Good morning, ladies and gentlemen. My name is Maria, and I'll be your conference operator today. At this time, I would like to welcome everyone to Coty's Fourth Quarter Fiscal 2020 Results Conference Call. As a reminder, this conference call is being recorded today, November 06, 2019. On today's call are Pierre Laubies, Chief Executive Officer; and Pierre-Andre Terisse, Chief Financial Officer. I would like to remind you that many of the comments today may contain forward-looking statements. Please refer to Coty's earnings release and the reports filed with the SEC, where the Company lists factors that could cause actual results to differ materially from these forward-looking statements. All commentary are like-for-like in net revenue reflect the comparison of the business at constant currency in the current and prior year, excluding the impact of acquisitions and divestitures. In addition, except where noted, the discussion of our financial results and our expectations reflects certain adjustments as specified in the non-GAAP financial measures section of our earnings release. You can find the bridge from GAAP to non-GAAP results in the reconciliation tables in the earnings release. I will now turn the call over to Mr. Laubies.

Thank you, Maria. And welcome everybody to Coty's first quarter fiscal 2020 conference call. I will start by reviewing the progress we have made on our turnaround plan in the last few months, and Pierre-Andre will then discuss our financial results, outlook, and some of the recent strategic developments. Our Q1 can be characterized by several key developments. First, we have begun activating our turnaround plan announced on July 1. Second, our operational and financial results illustrate that we are off to a solid start for the year and that we are showing improvement on the parameters that we seek to drive. And third, we remain confident in the fiscal 2020 targets we laid out on the last earnings call. As a reminder, we built our turnaround plan aimed at addressing what we consider our most pressing issues. More specifically, we were talking about the need to redress the trajectory of our Consumer Beauty business, retain the high performance levels of our Luxury and Professional Beauty businesses, close our margin gap against our peers, reconcile our organizational design and our size, and build an engaging culture relying less on personal genius and more on collective mastery. Four months into the activation of our plan, we are tackling each of these areas one by one. To begin stabilizing our plans in Consumer Beauty, we have been refocusing our teams on the most pressing fundamentals, namely our working media strategies. In Q1, working media spend increased 11% with the biggest step up behind Consumer Beauty brands. Within Consumer Beauty, we are actively focusing our resources behind our priority brand country combinations, leading to an investment increase of close to 40% on the strategic priorities. We are also returning, as you may have noticed with the recent announcement on Cover Girl, to a marketing strategy bolted onto our strongest distinctive brand assets. We are also beginning to address our gross margin gap in several ways. First and foremost, we are now making sure that we have the best possible alignment between sell-in and sell-out thus avoiding value destructive selling tactics. Secondly, our plans include price increases where relevant, which have already been or are being activated in several countries. Finally, we are advancing in our objectives to be a leaner and more aligned organization supported by an enabling culture with the right balance of key activity and discipline. We have defined our new organizational culture and have been communicating it for the core functions and in the market. We are currently actively allocating externally and internally for our new Amsterdam headquarters which will be ready by Q4, and we have recently named Richard Jones our Global Chief Supply Officer. Richard joined us with extensive experience in the beauty industry and is a key addition to our leadership team to lead our core and SKU simplification agenda. To build further on the progress we have made, our analytical approach to defining market turnaround plans has now covered approximately 50% of our business. This includes Consumer Beauty in the U.S., UK, Germany, and Brazil, as well as Luxury in the UK and an overall review of the philosophy brand. In these markets, we have arrived at core findings, identified the value at stake, and have begun deploying action plans. This analytical approach is now being deployed in Consumer Beauty in Russia, Poland, and Canada, as well as Luxury in the U.S. and Germany, where we expect to find many of the same conclusions. Our remaining markets will be covered in the next 12 to 18 months. Although we are still in the early stages of activating our plans, we are beginning to see some green shoots in our operational performance. In the UK, where we remain the number one mass cosmetics brand, we had experienced market share erosion. Our actions have driven a 200 basis points improvement in sales trends driving market share gains. Behind these improvements are substantial increases in working media investment, particularly in TV. The strong performance of recent launches, Wonderluxe Mascara, and Lasting Matte Foundation, both of which were launched at premium pricing, and while it is still early, the limited demand elasticity we are experiencing following our recent pricing actions are in line with our expectations. In Germany, we are seeing many different dynamics in the Mass Fragrance category. Bruno Banani, the number one Mass Fragrance brand in the market, has also significantly increased its sell-out performance from a moderate decline to a double-digit growth, fueling the growth and strong performance of the recently launched Loyal Man fragrance, increased media support for both the male and female lines and the successful expansion of the brand into the shower gels category through product launch. In the U.S., we have also seen some early positive signals, though we are clear that the path to stabilization will take some time. Sally Hansen, the number one nail brand in the U.S. mass market, has struggled with sales declines for several years. Our analytical approach identified across our brands of mass to focus on as well as the key lever to drive consumer engagement. Investments months, we had increased our digital media support for the premium Miracle Gel line, improved the packaging on our treatment products range, and deployed seasonally relevant in-store displays including a Halloween theme in collaboration. As a result, while the mass men market continued to moderately decline, both Sally Hansen nail color and nail treatment are back to steady growth. In Cover Girl, while the improvement in overall brand sell-out has been more moderate, our action plans are transforming performance in key areas. Our core eight sub-brands, which account for two-thirds of the brand sales, are now back to growth marking a 320 basis points improvement. Underpinning this improvement is a strong investment in TV support, so we're behind these sub-brands. And while our sales continue to be weighed on by the shelf space correction, we are seeing productivity improvement in our core customers as well as sales growth in uncut channels such as Amazon and Ulta. Speaking of Amazon, as we continue to focus on improving our fundamentals, both offline and online, we have seen very strong growth of our brands on Amazon, both in the U.S. and globally. The strong growth has been supported by our close collaboration with Amazon as part of the Global Vendor Management Program, the increased TV support for hero sub-brands, execution focus on core SKUs that were particularly strong on Amazon. As a result, in Q1 our mass brands listed on Amazon grew over 40%, and we now have our fair share on Amazon across most categories, which is a substantial change for us. In Luxury and Professional Beauty, we are continuing to deploy our strategies of premiumization and category expansion. In Luxury, our collection led by Gucci's Alchemist Garden remains amongst the top-performing ultra-premium collections, and now we are planning our learning to support the launch of Chloe's Atelier des Fleurs. We are also seeing some success in extending our Luxury brand into the cosmetics category with our Q1 luxury makeup sales three times the level of last year. In Professional Beauty, the team is continuing to drive conversion of leading salons to the premium Wella Koleston Perfect with ME+ line. Following the core principle of innovation and penetration, driving GHD has built on a strong positioning in traditional markets to launch its very successful Glide hot brush. All of these positive signals give us confidence that we have the right brands, the right people, and the right action plans to steadily improve Coty's performance and unlock significant value. With that, let me turn it over to Pierre-Andre.

Thank you, Pierre, and good morning to everyone. So, as you've seen, our Q1 results are in line with expectations and a solid start to the year. Starting with the first line on like-for-like net revenue, it declined by 1.1%, which was weighed down significantly by the performance in Younique, and we saw progress in the scope; our net revenues were particularly stable at minus 0.1%. This was obviously partially helped by low comparables in Q1 last year, but it was nonetheless an improvement from the approximately minus 3% like-for-like decline on the same scopes, excluding Younique, both at quarter and in full year 2019 overall. So continuing the like-for-like performance, we had strong growth in Luxury and Professional Beauty and a sequential improvement in Consumer Beauty. As we focused on gross margin improvement and continued controlling costs, our adjusted operating income grew 10%, resulting in 110 basis points of operating margin expansion. I will come back on that point in more detail in a few minutes. But first, I'll shift to the division results, starting with Luxury. As you can see here on this slide, the comparison for the new Tiffany & Co. fragrance launch is expanding the branding to both male and female fragrances. Over the course of October, the line has been exclusive to Bloomingdales in the U.S., but we are already seeing strong results. The sales of Tiffany on the very first day of launch exceeded an entire week of sales of the initial Tiffany Signature fragrance launch, and we're pleased to see that the quarter of the sales are coming from the male line, speaking to the appeal of the Tiffany brand across genders. On the right of the screen, close on the heels of the launch of our Gucci lipsticks globally, we also have been re-launching the Burberry Makeup line focused on Asia-Pacific, and the results have been very promising. So if I move to Luxury financial performance then, in Q1 the division delivered another quarter of low to mid-single-digit growth. This included growth in Europe and ALMEA. In the Luxury fragrance category that continues to grow in the low single digits, including in the U.S. While our revenue growth was based in part on easier comparables, some of our sales were impacted by the protests in Hong Kong. This has been hampering our growth in the city and the surrounding travel retail corridor throughout the quarter. From a brand perspective, we are seeing steady performance in our innovation. Both Gucci and Burberry Makeup continued to expand, contributing over a third of our divisional growth in the quarter. And this confirms a strong potential of several of our luxury fragrance brands to expand into adjacent beauty categories. As I mentioned earlier, Tiffany & Love is off to a strong start. Gucci Memoire has been a solid addition to the expanding Gucci portfolio, and Hugo Boss Bottled Infinite continued to be successful, showing further distribution expansion. From a margin standpoint, Luxury drove strong gross margin improvement coupled with cost control, and this resulted in over 300 basis points of operating margin improvement. And now turning to Consumer Beauty, you can see on the next slide a number of our recent successful initiatives. On the left of the screen is Lili Reinhart, an actress and celebrity with a strong following amongst Gen-Z consumers, and she will be the new Cover Girl easy, breezy, beautiful ambassador. The consumer response and engagement with these announcements has been quite positive. For Adidas, we are capitalizing on the strength of the sports brand with the launch of three new fragrances, which are working well in markets. And as Pierre discussed already, Sally Hansen has significantly improved its momentum through several initiatives, including our Halloween nail collaboration and in-store displays. So let's turn now to the financial components of the division; for the quarter, the like-for-like net revenues declined 7.8%, improving from the minus 10% decline excluding Younique last quarter and in full year 2019. Europe reported sales results with growth in net revenues reflecting incremental improvement in sell-out, so that's important. In North America, the performance was mixed but encouraging, with Sally Hansen once again back to growth and noticeable improvements on the priority Cover Girl SKUs as already disclosed by Pierre. We expect such improvements to continue in the coming quarter as shelf corrections moderate and as our investments continue showing traction. Last, we chose in most ALMEA countries for Consumer to drive healthy and sustainable sales foregoing margin dilutive low-value sales, and as a result, revenue declined in this region. In the division, as in the rest of the group, we remain focused on driving gross margin improvements, and these results will allow us to free up gross margin dollars to reinvest in the business. So on this point, in Q1 we actively ramped up working media and redeployed it to our priority brands. With working media investments behind these brands up 38% in the quarter, we saw a noticeable improvement in the strength of sales, which declined in low single digits in Q1 versus high single-digit declines in the full fiscal year 2019. So as expected, the increase in A&CP, coupled with revenue decline, drove a contraction in operating margin in Q1. To wrap up on Consumer, while the performance of this division remains weak, this quarter has shown positive responses to our initiatives, and we look forward to more gradual improvements in the coming quarters. And now shifting to Professional Beauty, GHD continued its strong momentum across core countries, aided by innovations such as the Glide hot brush and the Platinum Plus styler, as you can see on the left, and as Christmas is getting close, you should really look at this as a gift idea for the people you really love; that's a great idea, so I recommend it. On the right, you see that OPI also returned to strong growth supported by easier comparables and successful execution of some of our collections you see on the screen from the Scottish collection. Talking about financials for the division, Professional Beauty returned to growth as expected, reporting a strong 5% like-for-like. We saw strong growth in Europe and North America, partially aided by low comparables in the case of the U.S. specifically. As expected, U.S. customer discounting that affected our sales in the second half of last year has run its course, and we have been shipping in line with consumption. The combination of this top-line expansion and cost discipline drove over 400 basis points of operating margin expansion, which stood at close to 10% for the quarter. So that's it for the division. To continue the whole, key outcomes of the beginning of this year include the changing shape of our P&L, as we are seeing a real focus on gross margin translating into results. Gross margin in the quarter was up 160 basis points to 62%, which was a strong improvement throughout the quarter. Consistent with our comments in August, we significantly increased working media in the quarter by 11%, and this resulted in another increase of 70 basis points in our A&CP as we continue rationalizing our non-working media. This is a key outcome since it deals with the equation where growth margin progresses, finance investments behind our brands, which will gradually help our revenues and in turn our gross margin. It is also the main driver of the growth of our operating income, which was up 10% in Q1 or a 110 basis points increase in terms of operating margin. Lastly, our EPS ended at $0.07, which was down versus the $0.11 last year, which itself included $0.04 of non-recurring tax benefit and therefore, absent from these tax benefits, the EPS has been stable. Turning to the cash flow statement, which as you know is a new performance element for us. While Q1 is always a seasonally weak period for cash generation, we did improve our free cash flow very meaningfully by $169 million year-over-year. This growth reflects strong underlying improvements in cash generation, as well as an additional $75 million from factoring. Having closed the Younique divestiture in the quarter, we received $60 million of proceeds and at the same time repurchased the remaining stake in our Southeast Asia joint venture for $45 million. In total, aided by FX, our net debt and resultant leverage moved down moderately versus last quarter to less than $7.4 billion for the debt. So, I am now moving to Slide 18. In summary, Q1 was a solid delivery on our metrics and was also a turning point in the management of our equation and a first milestone in the construction of our turnaround plan. This makes us confident for the rest of the year and we're happy to confirm our target for fiscal '20 at constant scope as said in the last earnings call. In detail, that means like-for-like net revenues stable to slightly lower year-over-year and operating income at constant scope and constant currency growing 5% to 10%, or mid single-digit growth in EPS and a moderate improvement in our free cash flow. We expect Q2 trends to be generally consistent with this growth algorithm. To wrap up, let me remind you of an important decision, which we announced two weeks ago. While our turnaround plan is focused on building a better business and you have seen some first elements of delivery, we have with the Board come to the conclusion that we need to accelerate the transformation of Coty to increase our focus on core categories and to free up resources to invest behind these categories, namely fragrances, cosmetics, and skin care. Therefore, we decided to engage in a strategic review of the Professional Beauty business, associated hair brands, as well as the Brazilian operations. The teams in these businesses have done an incredible job of building strong platforms in their respective markets. However, we believe we need to work to identify the best options for them with very simple objectives: number one, unlock shareholder value; number two, sharpen our focus on our fragrance, color cosmetics, and skincare businesses; and by doing so, reduce the complexity of our portfolio and with potential proceeds deleverage Coty with a target pro forma leverage which we have fixed at around 3x. We anticipate that the review will be completed by summer 2020 and I must say that we have already received multiple marks of interest, which I think reflects the high attractiveness of these assets. After the stabilization of our supply chain and through the building of our turnaround plan, this is a key decision to accelerate the transformation of our company into a focused and competitive unique company. That's the end of our opening comments. Thank you for your attention, and let's now go through the questions you may have.

Great, thank you very much. I was just wondering if you can maybe just help us understand a little bit more of why selling Professional is a strategic imperative; it's a great business, important cash flow generator. I think we were a little surprised to hear about how you're thinking about it. So just really trying to understand in a little bit more depth, kind of the thinking around that? And then once assuming that happens, maybe give us a little bit of sense of any issues in terms of stranded costs or scale issues that could result from the sale? And then finally, along those lines, what that does to your kind of expected medium-term algorithm, whether the kind of targets that you have for fiscal 2020 would make sense as a medium-term algorithm after that divestiture? Thank you.

Okay. I'll hand it over to Pierre-Andre.

I think the reasoning is very simple. We have three great categories. We believe in each of them, but we also believe that each of them has a lot of potential, and we need to be able to put the means, human and financial, behind each of them to develop them. We don't believe at the moment we would be in the best position to manage the three at the same time, for reasons which have to do with leverage on the one hand and for reasons which have to do with complexity and focus on the others. So we've chosen to focus on two segments, which are Luxury and Consumer, which in reality category-wise are fragrances, cosmetics, and skincare. We believe that by focusing on these categories and only these categories, we can grow faster in creating value with them, and we can sharpen our focus and transform the group. At the same time, we believe that by putting the Professional business, the Hair business, and the Brazilian business in a different context, that's going to give these businesses the means they need to develop. So yes, it's really a matter of focus to give ourselves more attention to the categories we've chosen, freeing up financial needs as well recovering financial flexibility to invest behind those, and this is we believe the way we are going to maximize the value creation for our shareholders. With respect to stranded costs, this is something we'll have to deal with, but we are not overly worried for a couple of reasons; the main one being that most of the turnaround plan efforts have been focusing on Consumer Beauty and Luxury, and therefore the essence of the plan is going to remain on those categories, and we think that's going to definitely assist us in delivering the target we set for ourselves at that time, which was 14% to 15% operating margin, which we have confirmed recently. So essentially, it doesn't change our target in terms of gross margin and operating margin improvements, and we hope it is going to help us accelerate the transformation of the Group.

And in terms of the algorithm, what do you see is a good medium-term algorithm ex-divestitures?

What do you mean by algorithm?

Well, just in terms of expected topline growth, operating profit growth, EPS growth, as you know, the kind of targets that you gave for fiscal 2020?

Okay. So we are opening a strategic review, and I think it's a bit early days to talk about all that. What we are confident about is our ability to deliver substantial margin improvement and to target 14% to 16%, and then for the rest we need to work.

Great, thanks, good morning. First question is just on Luxury, if you could just break down the performance a bit, because it decelerated despite comping against a period where you had some supply chain issues. So are there still old disruptions you're working through because since there might be underlying categories changed much, particularly in fragrances? And then if you could just talk about your exposure to Hong Kong and travel retail there, that would be great? Thank you.

Yes, I can take it, and Pierre can again complement. It's true Luxury had a favorable base, so the way to read the focus into that is that it's a strong performance. But at the same time, it reflects easy comps and the Hong Kong and travel retail impact I have been mentioning. If you turn to Q2, you would expect the reverse; you would expect that the comps are going to be much higher. Therefore, probably Luxury is going to be low-single-digit growth in this particular quarter. We continue seeing fundamentally positive drivers of performance in the fragrance and the expansion to cosmetics, and at the same time, we have this situation in Asia, which is likely to continue impacting us for a few quarters.

Hi, good morning everyone. Two quick questions from me, first, I just want to make sure I heard it right that your second quarter outlook is in line with the full year, and I thought I heard that, but I just wanted to confirm that. And just given how important the December quarter is for the Beauty business in general, just any more clarity or specifics you can give us on kind of how you're thinking about that season would be very helpful in terms of selling of new products or programs or anything that would give us a little bit more clarity? And then the second question is just a bigger picture question on make-up; obviously, a lot of companies have been struggling in this area. I just wanted to get your views on what you see going on in that market. Do you think it's something that can be turned around? Is it really just a function of a cyclical change between skincare and makeup that tends to go every three to five years? Any thoughts around that would be helpful.

Hi Nik, this is Pierre. I'll take the last question first and then Pierre-Andre will take the others. I think our vision on the makeup is that probably there has been a bit of a cyclical timing, if I may say so, and I think we probably are in a normal cycle of multiplication of purchase by consumer; the category has maxed out in probably any type of penetration, and probably increase penetration needs to go to lower ranges and younger ages, sorry. But we do think that clearly, we have seen a bad developing case of quantity of purchase over the years, and I think we are cycling through that. We also, I think, have ourselves in the middle of channels which are not measured in the typical panel, and like we are talking about the online business. If I assume that if we have such good performances, and as well we may not be the only one having that performance, and as a consequence, I think alternative channels are also taking their fair share. So I think probably the shift in channel plays a role here in the official data that we see, and probably we're going through an accelerated cycle of purchase over the last two years, which we need to cycle through, but we do think that the category still has potential, and particularly we really believe that the category has, or we have potential in the Luxury side of these categories.

Hi Nik, Andre. So on the new launches, there are a couple of things we've already mentioned, Tiffany & Love, which is really going to be a Q2 event, which is off to a strong start as you have seen. We have in addition Gucci Bloom Ambrosia, and the first signs we have are pretty positive in the U.S. and in the UK, but these are very early days. We have Burberry Her Eau de Parfum, which is adding to the range of Burberry fragrance. We have as well two shades of glitzy lipstick for Gucci which are going to come in addition and widen the range, and that is for Luxury. So we continue coming with innovation on the market. With respect to Q2 and what we expect, so you all know that the base of comparison, in particular for Luxury and TV, was low this quarter, and therefore you would expect to have still a solid performance of these two businesses next quarter, but probably being on a higher base level. And at the same time, we expect to see continuing progress in Consumer Beauty. So if I look at the consensus now on net revenues, I would say that we are comfortable with that. On the operating income for H1, given the strong start which further is attributable to phasing elements, I would see the OI up in the low part of the range we have given for the year, which means about mid single-digit. So Q2, which will be on a different day is very much in the continuation of what we are showing in Q1, and we're reflecting substantial improvement in the business.

Yes, hi, good morning. So, a couple of questions.

Hi, Faiza.

Hi, so first, I just wanted to understand sort of why did you decide to include Brazil as part of your strategic review, because I thought that business was doing reasonably well relative to the rest of Consumer Beauty? I just wanted to clarify how much that Brazil and the retail hair care business contribute to growth this quarter on an organic basis? And then, I also just wanted to ask about gross margin and was hoping that you could disaggregate for us the margin increase here because I think last quarter you had sort of the higher incremental freight costs because of the supply chain issues. So I was wondering if we could get an underlying growth rate excluding that, and if possible sort of a breakdown between any contribution from lower promotions, any contribution from productivity, cost cutting, and synergies? Thank you.

I'll address these questions regarding gross margin. We saw significant progress in Luxury this quarter, and also in Professional Beauty; however, Consumer Beauty has shown mixed results that vary by market. In ALMEA, we prioritized gross margin and promotions on sales, leading to a negative outcome, but we expect a strong rebound in gross margin. Europe's situation varies by market, and overall it's negative, which is also true for the Americas, resulting in a contraction for Consumer Beauty overall. It's crucial to not treat Consumer Beauty as a single entity, but rather look at the unique circumstances of each market. Regarding Brazil, the reasoning is straightforward; without hair products and mass items—significant components of the Brazilian market—Brazil didn't fit well within our portfolio. Therefore, we believe it makes sense for Brazil to align with Professional and Hair in this strategic review, not due to poor performance, as both Brazil and the other reviewed areas are performing positively. The focus is about channeling resources effectively to achieve better results. In terms of the quarter's performance, the segment under strategic review showed positive low single-digit growth, whereas the segment not under review experienced lower single-digit growth. I hope this answers your queries. Thank you.

Hi, thanks. I just wanted to get back to the strategic options review that you're doing, and I guess first off, on the timing of it, because four months ago you guys presented plans, after doing a thorough review of the business. So I'm wondering what's really changed and what's driving the need to accelerate change, given the confidence that you had four months ago in the turnaround plan and who is really driving the decision to do that? Is it the management team? Is it the Board, or the primary shareholder? Can you shed a little light on that? Thanks.

Hi. Well, I mean you're right on something which is that we go fast. Pierre has been in the business for about a year. I think the business for about nine months. I mean in this period of time we have solved the supply chain issues and we have stabilized the business in '19, then we have produced a turnaround plan and now we are talking the strategic review. So that's a lot of thinking. One year, I think that's just made necessary if we want to reshape Coty and to transform it into a performing beauty company and beauty champion. I don't think there was any change. I once said that we had to take things one by one and not try to do everything at the same time. So that's really the methodology we follow. We had to stabilize the company and solve the supply chain issues; that was done. We had to stabilize '19 and to deliver '19; that was done. We definitely had to look at a plan to close the performance gap of all of our businesses, and that's what we've tried to do with the turnaround plan, and once we've done that, we started looking at the portfolio and thinking if there was any way we can improve faster and make the transformation of the Group quicker, our ability to free up resources, human and financial behind core categories; this is why we have made this decision. So no change; a diagnostic from the management, which has been shared with the Board, and it is fully supported by the Board; there is not one company, and another one; there is only one company with management in both, and we have taken this decision together. That's fundamentally it.

And then, if you can maybe talk about if you have any expectations for proceeds, is there a hurdle level in mind where you could potentially walk away from doing a deal and hold on to the businesses? And then maybe if you could talk just generally, I know it's early, but generally about like potential uses of the proceeds, how they could potentially be allocated between debt repayment and share repurchases? And along those lines, would you do a deal that could be dilutive to EPS in order to hit your leverage target of 3x?

Well, I won't comment on the last one. Again, it is too early days. In terms of expectations, the only thing I can say is that these businesses are incredibly attractive. Whether you focus Professional Beauty, which for many reasons, the hair business is one of the leading platforms in the world and has been performing well; and has been strengthened for the past few years by the management. OPI, which is an outstanding brand; GHD, which is literally flying in terms of growth; and Brazil, which is a unique player in the Brazilian market, which, as you would recall, is a very attractive market in the Beauty space. We have expectations that match the attractiveness of these assets, and I will not comment further on that. On the potential use of proceeds, we've been pretty clear, I think, in the press release saying that the potential proceeds would be used to decrease the indebtedness with a target leverage of about 3x net debt to EBITDA; any excess will be returned to shareholders. So I have got nothing to add to that.

Great, thanks, good morning.

Hi, Lauren.

Hi. I wanted to ask again about Consumer Beauty margins. I know you already mentioned it, but I was interested when you said you plan to focus on the specific situations of each market rather than managing holistically. With that in mind, you noted that in ALMEA, where you’ve decided to prioritize gross margins more significantly, sales have declined. Considering the situation in the U.S. and the promotional intensity you've mentioned needs correction, how does that affect the outlook? If I think about the trajectory for Consumer Beauty in the U.S., will there be a time in the next 12 to 18 months when we might see more pressure on sales as the focus shifts more towards gross margins?

Hi Lauren, this is Pierre. The - I think I'll come back to that point at the end of the day, it's first and foremost our strategy is to raise the gross margin, and we raised the gross margin by combination of the deal that is really competitive on the promotion, but do not be overly competitive. So clearly, we do understand that there is a promotional intensity that you need to respect. So we are going to be in line with what we think should be the level of promotion in the market, but certainly, what we believe is that we have not exerted pricing power on our products over the course of the last five years, and it is time to return to that. And so, we do know that we have all the math in order. We do clearly understand that there is some necessity about this and we are ready to accept some of these volume losses associated with that because we think it is very important that we generate the gross margin which will enable us to increase the velocity of our brands by advertising, and I think that model, we are convinced will work and we are going to execute it. The second thing well into work to improve our gross margin is to really simplify our portfolio, simplify our brands, and make sure that the SKUs which are penetration drivers and are also in general high margin SKUs, these obviously get the shelving that they deserve and are being worked on the shelf for six elements, four elements, two elements, or one element. And I think there's a lot of tackling and blocking there to be done, but actually, I do believe that we can both at the same time play by the rule of the game of the promotional intensity which we require, but not overtly and at the same time raise our gross margin by balancing the mix over time.

Hi, good morning everyone. I wanted to just focus on the work media; I want to make sure I have the statistics right here. So I think you mentioned core brand investment in working media was up about 38%. Can you help us understand what percentage of the business falls into that priority or core brand mix, and then also tell us a little bit about where some of those media dollars are going? I know you mentioned TV, but if there are any other areas of emphasis in terms of your media mix, that would be helpful.

Media mix is established by our reach-based strategy, and as a consequence, we apply the media mix that we need to apply based on the, again, the specific complex situation where you have countries where you can use - you need to have a balance between adjusted balance in term of online versus regular TV. Due to the penetration of digital and all the companies where the penetration of digital is lower, and as a consequence, you do more mainstream media. So that's, and even in some countries, you can do - you will do a general balance with take or shop. If you look at the most successful markets, you are going to be massively investing in digital versus the rest of the company. You are going to invest in key brands. So, I think we tailor-made this media plan market by market, and there is not a one-size-fits-all strategy. So that's one of the field drivers. The second thing is that at this stage, the DMUs, if we call them by market intersection, will represent about 60% of all the news, and they tend to be also our biggest global brands. Over time, we do want to continue to be exposed to increase that because we still have gaps to close in terms of media investment in a certain number of markets, and this is why the job that I was relating to earlier on gross margin is absolutely important, as well as the balance between working media and non-working media. We still can be improved at Coty.

Thanks, good morning everybody.

Good morning, Mark.

One, on the pricing commentary. So is this something that it's more of a one-time repositioning of product pricing, or is it something that you want to use as a lever on a more ongoing basis, kind of an inflation-plus kind of curious on that? And then secondly back on the potential asset sales, I realize it's obviously early and this is kind of a second deal, if you will, the implication of what you said about leverage would imply redeploying proceeds assuming multiples or value that we all kind of believe is reasonable for the business. So maybe holistically, if you could talk a bit about what you would do with cash, where you are unencumbered by the current debt levels, that would be kind of helpful and just hearing your thoughts there?

Hi, Mark. I'll take the pricing decision; this is Pierre, or the pricing question, sorry. I think both of the above will be true. Yes, we have a catch-up plan to do, and we are executing our catch-up plan. We have not taken pricing for many years, and it has depleted our ability to - it has depleted our gross margin. And as a consequence, it has, unfortunately, led us to increase promotional intensity. So we need to get out of this virtual circle to get back into a virtual circle. And then at this stage, we do think that we need to have a bit of a reset; right? And then going forward, indeed you are absolutely right, we need to make sure that we manage inflation correctly and we do not fall back into this trap we have fallen into.

And Pierre-Andre here, I think it's really a matter of trade-offs and financial flexibility. Trade-off, we have debt levels which, given the recent evolution of the business, have led us to make our trade-offs in favor of cash as opposed to in favor of brand investment and profits, by the way. So, I think, by coming back to a leverage level which is more additive to the industry and category, we are putting ourselves in a position to make ourselves in a position to make better trade-offs overall, which sometimes will still be in favor of cash but sometimes will be in favor of growth, and then altogether that's giving us more financial flexibility. More financial flexibility means that with two categories which offer a lot of possibilities for growth, we would have the ability to invest if and when in front of the right opportunity. So yeah, I would say overall that's definitely an improvement in order to grow the business we have chosen to keep.

Hi, good morning. My first question has to do with the comments you made about selling on Amazon and the great growth that you're seeing there, and you're one of the few beauty companies who talks about that. So, I was curious on why do you think that is? Are you doing extra promotion on Amazon? Can you talk about what your margins look like on Amazon selling to Amazon versus selling to traditional retail? And then my second question just on the divestitures. I mean, I was stunned to see the price, the proceeds you've got for Younique. I mean one-tenth of what you paid is kind of stunning, and I am a little bit worried that that sends a signal to potential buyers for professional hair care, the Brazilian business that you're in kind of fire sale mode and you will sell these assets for anything. So, was Younique like a one-off situation? You just wanted out, or was it really that bad of a business? I mean, maybe you could just comment on how much discipline you're going to show in terms of the proceeds you will get for these businesses? Thanks.

I'll address the first part of your question and then Pierre-Andre will respond to the second part. Our decision to engage with Amazon is primarily due to our approach to retail and the mass market. We have a clear understanding of our core products, our high-velocity items, and the products that help us build market penetration. We are ensuring that these items are well-represented on Amazon, which in turn is driving business growth. We have a strong alignment between our efforts in identified markets such as the UK, US, Germany, and Brazil, and our activities on Amazon. The benefits of online sales are evident; our strategy's implementation is quicker, and we can adapt and expand our product assortment more efficiently. As a result, we've achieved positive outcomes, and we have dedicated resources to this initiative that we may not have applied in the past, leading to improved margins compared to previous metrics.

So we are not, absolutely not in a fire sale mode. I think Younique, you will understand, was a very specific case, and not to use the Younique word, of course. It's a business which was far away from our competencies, which we have been struggling to manage for the past few quarters now with very difficult performance and at some stage we just chose to move on. We chose to move on and to divest it in conditions which I agree are not very good looking, but at the same time, we thought it was very important for the rest of Coty that we could move on and as we put this program on the side, knowing that Derek will be managing us much better than we have done together. So that's a choice we made, again not being in a fire sale mode, what we are doing now with our strategic review is completely different. Of course, we are talking of an asset which has not been losing, and we are talking of an asset, which is performing well. You see this quarter; this is the case of Professional Beauty, this is the case of hair, this is the case of OPI, GHD, Brazil; we are looking at brands which are recognized by many people, Professional as a sector, but also by many investors, which attract a lot of interest, which was not the case of Younique. These are brands which have a fairly good level of profitability improving. PB was 12% last year and that's a good proxy for the overall group. So if you should take into account the current costs, which are going to remain at Coty, we are talking of the scope, which has a mid-teens operating income. Given what I said about the profitability of other growth, given the obvious appetite which we see, and which I'm sure you can see, we expect this transaction to be creating a lot of value, actually, just creating a lot of value and we are going to make sure that this is done in that way. It's really about extending value for the Group and reshaping Coty in a much more substantial way than Younique, which was a very different small case.

Thank you. So, just as a final question, sorry, a couple of clarifications. One is for the Q2 guide, when you mentioned, first half, did you mean the first half operating profit would be up mid-single or were you referring just to Q2 specifically? The second one was on the expectation of the proceeds from the sale of the assets. I mean, I think that $8 billion to $9 billion, as you talked about, implies about 20x to 21x EBITDA. So, as a follow-up, just to see if you think that could be feasible from what you just mentioned about not being on a fire sale? And then on the marketing spending, sorry, the third one would be, you said working media was up 11%. But can you comment about the whole A&P because I understand you were taking down couponing. So in the couponing, on the total A&P spending is still down, relatively, I think it is still down. So I want to just double-check that and also how a like-for-like, I understand that you do on a net basis, how would like-for-like have been without the reduction in couponing? Thank you.

Okay, I'll address these questions. Regarding A&CP, it has increased by 70 basis points overall. Specifically, there’s an 11% rise in working media, but the total growth is 70 basis points. This has been ongoing, and we will continue to pursue growth. We believe it’s crucial to keep reinvesting in this area, so we will increase our investments in A&CP. For guidance in Q2 and the full year, I mentioned we expect mid-single-digit growth for the first half, which includes a particularly strong Q1. Overall, we anticipate the first half to grow in mid-single digits, consistent with our annual guidance. Concerning the proceeds, we haven’t confirmed a figure of $9 billion; that information appeared in the Financial Times, if I’m not mistaken. It’s going to be a significant transaction, and I’ve provided some analysis on earnings related to it. Strategic transactions have specific market pricing multiples, which you can calculate. While we don’t want to speculate on the amount just yet since it’s too early, we do believe it will be considerable. That covers everything. We’ll conclude the call now. Thank you for your attention. It’s an exciting time at Coty, and we look forward to sharing more updates with you next quarter in February. Thank you, goodbye.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may now disconnect.