Coty Inc. Price & Performance (COTY)

China is not a large percentage of total, but it's sounds like Yes. Thank you, Thanks for the question. So just to give you, I would say, some, as you said, some magnitude. Indeed, as we flagged, indeed, during the last quarter, I mean, we discussed that we were seeing some pockets of the business, okay, where there were some challenges and we were expecting that these pockets, I mean, will stabilize. And in fact, we see that there are worsening in the Q2. In fact, we are talking about 20% of our business, so which is China, but also travel retail Asia. Australia, ANZ, and also Consumer Beauty. So this is really the scope we are talking about And indeed, so if combination of China, travel, retail, Asia and Australia are impacting your prestige business in terms of selling. By roughly three points. This is really what you need to have in mind. And if we look at the consumer beauty side, indeed, this is really on The U. S. Consumer beauty challenges, which is also impacting by three points. So these are really the two areas of of disruption, if I can call them this way. At the same time, so indeed about retailers, indeed, I mean, we have good, especially in prestige, especially [indiscernible] during the holiday season, but we are seeing low replenishment from retailers.

So we are seeing that there is a global pattern that they are very cautious on their inventory management. And indeed managing these their inventories very, very cautiously. And this is indeed creating also the gap between the the sellout and the sell in. And if I just take concrete example on [indiscernible] where indeed we have I mean, Fragrance as a whole is performing well. I mean, we see our Sellout being between the the mid to high single digit but indeed we are seeing selling below due to this very cautious behavior by the retailers. The sellout is very healthy. Oliver, this is Sood. Just to complement on Laurent's answer. We don't see this replenishment happening in H2. That's what explains our prudent guidance. And we hope that this would happen at the moment or another, especially given what Laurent just described, which are the very strong sellout we saw during the early season and we continue to see behind our fragrances in both divisions.

Our next question comes from Rob Ottenstein from Evercore. Please go ahead. [indiscernible] You obviously touched on it in the in the release. I was wondering if you could go into a little bit more detail On both the structural challenges that you're seeing in U. S. Color cosmetics and the competitive challenges [indiscernible] how you look to combat those going forward? Thank you. [indiscernible] This is Su speaking. So indeed, you're right.

We mentioned some structural challenges. Some of them are also I would say, challenges at the moment, specifically when it comes to the closures we are seeing in the pharma drugstore environment. So it's not just structural, a bit of these challenges is indeed structural. I believe and this is one thing that I addressed in the earnings call during the earnings script, sorry, that what makes the cosmetics category because this is the category we are referring to much healthier in prestige, is the combination of both heritage Couture brands, if I may call them like this, and indie brands, which is not what we are seeing today in the consumer beauty color cosmetics space. Where only new brands are favored and these new brands are not able to make up for the decline of the market. So I think it takes two to dance and this is what I believe is the strength of the any market and heritage brands, by the way, are still doing the biggest chunk of the sales. So I believe that the color cosmetics market specifically in The U. S. But also elsewhere would highly benefit from a same exposure between heritage brands that are doing an exceptional job, I'm thinking about CoverGirl that is the among legacy brands, the one that resist the best among heritage brands.

Thinking about Riemel outside of The U. S. Together with, of course, entering new brands, new indie brands, which are going to give a kind of excitement trendiness, etcetera. So it really takes both to grow the market. So if this and this is part of our discussions with our partner retailers If this is what is going to happen, I believe that there is no reason for the color cosmetics market not to be back to its traditional low single digit growth.

Thank you.

Our next question comes from Filippo Valorini with Citi. Please go ahead.

Good morning. Good afternoon, everyone. You talked about some of the weakness coming out of fiscal twenty twenty five persisting potentially in the first part of fiscal twenty twenty six. At the same time, you're expecting an improvement in sales growth in fiscal twenty twenty six. Can you comment on kind of the leverage that you have in fiscal 'twenty six as you enter fiscal 'twenty six to kind of accelerate organic sales growth and terms of like how should we think about the year relative to your medium term outlook of 6% to 8%?

Thank you very much, Filippo. So first, let me just remind everyone because I think this is an important element that this first half and the second half, by the way, too, is in front of our best year ever. Okay, fiscal 'twenty four was a year what the company has grown with the highest growth potentially in prestige 18% and the highest growth ever in the consumer beauty division, which was around 7%, if I recall well. So this is really what explains in a way how much the comparative has been high for when it comes to fiscal twenty twenty five. In fiscal twenty twenty six, we believe that one, hopefully the good news would be that retailers will come back to more, I would say, a classical or normal inventory levels because they cannot forever stay at this level of inventories.

I think this was an overreaction following the stocking post supply chain crisis a year and a half ago. So hopefully, there will be a kind of stabilization. Second thing, our market is a market that's driven by offers. Some competitors speak about stimulus, we speak about an offer driven market. And it's all about this. So we will contemplate for fiscal 'twenty six two very big blockbuster launches. May I remind people that Coty has been putting on the market and still today some of the best performing launches of the industry. Thinking about Burberry that is continuing to grow by double digit growth between 2030% year on year. Which is really unprecedented. TidyCosmic, the number one volume launch in The U. S. And in UK. Marc Jacobs, Desi Wilde, Hugo Boss, which has become the number number one brand of the division and of the company, by the way. So it's really an offer driven business. So we have a big innovation in the first half same thing in the second half. We are also it comes to some of our key pillar brands in the prestige division, some brands and for example Chloe was really not a brand we were playing with in The U. S. Market.

We decided to do so in the first half. And with the various strong results, so we will expand this. So the conjunction of big launches together with the distribution expansion of some of our key prestige brands in The U. S. But also in other emerging markets. Will help us to be back to growth in fiscal 'twenty six. This together with anything that is not in our control such as back to more classical retailer inventory levels And hopefully, travel retail in Asia and China, even if these are low single digit percentages of our mix, they are still heavily disrupted in the moment we're in right now.

Our next question comes from Corinne Wolfmeyer with Piper Sandler. Please go ahead. Hey, good morning. Good afternoon. Thanks for the question. I'd like to understand some of the puts and takes of the margin outlook a little bit better. Can you just describe a little bit on fixed versus variable cost structure you're dealing with for the back half how much deleverage you're baking in with the guidance and how much reinvestment in A and P and innovation and things like that? And then also I believe in the prepared remarks you discussed some softer promotion activity last quarter. Is that something that you might decide to pull on a little bit more here in the back half to help drive volume performance? Or you committed to other forms of volume activation? Thank you. Yes. Thank you. Good morning, Corinne.

So first of all, what I want to highlight is really that we are showing in this fiscal twenty five and in H1 that we have a very healthy P and L and a very healthy balance sheet. So the result is really that with I mean gross margin expansion in H1, I mean, which is close to 200 basis points. And we are close to 67% gross margin end of Q2. So it shows really that all the work we are doing really managing the food equation, we do it in a very disciplined manner and we keep focusing on this gross margin expansion which for us is really a strong KPI because of course this is really then what's fueling our investment behind the brands. And really, we keep this very, very strong discipline. So now looking ahead, talking again about gross margin, As you remember last year, we had also I mean very strong gross margin expansion in the H2, which was around 150 basis points. So now we are going to rebalance the seasonality effect so that our H2 gross margin will be slightly lower versus last year due to this high base. But it will remain 100 basis points above fiscal twenty twenty three gross margin.

So it means that our full year gross margin will land at about 100 basis point improvement. Now of course, starting from this gross margin expansion and I can detail later, but it's really the combination of productivity, still have some pricing effects, I mean stronger in H1, which because we have the carryover from the previous year. But we will have still some positive impact in the H2. Also benefiting from the mix. Then we make sure that we keep our ENCP in the high 20s, as you saw in the and we continue in the H2 to support the initiatives that Sue has just described and really to continue to [indiscernible] Then we I mean, as you know, we are putting in place a very strong savings initiatives we confirm €120,000,000 this year. It's a combination of short term actions, but also more medium long term actions, which will keep fueling, I mean, the margin for for next year. So that's really all these that we are showing that we have these discipline, but also agility to manage and to continue EBITDA margin improvement even in a context, which is more uncertain and volatile than than before. So that's really and that's why we confirm really that our see our EBITDA margin growing from 70 to 90 basis points fiscal twenty twenty five.

Means that our EBITDA margin will be close to 19% at the end of this fiscal. Our next question comes from Olivia Tong with Raymond James.

Please go ahead. Great. Thanks. Good morning. Good afternoon. I was wondering if you could talk about why you think Prestige Fragrances has been able to hold on better with respect to growth versus other categories. And in terms of the other categories, particularly mass, what you can do to with respect to innovation. To help offset the externals? Thank you.

Yes, Olivia, thank you for your question. This is Sue speaking. So indeed, it's a very interesting question, if I may say, because this is really what is the key element of the growth of the market. I believe that prestige fragrances are holding much better because they are not easily replaceable. When you like a scent, you're going to buy the scent. And anything close like.

While on other categories, specifically, for example, on color cosmetics, if you like, I don't know, the latest lip color or a primer or whatever, you'll always find something that's very close and it's fine to buy something close. So I believe that the entry barriers of prestige fragrances are higher because of the uniqueness of the creation, because of quality of the juices, [indiscernible] things that have been crafted for two, three years that are really creations together with science know how. I'm thinking about what we've been doing recently by adding molecules that act on the longevity of a fragrance. So these are barrier to entry to the category that explain why fragrances specifically prestige fragrances or fragrances with a cool, I would say, vibe are really resisting better than other categories. So what can we do in terms of innovation and other categories to fuel the growth? Well, the answer is in the first part, in fact. It's about creating entry barriers. I believe that the color cosmetics world have given up on real innovation. It has become a world of TPMs where everyone is buying from the same TPM the same kind of innovation. And you end up buying the cheapest option.

So it's really this that is missing today in this market and that we are fighting against until working on through agile innovation that we put in place recently. It's to be able, of course, to be on trend and to launch the latest buzz of the moment, but also to be able to put on the market high entry barrier innovation, something difficult to copy something that's worth the price that you're putting on it and something that will grow back the market by attracting consumers who decided that it's worth it only if it's the cheapest option.

Our next question comes from Ashley Helgans with Jefferies. Please go ahead. Hey, thanks for taking our question. So last quarter, you mentioned some upcoming kind of product in the introductions. Just curious if maybe you held off on some of those given the environment or maybe if they didn't perform as expected. And then just following up a little bit on Olivia's question on Fragrance being such a strong driver What's embedded in your underlying assumptions for the second half? About the fragrance industry? And then anything you can tell us on fragrance quarter to date? That'd be helpful. Thank you.

Okay. So let me take the question part by part. So last quarter, we mentioned some upcoming launches. Indeed, we released them. One of the biggest highlights was indeed Gucci Flora Orchid, which is really one of the biggest successes of the fall Q1 and Q2.

This is really something that was part of our agenda. Yes, to a lesser extent than what we did with Burberry Goodes two years ago, But still, it's something that is really part of the best selling innovations in The U. S. And we started that's why probably you did not see we didn't see an effect that was so high. We started with an exclusivity at one key retailer globally, which in a way didn't allow us to take a benefit from all the impact of this launch. Now it's the case. It's rolled out everywhere, and we can really see that this Fluoro innovation is doing very, very well. So that's number one. Number two, we are continuing to do key innovations on bus, Specifically on both the Scent and the LXIERS and the Audiopartan we have launched.

This is what explains that BOSS has become the number one brand of the company with a stellar growth, which is close to high single digits. So this is really also something that explains the two key launches that we have done in the first half. So are we assuming on fragrance category growth in the second half? We are also going to continue to have launches without revealing what are going to be these launches. We will continue some of the key initiatives we started in fiscal 'twenty four in the second half.

By anniversarying these initiatives last year we launched the CABYLE, Cosmic and Marc Jacobs Daisy Wild which by the way for Desi Wild has become the number one SKU terms of innovation in The UK market. So these two innovations will be announced arise Last but not least, as you've heard it during the earnings script, we are back also to key innovations behind entry prestige brands. I'm thinking about David Duff, will see for the first time a very strong innovation represented by a Gen Z favorite Charles Melton which you will see during the second half of the year.

Our next question comes from Patty Cannata with Goldman Sachs. Please go ahead. Good morning, afternoon. Thanks for taking my question. I just had one on Asia travel retail and just travel retail in general. So we've been dealing with pressures there a while now. So wondering if you could talk about travel retail outside of Asia and how your performing there? And related to that, are there opportunities to perhaps resize or reshape your strategy by rebalancing toward non Asian regions where maybe there's less volatility and more growth opportunity? I would love your thoughts there. Thank you. Yes. Good morning, Patrick. This is Sue.

Ingen, this is a good question. We started to do this in fact.

In the second half of the first half of this year, meaning October, November and December, we've shifted significant resources from Asia markets specifically China, but also the Asian travel retail to The U. S. And to European market, but mainly to The U. S. That's the reason why even if we do not communicate on this, but we saw our sellout reaching some weeks at 50%, 60% of growth in terms of sellout prior to the holiday season. So this was really the result of shifting resources from these regions to regions specifically The U. S. Where there is growth where the momentum behind the fragrance category continues. The prestige fragrance category is still growing in the high single digits. And it's still continuing to premiumize and the I would say the the adjacent categories of fragrances such as body mist are also booming there. So it's something that we've done and that we will continue to do to answer the second part of your question. Now regarding the first part, which is around Asia Travel Retail, you're totally right. You say that the Asian travel retail is the one that is really lagging behind the other regions. Americas and Europe are doing very, very well.

Which is something that is better than what we saw in Asia. The travel retail in Asia, I can tell you that it really behind one key category, which is prestige color cosmetics. It's really the restrictions that happened between Korea and China with regulations on both sides. That really stopped literally a key stream of the sales between these two regions. That was mainly focused when it comes to Coty and our color cosmetics prestige category. So the rest of the categories be it fragrances or even skincare are continuing to grow much better than what we saw on this color cosmetics. So it's really the color cosmetics category that is hurting us, which is I think a difference versus what our competitors are seeing in this region. Where it's a lot behind skincare. Our next question comes from Ana Luzwalt with Bank of America.

Please go ahead. Hi, good morning, good afternoon. Thank you so much for the question. I was wondering if you could discuss the retailer channel shift you mentioned in your prepared remarks, particularly in The U. S. It seems like some online platforms like Amazon are gaining more market share here. And just wondering how you're adjusting to this [indiscernible] Then also if you can comment on the different parts of your business consumer beauty versus prestige, just how they're performing on this channel?

Yes. Thank you very much, So indeed, you're totally right. And this is one of the regions why I believe this competition between online players, offline players, course e retailers, who are usually offline players too. It's this year's competition that is probably also explaining why all these retailers are really, really pressuring their cash management through inventory management. So that is one of the key explanation and which also explains a lot of door closures we are seeing in the country, be it behind department stores, but also behind some other channel when it comes to consumer beauty. So indeed, you're right, to mention Amazon. They are gaining market share in the beauty industry. You've seen a lot of players, including some of our brands, going to Amazon. I have to remind everyone that we were the first to be partnering with Amazon maybe six, seven years ago with brands such as Buzz or such as Kaldi Klein. And this has created a very special relationship between us and Amazon. The other element I can tell you when you ask me about CB and Prestige, performing on ecom and Amazon, indeed the growth of our ecom is stellar. On both divisions.

And if you think about a brand like CoverGirl, if I take The U. S. CoverGirl is growing faster than the ecom market on color cosmetics in The U. S. And therefore gaining market share, which omni channel wise gives us this possibility to say that CoverGirl is almost stable in The U. S. Since we are growing very, very fast on this channel. I can say the same thing about our prestige brands. They are really doing wonders on Amazon, growing very fast, much faster than in the brick and mortar. Which is also a very good indicator of the health of the brands. Because when you look at the health of a brand online, you really have the pure equity of the brand in front of consumers While when you think about Bric and Marta, there is a lot to do with how the store looks like, how your chefs look like, etcetera. So for us, it's a strategic channel that we've been outperforming and that we are continuing to outperform in both divisions. Our next question comes from Susan Anderson with Canaccord Genuity. Please go ahead.

Hi, good morning. Thanks for taking my question. I was wondering if maybe you could talk about your plans around pricing given the higher FX impact for fiscal twenty twenty five now and I guess, we are expecting pricing to land out units for fiscal twenty twenty five?

Yes. Good morning, Susan. So indeed, as you know, I mean, we shared many times last year that to high inflation, we put in place price increase, which was mid single digit and even at some moment we even push towards price increase during the year. So now of course looking ahead, we are now seeing inflation slowing down And so of course, but we will continue price increase, more moderate it's going to be low single digit because again with innovations and all what we are bringing to the market We have a pricing power. And again, that's really all the power of our technologies innovation. So we will continue And we keep monitoring in a very precise manner managing also versus elasticity, so that it's not going against volumes. And fragrance is a clear demonstration that we are really well in control We keep working on pricing in fragrance. On both segments, on both divisions by the way, Prestige but also Mass. We keep improving the mix and volumes keep growing. So it shows really that we are really well in control of these Our next question comes from Andrea Teixeira with J. JPMorgan. Please go ahead.

This is Shavana Choudhary on behalf of Andrea. Thanks for taking our Can you comment on the inventory levels at wholesalers and retailers? I'm just trying to decompose the sell in versus sell out. Just trying to understand if you're still seeing positive sell in for Fragrances and your outlook is flattish to negative even in fiscal 'twenty six, so or entering rather, wouldn't retailers run out of inventories [indiscernible] can you please comment on the most recent trends from exiting the quarter? And if February has improved? Thank you.

Yes. Hello, Good morning. So indeed inventory at wholesalers and retailers, this is really what we flagged. And indeed, we are still seeing some adjustments And again, as we just shared, there is also this fierce competition between brick and mortar than e commerce, which is also in a way creating some additional tension. Now when you were raising the question about fragrance, again fragrance is really by far where we are seeing, I mean, really good sellout in these category, key [indiscernible] keeps growing and this is the case in Prestige Fragrant and this is also the case in mass fragrance. So category is growing We are growing our sellout. We are bringing some new initiatives. So indeed, we are expecting some improvement within our selling fragrance. And this is also [indiscernible] is next year. And we have also some pockets of opportunities Of course, we will name The U. S. Where absolutely we have some potential. Also we have still some upside in this e commerce where there is also great upside. And last but not least also in the growth engine markets, where we have also some promising plants.

Our next question comes from Chris Carey with Wells Fargo. Please go ahead.

Hi, everyone. I have two questions. So number one, what is your thought process around long term algorithm? Think this has been discussion in this forum for the past few quarters. There was clearly some commentary in prepared remarks about adjustments. I think you had talked about best in class total shareholder returns, but have avoided the prior targets that you put out there clearly, which makes sense given evolution of the category. I think we could hear more next week, but it feels like an important shift to recalibrate expectations more appropriately for the longer term. So I'd love your thoughts on what the business is effectively trying to accomplish in the coming years with a longer term perspective? The only second one which I'll add on is, can you explain what's going on with the swaps and the prepayment that you have to make in Q3, but mostly I'm curious on the first question, but I'd love a little bit on the second question as well. Thanks.

Good morning, Chris. This is Sous speaking. So yes, indeed, this is a very important question. So let me start sharing with you our thoughts. First, this year, the beauty market growth, as we've seen it all, is normalizing to a steadier growth level. I have to say that this low to mid single digit growth is broadly consistent with what we have estimated several years ago. Even if the market was much higher, but this is the assumption we made years ago. And the growth algorithm was based on the that was growing between plus 3% and plus 4%. As before, our goal is to outperform the beauty market. This is very, very important. [indiscernible] in this various macro environment, retailer environment, regional uncertainties, Now there are potentially tariff force that could happen here and there. Which are honestly at a level that has not been seen in decades. Many, many disruptions I think and we think that it is no longer prudent to put specific sales growth targets. And we are therefore committed like some of our peers to outperforming the market whatever the level of growth we see in our core markets and So how would we support this outperformance of the market I believe that we have several drivers in our hands.

First, a robust fragrance category with steel penetration and usage that are still increasing structurally and across many markets around the world. Second, the company is expanding its offering in fragrances now to mass. So we are really leading and we are the global leader where wide when it comes to premium fragrances, up to mass fragrances.

Number three, we are expanding our businesses in categories where we are currently under indexed. I'm thinking about prestige, color cosmetics category, including the launch of the new Marc Jacobs color cosmetics line. But also I'm thinking about skincare, and this gives me the occasion to really say that one brand at Coty is doing wonders in China, It's growing on a market that is minus 10 at almost 200% and some key SKUs have become part of the top 20 of the Chinese market. So this is really the start of our first green shoots when it comes to skincare on the most difficult market at the moment, but the biggest market when it comes to skincare. Number four, we will continue to grow our penetration and market share online, hence the question I've been answering a few minutes ago. This is really an area where we are growing faster than the rest of the market and we reached the $1,000,000,000 threshold a year ago when it comes to online sales. And number five, we'll continue to strongly grow our business in growth engine markets I'm thinking about some Africa, one example where the company has become the number one prestige fragrance maker thinking about Saudi Arabia.

I'm thinking about South East Asia growing by 15%. I'm thinking about mix what the company is doing also Wonder. So clearly, the addition of these five growth drivers is really what will allow us to grow our sales above the market And at the same time, our target remains to continue to grow our gross margin. You've seen our gross margin reaching a record level this quarter at almost almost 70%, 68% to be precise. And of course, this will allow us to continue to grow our EPS and free cash flow.

Laurent, you can do this for us. Yes, absolutely. Good morning, Chris. So indeed on the swaps, first of all, I mean, I really want to remind that as you Coty, I mean, for the first time ever over the last eight years, I mean, we are reaching now leverage ratio below three times.

And we made very clear that at some moment, I mean, we will resume return to shareholders either through share buyback or dividend. So swap is really a mechanism we put in place indeed to reserve some share buybacks. So it's about 48,000,000 shares So now the mechanics currently that is happening as we are seeing some pullback in our stock price in the recent quarters. There is a mechanism that we need to have a true up cash payment to the banks. According to the current stock price. So a way, this is really an anticipation but it's also the confirmation that at some moment indeed we will operate this share buyback.

Our next question comes from Mark Astrachan with Stifel. Please go ahead.

Yes, thanks. Hi, everyone.

So I guess first one on retailer stock levels. What gives you confidence as they return back to levels over the [indiscernible] comment on whether the inventory levels prior to the recent slowdown, especially in Prestige, fragrance, which had accelerated coming out of the pandemic, was elevated or not relative to historical levels for fragrances just from a retailer perspective.

And then secondly, in the press release you talked about evaluating the operations to fuel long term success. You're obviously talking about an increasing focus on reducing leverage I guess what are you thinking in terms of the business footprint today versus maybe three years ago, it does seem like consumer beauty is a bit more challenged. You talk about More heritage brands not being the focus of customers at this point? Is the portfolio you have today the right one? Would you consider divesting that business? Would you consider M and A to increase exposure to faster moving categories? Just any sort of color there would be helpful. Thank you.

Yes. So hello, Max. So on the Retailer stock levels, I think this is what we we have explained and indeed that we are in a transition year. I mean, so I think it's important to step back a little really to understand that indeed over the last two, three years, there were a lot of disruptions on the market. So of course, it started with COVID and then there was all the supply crisis. And at that moment, indeed some there were some shortage of products, components then retailers also rebuild some inventory. Now indeed, we are seeing that they are growing the other way around. So difficult to tell you how long it's going to take, but there will be a moment where I think, I mean, the behaviors, the retailers will be back also to healthy inventory. And then we can really be back to a normal combination and more closer connection between the sell in and the sell out. Again, assuming that the pocket of disruption that we are seeing again in Asia. And also as we explained in the consumer beauty business in The U. S, of course, are getting stabilized at least, which is not the case today.

So So that's really what I can tell you on the inventory So Matt, this is Sue. On the second part of the question, which is around evaluating long term success, So you were referring to our consumer beauty color cosmetics brands. Again, in this area, it's first, let me start by saying that it's very encouraging to see that our cosmetic brands, specifically in The U. S. But not only in Europe too. They continue to outperform most legacy players. And this is very important because it means that despite having much less means than some legacy players, we are doing a very good job by putting in place the right innovation, powered by the right advocacy strategy in the different markets and we are activating even more and more agile beauty innovations. That are supposed to put on the market innovations in as quickly as every six months. So this is on one side.

And we continue, I have to say, to see the benefit of operating across multiple beauty categories in multiple markets and of course in multiple channels. At the same time, like I guess most of the corporations, we are always evaluating our portfolio And this is very important. We're looking very, very closely to the portfolio of the company. And to of course where are the long term opportunities and return on investment presented by each category, by each brand in the the different categories and the different markets. So it's really both options that are in our minds, continuing the site, while at the same time looking at what could be done better in the future and what could be pivotal for the company.

And our next question comes from Carla Casella with JPMorgan. Please go ahead. Hi. Just two quick ones. One, you've got a couple bonds maturing in 2026. And I'm wondering if that's something that you want to get ahead of a year before maturities so they don't go current or does that matter?

Yes.

I'm sorry, Laura.

Good morning, Carla.

I mean, of course, this is really a great improvement now with these deleveraging that we constantly work on our debt maturities so that we can really be a healthy place. So of course, I mean, these are always bond maturities, always the options that we are looking at.

Okay, great. And then the well at stake decline of about 3% sequentially. Is that and can you give us any update on the the performance of that business or maybe the timing of a potential sale of it?

So the business is is performing well. So the value that you can see in the book is just some I would say, accounting methodology and strongly driven by the work or interest rate which need to be used. So it's really not reflecting really the performance of of the company. Then on second part of your question, as we reminded in our last earnings call, is that November was the end of the standstill period. So in this context, yes, I mean, we remain opportunistic and pragmatic of course, to monetize these assets, which is a great asset in our books.

Great. That's super helpful. Thank you.

Thank you.

I would now like to turn the call back to our speakers for any closing and final remarks. Thank you very much. So again, thank you very, everyone, for attending this earnings call. Again, to conclude, of course, as we've said during the earnings call, we are not satisfied continue to believe that this beauty category both historically and even now in the future, specifically behind the fragrances, whatever is the price of the fragrances will continue to be a key driver of growth of this market. We are very happy with the improvement of our fundamentals throughout the last four years, specifically this year, You've seen our gross margin, our EBITDA growth, our EPS double digit growth and Laurent just mentioned our deleveraging which is the lowest since eight years under three times. And last but not least, we continue to outperform the market categories we are playing in sellout is the ultimate indicator of the health of our brands and this one continues to be very good. Thank you very much.

You. And ladies and gentlemen, that does conclude today's conference. We appreciate your participation. Have a wonderful day.