Good morning and good afternoon, everyone. My name is Madison, and I will be your conference operator today. At this time, I would like to welcome everyone to Cody's First Quarter Fiscal 2026 Question and Answer Conference Call. As a reminder, this conference call is being recorded today, November 6, 2025, at 9.30 a.m. Eastern Time or 3.30 p.m. Central European Time. Please note that on November 5, at approximately 4.30 p.m. Eastern Time or 10.30 p.m. Central European time, CODI issued a press release and prepared remarks webcast, which can be found on its investor relations website. On today's call are Sue Nobby, Chief Executive Officer, and Laurent Mercier, Chief Financial Officer. I would like to remind you that many of the statements today may contain forward-looking statements. Please refer to CODI'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. In addition, except where noted, the discussion of CODI's financial results and CODI's expectations reflect certain adjustments, as specified in the non-GAAP financial measures section of the company's release. With that, we will now open the line for questions. If you would like to ask a question, please press star 1 on your keypad. To leave the queue at any time, press star 2. Once again, that is star 1 to ask a question, and we'll pause for just a moment to allow everyone a chance to join the queue. And we will take our first question from Rob Rottenstein with Evercore. Please go ahead.

Thank you very much. I've got a few questions all around the Gucci topic, if you will. So, you know, first, can you talk a little bit about how exiting the Gucci license will impact your overall portfolio, how you're thinking about it? And then, you know, does the curing announcement, you know, along with L'Oreal, actually have any influence at all on how you're thinking about your overall licensing model, you know, any tweaks to that? And then finally, is it at all possible that curing will try to take the Lucci license back before its expiration? And can you come to a deal with curing in terms of an early license termination? Thank you very much.

Good morning, Robert. Thank you very much for giving me, again, the opportunity to speak about this important topic. So let me start with the first question, which is around how this is going to impact Coty's portfolio. So with the public announcement that the Gucci license will no longer be part of our portfolio after its expiry, as you can imagine, the focus of Coty for the next several years will be on, number one, will be overdriving the brands with the biggest long-term growth potential. Number two, we will be building and I should even say amplifying the new licenses and brands we have recently added to Coty's portfolio. And number three, in parallel, we will optimize the Gucci brand during its remaining term, while, of course, fully respecting and operating within all of its term. In fact, and it's important for me to have the occasion to say this, the uncertainty over the last few years around the fate of the Gucci license, resulting from the public comments of the licensor, were a challenge for the COTI organization and the COTI reputation, including whether to build the brand in a strategic or a tactical way, and also its role in our overall portfolio. And now, as there is full clarity on the brand direction, we now have a fantastic opportunity to grow the rest of the portfolio with a bigger sense of focus, especially on the ultra-luxury part of the business with a comprehensive portfolio of ultra-premium brand. I'm thinking about Atelier des Fleurs from Chloé. I'm thinking about Burberry Signatures, Gilles Sander Collection, Infini Moncotty Collection, and upcoming Atro and Marni Collections. So even without the Gucci license, it's important to state that we remain firmly in the top three for total global fragrances and for prestige fragrances. And with this clarity on the fate of Gucci now, we will work to optimize the brand in a more tactical way until the last day of the license, while focusing on accelerating the rest of our portfolio. As a reminder, and you have seen it probably in our prepared remarks, we have already grown some of our biggest brands at a fantastic pace in the last five years. Burberry by 140 percent, Hugo Boss by 33 percent, Chloé by 70 percent, Marc Jacobs by 50 percent. And we can now focus even more on further expanding these brands, while in parallel building our next stars with brands like Swarovski, just like we have built Gucci. You may recall that we grew Gucci by 60 percent over the same period at constant currencies. Now, I would like to take this opportunity, Robert, if you allow me, to stress that some of the delusional media rumors from recent months about Coty potentially exploring the sale of some of our key fragrances are categorically false. May I repeat, categorically false. We are committed more than ever to solidifying our position as a prestige beauty company with an emphasis on fragrance and scenting across price points with cosmetics and skincare best-in-class capabilities. And as you can imagine, our long-term fragrance brands are the backbone of this strategy. Now, moving to the second part, which is a very important also question, which is around the impact of this event on the licensing model. I think that we can say that everything that happened confirms that the winners in beauty have been and will remain specialty beauty players like Kuti. In-housing, beauty remains incredibly complex, incredibly costly for non-beauty players, which reinforces the appeal of the licensing model. May I remind everyone about why this licensing model is really a strong model? It offers strong return on investment with no material upfront license or renewal costs, while established brand equity increases the probability of success and of payoff. Again, a successful licensing business depends on portfolio diversification and on minimizing the license duration risk. In recent years, as you have seen, we have proactively renewed and significantly extended many key licenses, including Hugo Boss, Marc Jacobs, Adidas, Davidoff, and all these for an additional 15 years plus. So today, I would say that 85% of our portfolio is either an own brand, a perpetual license, which we view like an own brand, or a license with very long-term remaining duration of more than seven years, 85% again. So for our core beauty portfolio, it remains also a very long-term in terms of nature, with approximately 80% of the brands either being owned or under long-term license. We also have been very prudent, as I said it for many years now, that no single brand in our portfolio accounts for more than approximately 10% of our sales. Now I'm going to answer the last part of your question, which is around, you know, an early exit from the license. So, again, there is no change to COTI's existing license on our ability to operate the Gucci Beauty license. All contractual rights remain in place and continue as agreed. COTI will continue to manage and operate Gucci Beauty under the same structure already in motion. And overall, we continue to solve this amicably with caring. Last part of your question, which is around, you know, a potential deal. As you can imagine, we are always open to evaluate any proposal, if and only if this creates real value for the company.

Thank you very much.

Thank you. And we will take our next question from Susan Anderson with Canaccord. Please go ahead.

Hi. Good morning. Thanks for taking my question. I guess maybe just a follow-up on the last question. I did see that Cody filed a lawsuit against caring for breach of contract. I guess maybe if you could just talk a little bit about what that means for Cody, you know, if that maybe helps to sell the license back early. And then also, I don't think you talked specifically about any financial impact when the Gucci license does transition to L'Oreal. Not sure if you could give any numbers around that.

Good morning, Susan. So let me maybe start with the second part of your question, which is around, you know, potentially the impact of this exit when it happens. As we have been discussing for some time now, we have been actively focused on risk management in the portfolio of Coty. And again, as I said it earlier, no brand bigger than approximately 10% of our sales. Now that the public announcement has been done that the license will no longer be part of our portfolio after the expiry date, Our focus for the next several years will be on overdriving the brands with the biggest long-term growth potential. It's going to be also on building and amplifying the new licenses and brands we recently added to the portfolio and, in parallel, optimizing the Gucci brand during its remaining term. As you can know it, Gucci is currently a sizable brand in the portfolio, so the loss of the brand at expiry will mean some profit impact in the year after. to address this gap, we will be overdriving, again, all the other rest of the portfolio while also addressing our cost structure. Now, regarding litigation, what I can tell you is that, of course, I will not comment on ongoing litigations, and I can tell you that we will defend our rights until the last day, until the last hour of the contract.

Okay, great. Thank you so much. Good luck this holiday.

Thank you very much.

Thank you. And we will take our next question from Filippo Filorni with Citi. Please go ahead.

Hi, good morning and good afternoon, everyone. Sue, maybe can you comment a bit about the better performance that you're seeing, fiscal Q2 that is driving you to the higher end of the range? Are you seeing an acceleration in some category growth? Is it the inventory dynamic solving itself earlier than expected? And then I had a bigger picture question on the fragrance mist. Can you just help us dimensionalize opportunity in that category and also just the margin profile as you expand there?

Yeah, good morning, Filippo. So on the first question regarding the better performance that we are contemplating for Q2, which led to our, you know, increase in terms of being at the more favorable part of the guidance for Q2. I would say that it's a mix of everything, in fact. The dynamism of the fragrance market in the U.S. continues to be very strong. Again, we are talking about a market that's in the mid-single-digit growth, and what we see in Q2 in terms of market dynamics is confirming this this element. So we believe it's going to be a good holiday season. This is number one. Number two, our innovations, specifically the Boss Bottle Beyond launch that started at the end of the Q1, more or less, and it was exclusive to travel retail during the summer until the end of August. So it all started in domestic markets around the end of September. This is such a big success that I believe it's going to translate into a stronger selling also for Q2. Boss Beyond Bottle is today the number two innovation in Europe, the number one innovation in volume in the dark region, number one in Australia, and even number six in the U.S. as an innovation for a brand that has never been a U.S., I would say, traditionally present brand on this very important market. So for us, it's really a big strategic bet, and it looks like it's going to be very, very big, which will help us to increase our market share in the male fragrances, which are also booming, as you know it. Number three, I think the dynamism is also at the entry part of the market, which is around the entry prestige brands, but moreover around the myths. The myths today are representing more or less 2% of Q1 net revenues in fragrances, which is big, I have to say. We have become the number three or number four player in Europe. Number one in Italy, to take a few examples, everywhere or every brand that launched its own MIST is seeing a very strong halo effect on the base business, be it Kylie, be it Philosophy or Calvin Klein, that are the first to go to market. And there are other brands arriving soon. And last but not least, you have a question around the gross margin of MIST. The way we have built these MISTs is, number one, to make them fully additional. And this is really confirmed. It's really incremental sales for the company, attracting consumers, which are the youngest part of the Gen Z target, which are not usually buying into traditional fragrances to that level. So this is one. And two, it's a gross margin that is in line with the one of our prestige fragrances. So there is absolutely no dilution in the way we have crafted and created this new category. So in a way, this Q2 better-than-expected outlook is driven by our ability, and I guess we are the only company doing this, to play high-low, while at the same time securing the heart of our business, which are premium fragrances.

Thank you. And our next question comes from Oliver Chen with TD Cowan. Please go ahead.

Hi, Sue and Laurent. As we are excited about the second half here, what are your thoughts in terms of the key launches and how you'll think about categories and the comparisons as well that will give that return to that growth in the second half? Also, as you think about consumer beauty in Brazil, we'd love your thoughts there on potential outlines and outcomes and timelines. Thank you.

Yeah, thank you. Good morning, Oliver. So indeed, about H2 and indeed, we are confirming that we will be back to growth in the second half of this fiscal. So that's the number one message. So, you know, what is, you know, behind these numbers is that indeed, you know, the continuing momentum of, you know, the beauty category and especially of the prestige and fragrance categories. So we see really consistent, resilient growth of this category. And again, you see the numbers. If I take the Q1 category, you know, fragrance growth in the U.S., which is a plus 7 percent. And our set out in Q1 is in line with this category growth. And indeed, all the work that the new management team is putting in place in the U.S. is really confirming that this trend is going to continue. and amplify in the H2. So that's a very important category. And the U.S., which, as you remember, was the main issue that we had a year ago. Now we are really already, you know, in a good place that we are recovering very fast. So that's really the big element. It's going to be amplified by strong innovation. So as you heard and as you saw, I mean, you know, BuzzBee on Bottle is off a very good start. and of course it's going to continue and amplify and we are coming also in the second half with an additional blockbuster so again the fundamentals of this growth are here and the last element which i want to highlight which is very important is that indeed at the end of this calendar 25 we are seeing that our sellout performance will converge with the selling So, indeed, we are seeing already this quarter and we continue next quarter that, you know, the level of inventory with retailers is declining significantly and, indeed, that we can really be back to really a well, you know, synchronized sellout and selling. So these are really all the drivers, the key drivers, confirming, indeed, having our H2 back to growth and, of course, to continue on this growth trajectory. So, indeed, that's really on the H2. So, indeed, on consumer beauty cosmetics, again, I mean, we announced and we made very clear that, indeed, now is really led by Gordon von Breton, who, as you know, I mean, knows very well the company. I mean, he was, you know, head of transformation, you know, a few years ago. And, you know, Gordon is really currently assessing and really reviewing, you know, the full potential of this division, working on all components. So the number one mandate, of course, is really to rejuvenate really the P&L, I mean, the profit and the cash generation from Color Cosmetic. And I can tell you that Gordon is already full speed, really, you know, built already a strong team, really to manage all these key initiatives. And I can tell you it's covering the full spectrum, again, of the P&L, starting, you know, of course, with top line, growth to net, growth margin, ANCP allocation, and, of course, the fixed costs. So it's really in motion, and we will keep you posted, of course, on the progress on this journey. And second, which is on Brazil, as you know, Brazil is a very, you know, is a profitable business. I mean, really, the work done over the last years really has brought very, very good results. And indeed, I mean, conclusions on Brazil are likely to come before the non-consumer beauty, the non-color cosmetic business.

Thank you. And we will take our next question from Olivia Tong with Raymond James. Please go ahead.

Great. Thanks. Good morning. With respect to fragrances, you've got really substantial growth, both in Ultra Prestige and Mist. So can you talk about the opportunity you see for both of them And more importantly, how to balance the two, particularly in terms of the MIST side. And then just building on that, you know, just thinking about the barriers to entry on MIST and then what your view is on price mix impact over time, given those dynamics.

Good morning, Olivia. Let me take this question. So, again, let me start with the MIST part. So these mists, as I said earlier, we really designed them with two or three principles in mind. The first principle is that we have to be where the Gen Zs and the consumers are shopping today. And they are shopping this kind of fragrances. You could think about the mists like a kind of modern colon. It's not new, the mists. But the way we've designed our mists maybe is the comparison that could be done between a Nokia mists and an iPhone mists, more or less. That's exactly what we have done. And on top of this, we added entry barriers. Indeed, it's a very important element, first in terms of our ability to use the library of winning scents from our prestige division. And number two, I can tell you that the formulation of our body mist, whatever is the brand, are patented formulations using ingredients that are there to act on the longevity of the scent on the skin of the body. And this is really a unique know-how to the company, which allows us to do what a lot of brand mists have not been able to do so far, which is to create a lasting impression. If you read online, what people love and hate about the mists, they love that it's easy to spray. It's also stackable. And the mist phenomenon is incremental because a lot of young users use it as lingerie and then they add their favorite fragrance at the main outfit on top. So it's not instead, it's with the rest of the fragrance consumption. And if you look at social media, the number one need gap is that it does not last. So this is where we use this patented technology that allows the fragrance to stay on the skin as true as possible from the moment you spray it on to the end of the day. So that's the first element regarding the mist. And for me, the mist is just a first step into what we call scenting everything, which I believe is the mission of the company, the know-how of the company, and the competitive advantage of the company. niche, you'll see many more things arriving in the near future around scenting your body. Number two, which is around the ultra-premium part of the market. This part, you know, we used to call it niche. I think niche is really a wrong word, because it's not that niche, in fact. Today, if you look at the biggest niche brands, they represent multiple hundreds of millions of dollars of net revenues. In a country like the US or in a country like UK, it's close to 20 percent of the prestige fragrance market. So it's a sizable portion of the market and probably the most profitable part of the market, too, given the high prices that are used in this area. There, it took us some time to build a portfolio, but now we have a portfolio. Again, there aren't that many companies that have a portfolio of ultra-premium brands. Again, I quoted earlier, of course, the Chloé Atelier des Fleurs collection, the Burberry Signature collection, the Jill Sander collection, the Boss collection, the upcoming Marnie and Etro collections, and, of course, the own brand, which is Infiniment Coty Paris. And we are continuing to chase new names in this area so that we are able to build a Coty ultra-premium business that represents between 10% and 20% of our business. And today, it's only 1%. It's growing at 17%, but we start from a small base. So for me, this is a fantastic growth engine for the future of the company. So again, we are the only company playing high-low on top of the core of the market.

Thank you. And we will take our next question from Ashley Helgens with Jefferies. Please go ahead.

Hi, this is Sydney on for Ashley. Thanks for taking our question. Can you talk a little bit more about what you're seeing in terms of promotion and how that maybe varies by region or channel? It sounded like there was some challenge from peers leaning into promo, so just curious if that puts pressure on you guys to shift your promotional approach at all. And then also just curious about any trade down or up dynamics. As you've mentioned, you are, you know, really spanning price point, especially within your fragrance offering. So curious kind of what you're seeing there in terms of consumption trends.

Yeah, good morning, Ashley. Yeah, indeed. So, indeed, we are seeing, you know, some, indeed, you know, some promotional activity, indeed. I mean, I can tell you, indeed, from some of our peers. I mean, we are very disciplined and very diligent, really, you know, not to be aggressive on that game. So, indeed, we are very choiceful, really focusing, again, on innovation and continue, really, to protect, indeed, our brand. And we are also developing, really, some ways to avoid this game, which is, as we shared a few times, now we have really dedicated teams working on revenue management. And revenue management is exactly how to avoid playing this kind of, you know, promotional game. I give you some examples. In the U.S., one category which is growing fast is a pen spray. Pen sprays are smaller format, 30 milliliters, indeed lower, you know, lower price. And indeed, instead of promoting, you know, some of our icons, in fact, some consumers can go to this segment. And it's also a smart way to enter the category. And then they go to the icon. So we are really developing different formats, different games exactly to match. So sometimes, you know, some pricing expectation. At the same time, what is very interesting, and was a previous point from Sue, is that you are seeing that, you know, the high premium category is flying. Okay, so it shows that we have really, with really our capabilities, our know-how, and really all the formulation that we are bringing, there is really a path that it's not only about price. It's really about always, you know, the excitement about the category. So I think, again, we are very well positioned, and you understand that these 5 to 500 is the best answer to this promotional environment because we are covering the full spectrum. We are, you know, matching the needs of all our consumers. And, indeed, I can tell you, so we are very choiceful, and we are making sure, indeed, that we are protecting our profitability. So, and on your last point, trade-down versus trade-up, I mean, that's exactly this point about the $500 to $500. So, it's really managing the full spectrum. Body Mist is also, you know, a very great answer to this question. I mean, we are seeing Gen Z, very excited by Body Mist. You know, it's $20 to $30 product that they really enjoy. different formulas as we indicated and then it's also a path at some moment to access you know to more premium products so you're absolutely right but i think all the strategies the teams and the tools that we are we have in place are really helping to navigate in this environment in fact to complement what laurent just said we are seeing clearly that consumers are stacking you know the sense this comes from the middle east this is a trend that's globalizing we call it scent stacking or scent wardrobe, depending on the moment.

So it's about using a body mist on your skin and then using a lotion on the rest of your body. And on top of this, you add your favorite colon for the day and your favorite elixir for the night. So that's exactly what we are seeing. So no trade down because the more expensive categories are the fastest growing, but it's a story of end rather than a story of either.

Thank you.

And our next question comes from charles scotty with kepler please go ahead uh yes hello good afternoon do you hear me yes we do yes good morning okay good thank thank you good morning um i have three questions please the first one uh how how is the shift uh toward the e-commerce affecting the the selling sellout dynamics um i suspect that you know brick and mortar retailers are experiencing some They're talking partly due to the intensifying competition from online players. So I would like to understand whether the shift to online, particularly in the U.S., could lead to a prolonged period of net destocking in that market. Second question on EMEA, which, if I'm not mistaken, was on 9% like for like in Q1. It seems that it's the mass color cosmetic business, which is dragging on growth. Could you comment on the trends of the prestige fragrance business? You mentioned missing edited growth in the U.S. What about EMEA? And if you could give us an idea of the price mix volume breakdown of the category, both in EMEA and in the U.S., it would be helpful. Lastly, in China, demand seems to be recovering. You are obviously under indexed on the Chinese market. But you mentioned that the outlook for the fragrance category is quite promising. Who do you think will take the lion's share of the market between the niche brands and prestige brands? And with which brands are you going to tackle the Chinese market more specifically?

Yeah, good afternoon, Charles. So, indeed, I can take the first one, indeed, and we can complement it in on China. So, indeed, on your question about brick-and-mortars and e-commerce, just to zoom out a little, yeah, of course, I mean, e-commerce is growing very fast, and you know that now it's more than $1 billion net revenue for Total Cote Inc., and it's growing fast. In the Q1, we are seeing, I mean, the sellout of our e-commerce on both divisions is 5% to 6%. So, indeed, we are really taking full opportunity of these channels. So, that's, of course, very dynamic. From a de-stocking standpoint, no major difference, you know, between both. What I would highlight, though, is that, of course, we are e-commerce players and the number one being Amazon. As you know, they are, you know, very strict and very well organized on their inventory management. So, indeed, it means that it's creating, if you look at full picture, indeed, you know, reduction of the retailer's inventory. So, indeed, you have, I would say, I call it more mixed effect, you know, from between e-com and brick and mortar. So, that's a fact that it's not material. The other element is also that it's putting pressure on the brick and mortar retailers. And as a result, they are also becoming more disciplined and strict on their inventory management. So I think you need really to look at it more this way between both channels. EMEA, yeah, down. Indeed, yeah, it's mostly color cosmetic, indeed, as you see for the whole company. Indeed, our prestige, fragrance, sellout is positive, so it's really dynamic. And again, all the innovations that we are bringing, I mean, BuzzBee on Bottle is the number two male initiative in Europe. It's number one in volume in Germany, and we are only at the beginning. So it's going to continue and amplify in the Q2. So you will see really the sellout in EMEA continue to increase. At the same time, same as the U.S., yeah, we are still facing, and we will, you know, close by end of calendar. Indeed, you know, from a selling standpoint, facing the retailer stocking, and, you know, for example, Douglas made public that they are focusing on inventory reduction. So these are really on the first two elements, and, yeah, I will hand over to Seth.

Or maybe I can complement your answer regarding the dynamics of the fragrance market in the U.S. versus in Europe. Again, what we can say is that the prestige fragrance market grew by 5% during the quarter globally. which is a little slower than months ago but it's ahead of many other consumer categories including color cosmetics in the u.s the market remains very strong as i said it before seven percent of growth in the quarter and very importantly this is to answer your question this includes low single digit volume growth since the category continues to gain users and additional usage occasions in europe the picture is a bit different where the market has been growing only by uh you know low single digits in Q1, coming from mid-single digits. This is mainly due to one market. It's very important. By the way, Coty is quite small. It's the French market, where the likes of L'Oreal, LVMH, and Pouch are very big. It's the market that is really very big and not very dynamic, whereas markets like the UK and Spain remain very strong with a mid-single-digit growth, including here again, low single-digit growth from units. So that's the picture between U.S. and EMEA value-slash-volume growth. Now on China, the market is recovering. That's good news. It's recovering on all the categories that the company is playing on, be it skincare, fragrances, or color cosmetics. Koti has posted 15% sell-out growth in the market to be compared to a market that was around 7% of growth, which is a good growth. And this was driven by our skincare business. Lancaster is doing wonders in this market, which is very important. It's the most competitive skincare market in the world, even if it's from a small base. The brand is doing 90% of growth on the market that's more or less 8% to 9%. So we are growing 10 times faster than the market, both in photo protection, which is UV care, but also on traditional skincare with our moisturizer, among the best-selling moisturizers of the Chinese market. The other part, which is the biggest part of our business, it's 70% of our business, it's fragrances. And there the market is back to growth, and we are growing two times faster than the market. So your question is what is needed to compete on this market? Exactly the brands we have at Coty, in fact. There it's not a question of high-low. It's all about high, high, high, high. And the higher you go, the better it is. And, again, I've been describing at length the very comprehensive portfolio of ultra-premium brands that we have today in our hands. Again, Atelier des Fleurs, which is phenomenously doing well in Asia, Burberry Signature, Bus Collection, Jill Sander Signature, Marni and Etro Upcoming Collection, Infiniment Coty Paris. and I'm sure I forgot one or two, but this is really a portfolio that will allow us to play in this area like never before to reach here not 20% of the market, but likely 40% to 50% of the Chinese market are ultra-premium brands. So there is really a big game to be played with a very, very profitable business to build.

Thank you. And we will take our next question from Anna Lizel with Bank of America. Please go ahead.

Hi, good morning, good afternoon. Thank you so much for the question. I was wondering if I could follow up on the prestige fragrance expectations for just the holiday season. You know, gifting is such a big driver of fragrance sales for many retailers during this time. And, you know, should we expect trends, I guess, be more similar as you thought before Q1 on the more difficult comps for prestige fragrance gifting, despite some of the sequential improvement that you might be expecting in the next quarters? And then on the mass beauty side, just wanted to follow up on the comment regarding the rapid channel shift, if you could elaborate on where you're seeing buyers gravitate in mass beauty and how it's impacting your business.

So, good morning, Anna. And indeed, I mean, you know, just to confirm again, and we shared with you a few numbers. I mean, we are, you know, very confident, again, about, you know, the prestige, fragrance, performance, and category. Again, you know the numbers. I mean, it has been, you know, very resilient for many years, many quarters. You know, the fragrance index that we talked a lot about, I mean, is fully at play. So we are expecting, you know, similar trend for Q1, also amplified by very powerful innovation, and BuzzBee on Bottle is one of them. We are seeing Gen Z being very, very excited by the category. And again, back to the previous point, what's very healthy is 5 to 500, where we are seeing, you know, the high premium category growing double digit. And, of course, holiday season is a great season for that. And at the same time, we are seeing entrepremium being very dynamic. So, yeah, we are expecting a really very dynamic trend in the U.S. and also in Europe. So, now on the… I can't…

So, I understand your question. It's about the shifts that are happening between, let's say, the brick and mortar slash e-retailers on one side versus Amazon and TikTok shop on the other side. If I'm not wrong, then I will elaborate on this. What we are seeing, indeed, is a shift that's very important. And it's a story of and rather than a story of either, again, here. You know, it's a question of funnel. And what we see is that a lot of the youngest consumers, at least, are really, you know, looking for what's new on TikTok, almost like a search engine and a hype engine at the same time. It's already also an e-commerce engine, not in every country. It's the case in the U.K. I think it's the second beauty retailer already in the UK. And this is where we learned our lesson with Remail, where we really tested the channel to understand how, you know, to play with this channel. And we understood that we need to see it as an investment channel, now more and more as an e-com channel. But this is really where you create the cool factor for your brand. And then you move to Amazon, where you get the ratings and the big numbers. And then after, you go to the rest of the retailers, including dot-coms from retailers. So that's really a way that is today played by key players when it comes to how to create, you know, virality or how to create desirability and demand. So we are doing this in the U.S. also with CoverGirl that also did a test on a TikTok shop recently, and we are amplifying these two moves in the coming quarter with the new innovations that are going to be done in Q3. The other thing that we are also seeing is that there is also a shift in terms of the share of what we call indie mass color cosmetics brands. If I take the example of Emco Beauty in Australia, which was a kind of, you know, this kind of indie brands that are quite cheap in terms of pricing, very nimble, very agile, mainly from the shelf innovation from TPMs, et cetera. They are collapsing. They are collapsing after one or two years, and this is really something that we are seeing across many regions with this kind of players, including key ones in the U.S., but also in U.K., who are starting to lose market share and who are not giving the growth of the category that retailers are expecting. So we expect a kind of, inside the channels, we expect a kind of rebalancing between these indie players, which are more or less dupe players, and the more traditional players, which are learning the lesson quite quickly.

Thank you. And we will take our next question from Siobhani Shadbury with J.P. Morgan. Please go ahead.

Good morning and good afternoon. Thanks for taking my question. I have a couple questions. You addressed the strategic review to Oliver's question earlier, but I wanted to dig a bit further into how you're thinking about the various options. Can you give us more color in the results that would inform your decision for each of the options out of this review, whether you decide to keep the business given like you're trying, you had management changes, and you just mentioned you're trying with CoverGirl testing out on TikTok, or would it be a JV or an outright sale? Given the strategic review, how do you prioritize the decision of the strategic review versus the well-as-sale?

Okay. Let me take this last question. Good morning, Shavana. So, indeed, what we are doing are two stories, two very different stories. So, you have on one side the Brazilian business, which, as Laurent stated it before, is a very profitable business, a business of $400 million, a business that doubled its size in the last, I would say, decade, a business that has its own factory that produces more or less half a billion units per year, R&D specialized in melanin-rich skins. You have also end-to-end capabilities, be it in terms of digital capabilities, commercial capabilities, marketing capabilities, and last but not least, with a portfolio of brand that is very different from the global portfolio of brands that Coty is operating elsewhere. So it's really local players, the number one nail maker, Risqué, the number one male skincare brand in the market, big growth in terms of face skincare, leadership position in terms of body sensing. So it's really a business that we believe have potentially more chances to continue to do its journey with a new acquirer, if you may call it like this, And this could happen quite quickly, even the size of the business, the profitability, and the dynamism. So that's one. On the other side, regarding the color cosmetics business, there, again, the strategic review is a real one. It's not, you know, just a word to mean something else. It's really reviewing our strategic options. The first one is by nature to do the job of making this business as fast-growing and as profitable as possible and as quickly as possible. And there, the duo that Gordon and myself are having at the helm of this business hopefully will produce quick results that we will see in the coming quarters. Then there is a deeper work that's going to be done on the cost structure, on the growth to net, you know, ability to lower this part that is today very, very heavy, but also on the ANCP allocation. We believe we went too far in terms of spending a lot on Gen Zs who are by nature the least loyal consumers on Earth instead of keeping our key loyal millennial and Gen X users, which are the big portion of the market, but also the ones that are growing more and more this kind of market, given the indie brands are not growing anymore the market. So, in a way, that's really the outcome potentially of this part. And there, you know, the first results in 12 to 18 months, but it could take longer. So, there is not the idea to sell the business tomorrow. There is the idea to really assess all the possibilities and see if this is an area where we want to continue to play or not. specifically given the fact that it's going to be more and more and we see it a business of in and out small players sometimes they go big but they become smaller later and they take a shelf space and they disappear so that's really something we need to pay attention to do we want to play this game or not are we equipped to play this game and are we able to do i would say a positive progress in this in this in this area now does it have any impact on vela absolutely not you know vela is a very separate topic. As Laurent said it several times, the standstill period is over since the end of calendar 24. We are actively more than ever working on this topic right now, so stay tuned.

Thank you. And at this time, there are no further questions in queue. I will now turn the meeting back to our presenters.

Thank you everyone for your questions and see you soon.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Done.