adamski from Goldman Sachs.

On [indiscernible] Fragrance, could you please discuss the trends you've seen across Rabanne, Carolina Herrera and Jean Paul Gaultier and also whether any of them are tracking below expectations despite quite an easy comparison basis in fragrances that you were lapping in the third quarter? And then looking towards the remainder of 2026 in Fragrances, I think you will be lapping quite a tough [indiscernible] 2-year comparison base in Fragrance. So do you expect that division to grow through the fourth quarter? Or could it perhaps turn negative?

Thank you, Aron, for your question. Well, yes, we'll start with the sell-in. In Fragrance & Fashion, we delivered 3.9% like-for-like growth in Q3, a 5.7% in reported. And it was supported first by double-digit growth in all our niche fragrances and in Carolina Herrera. Referring to Rabanne and Gaultier, as you were asking before, as we discussed in the last quarter, those 2 brands have been doubling and tripling their size in the last 5 years. And in the recent quarters, we experienced a kind of normalization or consolidation of this strong growth from the past. So we are starting to see that we are reigniting growth. We are happy to announce that 1 Million Black, which was launched worldwide by end of August, is reaching top 10 line positions, both in the U.S. and in Europe. And this was the first step of reigniting growth. As you remember, second step will be next year, the launch of our new masculine franchise. In the case of Gaultier, while also reigniting growth, we just launched a little bit later La Favorite, only in key European markets. We will have the global rollout next year. And we are happy with the results. We are having a top 15 line with La Favorite in France, which is one of the most difficult markets to penetrate with innovation. So we are quite happy with those results. If we move to sell-out, as you remember, we said that we report sell-out in a 6-month basis. In the [indiscernible] Half 1, we reported an increase of 0.3 points in sell-out. We are now collecting global data and our early results. We see a very strong sell-out increase in the U.S., and we are also, of course, seeing growth in the Europe top 5 market. So we feel comfortable with those results, in line with what we expected. And this Q3 performance is very much in line with our expectation for the segment. Regarding Q4, we feel very comfortable with inventory levels in the channel, and we see a Q4 not very different for the last 9 months. Thank you for your question, Aron. I hope this answers the whole question.

The next question comes from Tom Randall from Jefferies.

On Makeup, so you've highlighted strong sellout and market share gains and then some distribution expansion as well. Do you mind quantifying the distribution gains that you're seeing? And then given the strength of the sellout, should we still expect any meaningful channel inventory adjustment in the fourth quarter? Or would you say that risk has largely gone away?

Thank you, Tom, for your question. In the case of Makeup, as you were mentioning, our principal driver was a strong sell-out performance, a very strong performance that we have gained market share across regions. So innovation was an important contribution, very particularly in the Airbrush franchise. And as you said, we have some modest distribution gains. As we already shared in Q2, we opened those 30 [indiscernible] doors in [indiscernible] Boots. We opened some few doors in Sephora, in countries like -- in some European countries. And also, we complete our distribution in [indiscernible]. But once again, those are modest distribution gains. The big reason why it's a very healthy consumer demand and a very strong brand momentum. So what we could expect for Q4, we have to realize that we have a very tough comparison with last year because in Q4 last year, we grew [indiscernible] 26.5% in Q4. So in terms of sales, we feel very, very comfortable with the brand performance, and we [indiscernible] some continued digital trends having in mind [indiscernible] anniversary this Q4 that was really important last year. Thank you, Tom, for your question. I hope this answer.

The next question comes from Celine Pannuti from JPM.

My first question is on the Fragrance market. So at 9 months, you were growing at 3.9%. You said the sell-out at H1 was a bit better, a bit more than 4%. Do you think you are tracking in line with the market for Fragrance? Can you give us a bit of a feel for demand because it felt like the market was growing more like mid-single digit, and it seems you are doing a bit less than that? And also in Q3, you -- well, in Q4, you are alluding to the same performance as in Q3 despite the tougher comp. Is it because there is a bit of a change in timing of sell-in to the trade? What's driving your expectation on the 4% for the fourth quarter? And can I ask as well my second question on...

Sorry, Celine, can you -- do you mind repeating the question? We had a bit of -- we weren't able to hear you very clearly. Could you go a bit slowly and repeat the question? Sorry about that.

Yes, no problem. So my question is on Fragrances. You grew 3.9% at 9 months. I just want to understand that in the context of the Fragrance market, are you seeing the Fragrance market around mid-single digits? Are you slightly underperforming that market? I would like to have a feel for maybe demand by region. And also you seem to indicate that Q4 would be the same as Q3 despite tougher comp. Is there -- what's driving that? Do you have a change in your sell-in timing for the year-end season and that drives your expectation of around 4% for the fourth quarter? And then in my follow-up question on skin, can you say what's the difference -- what's the proportion of dermo-cosmetic versus [indiscernible] luxury skincare? I'm trying to understand like the weakness in [indiscernible] skincare, you mentioned the U.S., but if you could elaborate a bit. Is that from Charlotte Tilbury? Or is it from your other Skincare brands?

Okay. Celine, thank you for your question. I'm going to start with Skincare, and we'll continue with Fragrance, if this is okay for you. So in terms of Skincare, we have 2 very clear different dynamics in Q3. From one side, we have our dermo-cosmetic led by Uriage, which we maintain our double-digit growth from the previous quarters and remain a strong part of our portfolio. In the other side, we have this premium skincare, which is roughly Charlotte Tilbury Skincare and Dr. Barbara Sturm that remains soft in this quarter. And the reason why mainly was North America. We see the high-end skincare market in North America decreasing at 5%, and that explained the situation of this quarter 3. What we see -- as we go ahead, we see some continuity for Q4, and in the next year, well, first of all, we will reinforce our dermo-cosmetic side with ISDIN. And in the case of Dr. Barbara Sturm and Charlotte Tilbury, we have a very important pipeline of innovation. In the case of Dr. Barbara Sturm, addressed to the U.S. market, and in the case of Charlotte Tilbury, more addressed to affordability. So that set up our vision for Skincare. We'll share more with you in our Capital Market Day. Around Fragrance, I think that Capital Market Day will be a great momentum to give you a clear outlook of how do we see the market evolving through 2032. We see a similar trend for Q4 as a market and as our performance. We are really outperforming market big way in our Niche brands, and we are very happy with the results. Carolina Herrera is also enjoying a very nice double-digit growth with both Good Girl and La Bomba growing. We are roughly 70% ahead of our budget in La Bomba. So we are also excited. And the first results of our innovation in Rabanne and Gaultier seems quite promising. So we feel confident with Q4, and we will share more color of how we see the market -- Fragrance market evolving for the next year. I hope this clarifies your question.

The next question comes from Joffrey Bellicha Meller from BofA Securities.