The Estée Lauder Companies Inc. (EL) 1 Nov 232024 Q1 Earnings call transcript

Good day, everyone, and welcome to The Estée Lauder Company's Fiscal 2024 First Quarter Conference Call. Today's call is being recorded and webcast.

For opening remarks and introductions, I'd like to turn the floor over to Senior Vice President of Investor Relations, Ms. Rainey Mancini. Ma'am, you may begin.

Hello. contain Fabrizio Executive and Financial statements. materially press Vice of could remarks results are and Executive Officer. Since actual release call me cause you'll our Travis, let these find filed from Tracey President today SEC, and today's our Freda, to differ with Chief President forward-looking Officer; many refer reports On you statements, the our where forward-looking to and that Chief factors underlying adjustments business, sales and otherwise translation. currency our the commentary our facilitate on restructuring impacts results of To organic growth the release. Unless financial the expectations noncomparable and the impact and of our discussion of net press excludes all stated, other disclosed acquisitions, foreign before also closures is divestitures, charges and in brand

reconciliations between our section Investors and GAAP on in non-GAAP of and release our can You find press the website. measures

sites directly now It we consumers, products As the through include sales of Instructions] And sales retailers' a that through over to brand.com call through turn online sales our our reminder, websites. to our references includes estimated and [Operator make I'll third-party to our Fabrizio. also platforms.

and Rainey, us discuss outlook everyone. XXXX year first We hello appreciate to profit revised XXXX you for to quarter joining results, and year fiscal benefit to our fiscal accelerated you, plan Thank recovery and XXXX.

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adjusted outlook quarter EPS. to results. diluted the turn for Organic for expectation our our now me sales decreased sales and Let XX%. exceeded organic delivered We first

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retail in expect end Asia the part of third reset by travel to this, inventory we As quarter. retail continue the of to

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our recovery as of Let me well share accelerated profit with you across the expanded pillars as plan. these framework and progress our

gains the social we results extending media organically. across stellar we Latin were fiscal double-digit growth balanced up brand in strong of are each EMEA's Germany. on store strongly high-quality India markets with Mexico driven achieved the we where In gains first markets excelled, achieved online our more a growth emerging driven standout digits the U.K. that. was once and by engaging as in around by hero double the XXXX emerging impressive Western in did M·A·C. In Ordinary America, developed prospered. world our and activation achieved on First, the across EMEA, resonated we focused market, consumers year Europe sales and in beauty Organic extended and products by by the share numerous we driven beauty again gains and quarter, just our prestige remains prestige by Brazil and and The and In portfolio. We we results. innovation. In brick-and-mortar vibrant,

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quarter by our we led are double-digit Japan a that contributed, direct-to-consumer once growth Around in organic to business portfolio well. Australia global sales renaissance Every world, freestanding brand category. global enthusiasm is Asia Asia been organic in single-digit basis, the Our the to robust high in each Makeup again embrace thrived to thrilled desires. they ready retail. Americas, Pacific and makeup contributed by and the catering we especially Pacific. On sales in infusing, local and pressure in performance driven markets category the diversified consumers have region offset as from EMEA the the our growth performed as meet the in for travel the again stores their

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second Moving to our pillar.

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from Asia Let individual me travel travel to third capture demand now return the in pillar: the retail. discuss

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upon our We are plan. profit and expanding accelerating recovery

year plan expect XXXX. consists operating of margin. X gross $X to and across We each XXXX blocks of The $XXX to profit operating billion and improve margin of fiscal incremental to building realize million

and First, mix consumer across luxury we optimizing especially driven across by on preferences brick-and-mortar brands, in expanding elevating most and online. by care fragrance, are direct-to-consumer our skin ecosystem by focused

identified through Second, realization value accretive maximize to many opportunities price innovation. we and better have

few facility strategic years, Third, new notably China online we over last most Japan, our the made manufacturing we capabilities. Shanghai leverage in our and increasingly in innovation the labs intend new expanded to have investment

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efforts extraordinary Before that the around social the sustainability future our fiscal year across of of I release ESG made the employees today, areas close, we our and will I'm share our world goals. and previously pleased report, possible advancement XXXX to focus impact by stated

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and everyone. Fabrizio, you, Thank hello,

plan. order to Let brief in outlook revised and profit fiscal majority recovery with my discussion me our the our results begin review a of XXXX to devote of quarter first our

region as by first digits sales Our From share standpoint, declined and in by net both beauty Pacific X%, in region, were North Asia per $X.XX. the the rest Mainland strength as SAR our was slower-than-expected specialty-multi organic led growth ] driven Americas China. continued and in sales in continued in prestige several led bright and incremental Australia. geographic of in well organic headwinds a growth in XX%, growth earnings X% and double-digit sales in net net well fell as in channels. Organic primarily Kong online and was triple-digit brick-and-mortar spots the There strong growth of to strength in quarter from [ increased makeup recovery due by Hong Japan mid-single-digit overall the single America as

the where Our and markets. by growth by Tom X% Middle more travel most net and care Asia overall hero double-digit in Germany retail fragrance developed growth emerging in net increases SAR region, X%. makeup. offset growth benefited rose retail Labo and with growth, rising to from Pacific. business. The compelling performance well in sales a activation the Organic growth traffic in led in due Americas sales consumers Americas. Organic our and brand of East sales of saw as innovation Kong markets, Ford to in makeup Africa to business lead well than Strength to compared only restrictions in Europe, net the year our the continued well also digits double from in category the fell was strategic net product perspective, strong ongoing COVID-related with as products travel brick-and-mortar resumption sales innovation in as we the rising in France. From investments organic Western skin and continue new markets. Hong fewer the our rest contributed propelled from to driven also challenges U.K., Organic in due headwinds tourism. as X% the these resonate Le Asia and to in and in increased the last

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took expense of basis due XXX pricing were strategic to Tom to last the year brand. year. to acquisition Our of advertising past lower incident than to own year. activation. Operating financing by pay to benefits momentum, at million, and operating we second collectively now the the basis The increased declined as impact we growth care dilutive as related accounted as year. Operating in in plans points the samples, XXX sets innovation sales compared longer including year. activities, savings this in beginning selling Diluted of cybersecurity products of areas the margin in where X.X% gross income half promotional support our royalties an such we last prior accelerate and from last 'XX, the EPS, the disclosed debt Ford which consumer driven and margin increase July and of by to $X.XX and sales. was the largely obsolescence EPS XX% had of We increase such points EPS. offset to compared neutral primarily higher reduction was we no percent The more and fiscal for $X.XX declined compared points reflecting that of production The from items, as XX% the expenses contracted basis overhead the decreased to a to XX% investment to from actions accelerated charges key skin $XXX the of to we XXX under-absorption maintain plants fiscal our in from our the brand promotional interest

$XXX million compared and offset from including last During operating working partially through expenditures, million lower inventory to the net of million stockholders to in million activities dividends. capital, by $XXX decrease in levels, last in lower $XXX levels We year lower income. $XXX returned quarter, we net we capital from cash invested flows cash reflects year. The utilized

year. quarter to full Turning our second the now and outlook for the

pound, that activity the As growth our evolve to as to the retail outlook delivered reflects are the in spot other the expectations, the while $X,XXX currency Fabrizio pace slower-than-expected diluted unstructured for lowering and Asia the also Middle second This China. the full continue yuan balance rates EPS Korean fiscal mentioned, disruptions the headwinds. Using the as overall in business and $X.XXX September the and of anticipated we impact and quarter. of currency on Chinese during is well the to reflect our This 'XX for the translation of East we QX the of recovery reported slower-than-expected due risks second won, prestige for reduction $X.XXX headwinds of for beauty travel $X.XXX market year quarter for parts and as external euro, negatively of to potential year. well Israel includes incremental in for as for the containment Mainland the XX sales in

sales by anticipated growth the in each to more XX%. reported our X expected growth of retail quarter in the quarter sales Asia our Mainland organic for business markets from China further X% and are to sales business in pressures travel expect disruptions the We decline than to globally. Currency risk percentage The second impacting offset point. to anticipated incremental translation Middle East second and other potential continue dilute for to are

tax dilution interest expected includes is XX%. net business translation. The from and constant and risks currency quarter year of We full expected potential approximately other of a of XX% adjusted of Middle assumed are disruption in decline expect and effective the EPS between $X.XX for approximately This EPS parts in $X.XX by XX%. Israel to expense to adjusted between $X.XX EPS our from East second $X.XX. decline In rate to dilute and increases currency, collectively XX% to $X.XX

full range of of the dilute Middle an sales increase anticipated organic year decline X%. between For the and growth to we to sales the business the are percentage fiscal each East in point. translation a expect risk of further disruptions X% for X year, reported and by Currency potential

lower year dilute This approximately to and full disruptions risk the translation. year other year from full expect geographical East full be expect X.X%, from EPS between a adjustments. are The now the XX.X% effective estimate year reflecting to to EPS to before effective XX%. rate tax EPS earnings. Diluted expect by We well potential range charges as $X.XX last $X.XX full We from further currency $X.XX. approximately the be includes XX%, our expected tax between interest our Middle is to and operating and restructuring we growth margin and constant X% currency, to in level. to $X.XX due as contraction business of expense and $X.XX between year fall sales of increases expected In mix rate collectively our in the approximately XX% of

initiatives and the substantially which to efficiencies we more priority in development progressively deliver is many plan fiscal 'XX plan X local and to This we margin expanded meaningful rebuild gross this accelerate plan pace profit markets. The our fiscal plan 'XX. fiscal to Given also 'XX go-to-market the 'XX. support 'XX, support over of to our realization fiscal areas operationalize of the is will agility target operational in We margin rebuild to benefits expect and to the years. the designed to our million $XXX next margins our while in a operating incremental at facilitating the the to initiatives accelerate multiyear advanced beginning profit expected amount enable drive and billion backdrop $X of of to half for to fiscal operating challenging profitability years have specific in aim improvements of second initially recovery

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investing Our to in long-term profit target are plan also recovery accelerating driving will profitable OpEx that activities while growth. further reductions consumer-facing and recovery imperative

related in recovery encouraged well actions February. In to markets. are while markets, the slowed have include transportation. head as costs as indirect as volatility quarter in share we Our T&E pace in second are geopolitical brand profit take as we our procurement, call well confidence intensifying and of isolated and during our main the We earnings of closing, in to certain few count seeing our recovery macroeconomic plan markets portfolio These containing of across just strength expect under by unfortunately areas our a focus are we examples anticipated reduction recovery to more and weakening consumer plan.

confident incremental to for our our drive growth. momentum Given for few in certain to future our are profitable the optimism next taking seeing engines ability our remain support of rebuild and The challenges, actions resilience global drive positive through prestige margins plan as and the multiple gains brands give globally. are of recovery our desirability about our in our well prospects the to advancement corporate we markets as of in sustainable share progressively us and intention the all of the to demonstrate of profit categories growth the markets across long-term strategy these over long-term and years. We our beauty profit recovery we

in their achievement in this sales next profit second before, Our be to to which profit like time. challenging recovery remarks. we prepared globe to begin continuing the the these efforts concludes our year, for of and our our recovery at the plan I half with results and implementing We'll finalize deliver around as and employees the plan, commitment growth, combined the take our this happy would times. That appreciation during support to extend few margin to return questions of to your said rebuilding heartfelt years. I

Instructions] first comes Mohsenian today Morgan Stanley. question Our from [Operator Dara from

supply previously. building just of blocks we from outlined multipart that the that few So you top base, on that organizational then more case? line the are as more depressed step a like generate more issues 'XX aggressive some recovery posture $X changed. to it's but Obviously, question, then with pushing of recovery? changes has just, lead plan sounds with on internal also a think business now the that a and a forecasting. been a even base savings of even apologies Or new that? And to about just had in harder some growth a to do taking recovery this billion environment and the Conceptually, incremental savings? And for profit could not significant should top terms profit back, fiscal a here program. why recovery base think things of chain How it from Is get in b, are There's restructuring? there external greater that $XXX we million recovery, and on of depressed larger

thoughts point? the on tack restructuring more aggressive broader a just at So taking with some

difficulties be some with point, ladies we And having technical the this at line. and speaker may gentlemen,

while moment speaker line. the attempt one we to reconnect So

conference. like statement. turn floor a to quick I'd for the [Technical ladies back to reconnected the and line the to Difficulty] And do Rainey gentlemen, we over have speaker

for apologize for difficulty. Tracey now. for our Fabricio the We your you, patience. everyone, are Q&A Thank session and ready

can So if us take to Jamie, our first question, you please?

again, once question, Dara. is first our And

depressed sounds fiscal expect here from pushing more even Or blocks a the wanted just recovery $X in and profit So the start of with that base we with recovery and $XXX versus just terms savings growth b, should to a why get the not a It larger stemming is line but is a been outlined. restructuring? base to recovery profit I top clarity this levels and Is forecasting. it quarters depressed on building versus and last back, supply rebound chain apologize relative on the profit? And SG&A step -- a ex peers. harder of of X the multipart have There's and then previously million just it's in there, of flow-through question to to from had external top the Obviously, here that months want organizational new that get base? program. clarity like for some Or 'XX changes the marketing on more larger aggressive In billion taking more plan issues environment is also, the ago? And with looked theory, that internal a changed. recovery, that and are the the few to case? high has you business

thoughts a you a So tack and just on with taking about more broader aggressive any restructuring how guys think that?

the technical Thanks, Dara, for apologize difficulties. the question. And do for again, we

to that year, as profit the the we level from to As the plan, recovery Dara. indicate, incremental expect you is growth base it it depressed this relates

levels typically, the over carry we what's footprint is gross high in issues happen system, our we've and prepared years we're are for manage inventory. as So we to the We've that of -- know couple our levels thing remarks, because we does all Obviously, everything. looking and our of our of point, and you the about shocks high historic to to talked with times last happened at of affect which profit to inventory, first lead be And is, your our mentioned had margin. looking years. which at recovering when agility able

bit take manufacturing completing produce to next and out able closer supply our help certainly a the us facility being over of able inventory will of more Japan in regionalizing transit few chain have we and So terms the to years to being demand. in

gross our improve margins to and really year implemented we've in drivers have over we're that the taking which the include excess planning for a actions to about inventory. And of and Fabrizio accuracy more drive production the also to volume. a significant the year next improve that few business forecast, to process, last is business years invested in is tools leveraging the have of the We forecast, our some pull-down to our our in bit help already our of then integrated that talked our this accuracy improve less again, commercial

production So are about from down were XX% year they this what units our year. last

we're So travel in even draw trade down that to given from are anticipating more obviously, though our of the inventory the have forecast, we are some we we as, on standpoint inventory we have Asia on a to that in drawing update the growth shipment hand actions as modest the down well now taking retail.

gross that help there that So are will a taking of number margin. we're actions

going through cutting in next year addition over some of were a diluted the are SKU smaller innovation We X. or program programs that planned to our rationalization

there taking. So lots actions are of we're

those yet, are many expense growing much operate then, impact of and not this that be year finalized won't just in the given as sales our will they of lower yes, base going forward, future our flight. we off but especially are at All looking are we They level years. And of current of. actions base as and will we them how

from comes question Deutsche next Bank. Stephen Our from Powers

you as Tracey, well. I probably, guess for

It's sounds the quarter. of December Asia will what end travel the And where step be into third that will and as in be bridging battling help like second XQ in a maybe on could implied a the to implied bit profitability extend of help that's up your from at guide. Just outlook little you significant despite inventory the it will guidance. you based provide pretty more as half revenue retail least headwinds

first building the think brands if and So there, to a your is big get you just can I the again, underneath of that, it's more consumption again, visibility. Alongside level maybe you're bridge you through big Because it you might part actually headwinds. blocks you half on out very But of is this just step confidence what big help that start consumption have what inventory ship your quarter, to through the for as first view shipping. a maybe a from that -- a up. versus

would detail just some there So clarity great. and be some more

Yes.

destocking ahead prepared retail is remarks, of still that I because the in ship as to So trade. we're we no, you're more exactly right. trends retail our we The net able more ship -- our towards we are both said Asia in down assumption are trends. the towards retail, mean, travel trends the

expectation end third quarter, is of the half be so second And the by will the that in the so year. completed the that, of

given see to that when So what you step-up year. the a is this in second the our That's about towards half the part large of of big shipping part part more retail the you expecting trends it. think of half we're And second of the of that -- us year and what the are happened first changes a some change in we where reinforcement shipments low second half that quarter. in or the had, very in impacted and from of the parts policy We our the our changes. last and anniversarying policy quarter in impacted business, then had Korea policy fourth of Travel third those -- which year, our fourth we Hainan, Retail policy

that. And so as initial are of anniversarying we some shocks well of the

Lastly, than I seeing we that more travel slowly so anticipated. would come what slowly, we are say back again,

we up, the are certainly second pick what saw expecting well significant of pick levels in and the conversion lighter region. are traffic that And but changes policy we seeing to certainly will we half. conversion relative in that, pre- or gradually as the even Asia -- are seeing prepandemic up across We

don't the anything of travel combination mostly it that in well half factors, Asia It's know multiple the to add. big you terms are retail. there's some our a those pickup and of I in So are second China a bit reason of as is you in also. expectations our step-up see A want underlying if of volume. that Fabrizio, things

retail the digits want to on be continue mid-high this actually already just I retail globally. underlying estimate -- that No. is year-to-date point. our the And our -- improving retail single calendar to of add

innovation, retail is by So the is base, very by consumption consumers, the of the driven the by of the by the standpoint consumer demand from the which strength brand, solid.

year. calendar For

is the what been And are have And has For evolutions readjustment Tracey that of big inventories readjustments it's we the with. calendar difficult policies predict created volatile. anticipate, pretty to has things year-to-date. been the said, that as and these the and is dealing of

the already evolving need strong. to deliver future. But continue the underlying the that's order It's fundamentals. We that on just so in fundamentals these the to retail And not develop adjustment. are in to we them

English Sachs. from question from comes Goldman Our next Jason

the back shipments you're back if about been P&L, the retail a first look back how year. the sharing -- and tell down It catch a really a announced recovery, being the up weighed for round yielded it that really turn a up a million, objectively it where savings. 'XX. on cost-cut for different first is data it COGS once it's to talking the in, revenue where sales, problem. mean like the and to XXXX, of ] sales. slightly thinking, leverage to of for you following is were up a last in that's just get once composition any look Thanks to looks and year which that We've late trip back stop I gross on $XXX lot point actually revenue you're $XXX sales story. this does have aid at step of 'XX, sales story Despite Tracey, is quarter I leverage doesn't give going despite problem. But SG&A quarter of you encouraging problem. last was retail far in you to in doesn't you cost kind appear million, and [ back margin Revenue operational so program it's able like

back kind initiatives in announcing gone to have efficiency the with so caused last can it. you I kind of take savings out place? go So years? understand that new the the far? Where after And the help us of that you guess to to of have over run you are much enough what's the cost couple up so actions Is

Yes. great Jason. No, question,

that higher of fiscal P&L this pull-down Forward had to program, had cost margins programs. Leading a certainly XX, us look percent higher. our We points in X our operating percent obviously, able areas. create that you as latest if year a to sales in leverage activities, those over of XXX we've we of we've in Acceleration program. So margins Leading cost structures post-COVID us the those in cost in to both we by composition reinvest a were Beauty needed, of our anywhere sales year, particular capabilities Beauty the to guidance the -- in And our that to some 'XX, And see actually shared gross as well. But review, back basis you'll a be had cost-saving as did digital runway. our instances, Business program. a that have gave some through and allowed XX better functional And to are the program expanding given Forward between We were certainly, In to had points and lower. the accelerate bit marketing areas XXX basis that of some we was of service then

and regulations business the areas regulatory our capabilities programs initiatives have of and at expansion us the those area. in the program. was investments the our That and in do little needed our delivering a -- the well. going years, we in in that time. Advance few to to some that of have, also close area our doors been terms a But underproductive need that in both allowed forward. We've So or we all successful regulatory but as expense program of of marketing increasing with support brand in countries like given margin and the that leverage invested claims sustainability -- we number of bit in adjustments cyber, includes brick-and-mortar made last take over

of looking that we shocks is as we years, that the forward, I said been the as a levels or where org over other margin there, recovery areas, are couple were have looking profit last fiscal other are we've savings number we also And we're procurement in that, made So before, the at that look at back we had we not investments expense margin because needed we focused investments at, efficiencies. of gross 'XX in from some both have before. expect the can than program company. Certainly, on were even we our at the that program everything get gross to

the February, the as plan come focused P&L on to recovery we more But it's our look on will when Jason. give in quarter final are So believe you second actually as what you results -- are, structure we January, me, like.

we like add that Yes, the plan And gross fact point to you margin. -- said, needs as to And needs really the just in also profit new to to Jason, rebuild recovery as going our would the just would do on in Tracey that areas also our other mentioned are that we sales capability align in to invested many IT work current the well. in levels. that's

give and in affect, So in will areas X will more the those of will focus. February, XXXX. the XXXX are how and specifics we big impact And details much majority

I a on just say the plan. want clear aligned it's so And entire is pretty organization this plan. to

already teams on have working this. We

and Remember, brick-and-mortar. in sales this that of to tailored want We online announced part are area And completely go-to-market didn't program the the was the we the to of business clarification COVID disrupted said did I because the then XXXX the committed selling. it to on a It the programs the had deliver you versus in make lot fact That increased deliver just a saving saving. that. in was that deliver focus. our sales

the and between what did. -- to online need the cost and to we balance resources right we X the future future So create brick-and-mortar reallocate That's more to in less of to areas.

did in invested trends Today, are we the had we the cost fact, online leveraging the the In COVID selling progress. to benefits. created. areas in our reduce that we still brick-and-mortar And accordingly

these in did have we kind been what when So the in successful wanted. of we pretty delivering programs, we past

Our Raymond next question from Tong Olivia comes James. from

give digits. channel, the travel duty-free or we mid- inventory groups the high retail number individuals And But category? retail, question with you on have then bit on which still is up multipart your clarification a that What's brick-and-mortar that sense sitting A point in? of clarity to to a a a much just us on better global little or a few. for gave the in into a you can visibility versus single bit first, you of how and for follow-up of

was Yes. Yes, I our to. referring was it -- retail it's sales

that So trend. the And continue up improving date. calendar of retail trend estimate for future is in to to year-to-date our XXXX, mid-high our digit is single

the negative the Tracey sales months, the we year fiscal of in was And solid. is net ] this retail that for that is this that to month X see [ readjustment first point first inventories our related my are sure, mentioned. of So

-- numbers, in one retail inventories visibility say travel travel ex and just clarification. retail, Second, we way, on when retail the by the on the say this these we

So of retail we and make it's aligned the the as retail we and to trying end the is said they quarter. the be when The aligned, will are the retail point travel number, will travel third once the of number. net that be

with retail As in travel making. retail, -- are already significant to we stock we inventory of visibility quarter. the be this trying expectation by moment, of That's is make. Anyway, the the these a in had we have And on into the the aim progress this the the numbers. point in line retailers And to of first retail reduction we solidity of end March.

have visibility. We

end accelerate to that have the we -- are the for are We of in March, to retailers the of on understanding programs what where to the programs how we do to existing stocks in the That's have we and we finally, with And obviously what these areas. retail retail net exactly replenish aligned. and doing each program. innovation one aim and are sell need the are all in the what our and today, order by sales

Citi. Filippo Our from next question Falorni comes from

ask a about a a the talked It's slowdown quarters. prior on bit you first to wanted to I quarter where guys relative China. So question Mainland of

level can within mass care a some you any then the more of in So some both seen But seen little give standpoint, category, you from bit context trade-down maybe, cosmetics? and the doing a the brands And slowdown on seeing on competitive Fabrizio, that you're skin on we've local have the side. better, category?

No. Yes.

first all, quarter China. of the X% in growing was market the in First

growth retail to X%. market but Our are retail our specific and down we year-to-date China calendar But in growing, in share. flat, was quarter, market the quarter went during is this building that

in that recovery of making than estimate we year. -- the key the point. are the our of the projecting beauty the that, and Now That's was in the of one market the readjustments is higher in prestige --

prepared softer and in this why versus level. the so said is particularly remarks, year -- trend Tmall on Single the reflecting that's And my I in a are this trend Day, and we general, the Also, a current presale confirmation. ago, confirms X% as period of

the we are about the for sure. -- start is brands the a which that part doing in confirming of of question, more in is was presale Single part your in term softer events we of is local but are the -- November, mass there the next the market. In the are optimistic moment Now China well, Day for masstige, limited. well doing of and prestige, in impact In second

mass in at being big And we to solid prestige mass time. in point this general. see movement comparison don't from prestige And to so we see a in

Our America. from Brian of comes question from next Spillane Bank

-- cost go to and question how wanted it aspirations, the of try previous you much to is the about business savings? the from expanded And much mix? to retail back profitable. do the And travel just kind is I will think to so to how margin of resetting Jason expect English's as forward rebuild we come regarding Because look margins. guess, I

would back Or to we you so for up retail how to it retail years if as percentage get where of was X cyclical able ago? to travel kind get need it is? And be given a of do travel smaller reasons sales there similar ended being

great question. it's Yes. a No,

of retail, future the now, many sure terms by return a where retail to which prior about the return but is Given in are encouraged levels? others growth travel right and we, a are very we to Don't thinking know. certainly, I'm travel of

the You market now continue growth expect would shifted well. that I the of local to the to see market. And as local to has in much have volume

it the consumer particular may as there in to other consumption rebalance well a Chinese be relates consumer groups. as So as for the perhaps

plans great. that counting it But margin profit -- not growth So our If we some levels. travel to get back and return that profit that of are retail previously. to with markets brands relying had we're margins to on on combined for program, forward, we recovery going that's have not to the prior does, profit our the

that when COVID were in like happened versus X versus this on -- comparing you you years so because your XXXX. what ago -- COVID the historical previous period would the brought. volatility And I to mean offer this a perspective before during I and question of bit take

Our business doubled. in than versus more Mainland XXXX is China

this globally Our today now, estimate well that giving are XXXX actually versus by TR is now, is we you to below. business with

So the we -- has then actually now, also true driven was during reabsorbed. TR period, it's that by But been but previously, that phenomenon have this the by business, this discussed unstructured COVID up.

this of in that Chinese be in the -- was lot Hong and visited China. was around -- to in the Paris, at a was So to this sales what was a like, happening up base consumers travel that New the of in with Kong, of COVID. travel. consumer Mainland XX% were the was retail that And was XXXX business there profile that lot sales were I don't There also et was in estimated total a cities the in time London, the consumption to York, know, Chinese their before This Tokyo, of cetera. world

during obviously, now fronter COVID, So the all were closed.

China. Mainland consumption this into So back came

the In our in world fact, has China doubled as business today, was. I said, Mainland

it for like good retail, the development things of happened, Hainan into some which very all went are term. long and the And travel that other

and some are term. is And went it which these of now of positive the the for readjustment. things down unstructured going long And the business, part actually into is

business and result Mainland to China, of result we in for the the and these resulting support. are which is a because frankly sustainable movements the -- solid long so will all continue supporting And term is the solid

center. an have built We R&D

the algorithm. At derisked said, to down. in future also be the has business very and need in that period we going time, this is guidance in of business, abilities up we fiscal core In going the is consumption it's COVID it the important West. to coming improve. and amount that's continue believe the up in are the -- And of we been went so in and by And create forecast same will travel TR travelers. the announcing And future going The that. And this is meaning volatile what world, moment, support more for and in term and we business consumer that's locally what resulting derisk over growth business year. to these into of are of we gradually We that West good the the regular planning movements again as is are that to to back and this will to Chinese are the invest of that travelers have term market Asia to long lending but this be in place relatively continue all to us this we regular time business the relevant still more we traveling travel created in than the to the our in continue profitable limited, invest into the sustainable the this this and to.

Okay.

get to if of previously? can we retail the algorithm clear, back not big be as is was travel to it as basically profit So kind even previous and Hainan

Yes, we believe so.

to question-and-answer today's I'd session. like end And ladies gentlemen, for reached to with of back floor the and the that, any turn closing over Fabrizio we've remarks.

at wanted enormous you. this Thank and the on of that this clarity I moment. And summarize focused try to we part what to sure you this moving just are make in point we give

beauty period to XXXX the So industry. are as and calendar move our confidence post-COVID forward be expect attractive strong we year with company. painful, the reset final, prestige frankly fundamentals for this in We

that very digit recovery high general, calendar performance before. retail developed both mid-single emerging, sales markets I year-to-date in solid and all in the quoted in remain Our and

Tom active solidifying is lot didn't which with our a brand recent we Our portfolio. definitely than Ford, in is luxury fastest-growing at entry better strategy a in Ordinary, our portfolio our the but is ever brand call the of brand of growing and talk acquisition becoming powerhouse segment derma this and The

the but Our year for innovation that year expansion and even it the space fiscal opportunity robust white we gets XXXX, have in fiscal identified. bigger XXXX stronger pipeline is better with into and

We are sales reduction China private discussed retailers during the in as track and with to on net call. retail, inventory via retail align our

plan, you sales the to future to importantly, focused and today. growth. And and are new by strengthen to level growth consumer-facing do to rebuild cadence are delivering time activities. current our profit balanced accelerating work, the margin in for our by leverage thank via market, expenses focus return And our the to together, intend our more gross preparing historical this to and capabilities channel. And sustainable attention sales and profit we our your align the on we recovery further of We strategic talent your a for have and

for Ladies and joining. We conference today's presentation. you we'll with that, gentlemen, and call conclude thank

You may now disconnect your lines.