Interparfums Inc Q4 FY2024 Earnings Call

Greetings, and welcome to the Inter Parfums, Inc. 2024 Fourth Quarter and Year End Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Karin Daly, Vice President at The Equity Group and Inter Parfums, Inc. investor relations representative. Thank you. You may begin.

Thank you, Tomali. Joining us on the call today will be Chairman and Chief Executive Officer, Jean Madar, and Chief Financial Officer, Michel Atwood. On behalf of the company, I would like to note that this conference call may contain forward-looking statements, which involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from projected results. These factors may be found in the company's filings with the Securities and Exchange Commission, under the headings Forward-Looking Statements and Risk Factors. Forward-looking statements speak only as of the date on which they are made, and Inter Parfums, Inc. undertakes no obligation to update the information discussed. As a reminder, Inter Parfums, Inc.'s consolidated results include two business segments: European-based operations through Inter Parfums SA, the company is 72% of the French subsidiary, and United States-based operations. It is now my pleasure to turn the call over to Jean Madar.

Thank you, Karin. And good morning, everyone, and thank you for joining us on today's call. 2024 was a great year for us. We closed it on a high note with record fourth-quarter sales and earnings. Our sales culminated at $1.452 billion, and the adjusted earnings before an impairment was $5.18 per diluted share, beating our guidance of $5.15. It was also the year we initiated distribution and sales for the two new brands, Lacoste and Roberto Cavalli. We also renewed our license agreement with Bank of America, extending our 18-year partnership into the next decade. Additionally, we signed an agreement that will bring the off-price fragrance business under our direction starting in 2026. We have also been recognized for numerous awards and achievements this year. However, the one we are most proud of is our inclusion in Time Magazine's World Best Companies Sustainable Growth Ranking, which recognizes the 500 most exemplary companies in terms of economic growth and environmental commitment over the 2021-2022 period. Specifically, our 72% owned subsidiary, Inter Parfums SA, ranked number 44 out of 500 among all companies worldwide. Talking about business, for the second year in a row, Jimmy Choo, the largest brand in our portfolio, increased sales by 7% for the year, largely driven by the ongoing success of the I Want Choo franchise. Guess also had a stellar year, growing 13% due to the continued robust performance of its legacy fragrance, plus the initial success of our new pillar, Guess Iconic. The brand entered 2025 with very strong programs and momentum from the fashion house. Donna Karan and DKNY fragrances, which joined our portfolio in mid-2022, generated sales in excess of $100 million already. I would now like to provide an update on Ferragamo. As you know, we took the license three years ago, and the initial focus was to clean up the distribution, which we accomplished. The largest markets for Ferragamo are the USA, Italy, and Mexico. It is very important for us that we will launch a new blockbuster, the first blockbuster for Ferragamo in the last four years. It is called Fiamma, and we plan to invest over $20 million on the brand in 2025 behind a new visual merchandising approach and a new advertising campaign. Fiamma will be the first major blockbuster launch, developed with the creative vision of Maximilian Davis, the creative director of Ferragamo. It incorporates core elements of the brand, especially a brand new aesthetic, with organic shapes, fluidity, and texture. It represents true design innovation. Regarding the advertising, we shot the campaign with a renowned photographer, Mario Sorrenti, featuring top model Karolina Spakovsky. The new campaign is set against the backdrop of Florence, the birthplace and headquarters of the brand, expressing the vision of a modern community. We have high hopes for this new blockbuster, Fiamma. Touching on our newest brands, Lacoste far exceeded our expectations in its first year under our management, achieving over $84 million in sales or 6% of our total sales with strong popularity worldwide. We didn't just relaunch Lacoste original; we redefined its place in the market. Through a blend of strategy, creativity, market insight, and commercial innovation, we are transforming Lacoste's presence, setting a new standard in its space. In 2025, we will expand the original line for both men and women and the L.12.12 line. Regarding Roberto Cavalli, Roberto Cavalli met our expectations in its first year in our prestige portfolio, contributing 2% to our top line with $31 million in sales in less than 11 months. Earlier this year, we revamped the inherited fragrances and launched a new set called Sweet Ferocious. We also introduced Just Cavalli White Hat and a collection of Hair and Body Mist. In 2025, we have a significant blockbuster fragrance for Cavalli called Certain Time. Our partnership with the Cavalli brand comes at the perfect time, with new store openings, widespread buzz in fashion media and social platforms, and fashion icons embracing its bold designs. Cavalli's resurgence is in full swing. In December 2024, we signed for all Off-White brand names and registered trademarks for class three fragrance and cosmetic products. In 2026, Inter Parfums, Inc. will begin commercial use of a fragrance brand. Today, Off-White fragrances for both men and women are sold in department stores such as Saks and Neiman Marcus, specialty stores, and of course, online. Our three largest markets, North America, Western Europe, and Asia Pacific, attained gains of 6% from North America, 21% for Western Europe, and 3% for Asia Pacific in 2024 compared to 2023. The Middle East and Africa, Eastern Europe, and Central and South America also grew sales by 5%, 14%, and 17%, respectively. It is worth noting that travel retail sales continued to strengthen, increasing by 20% from 2023. Travel retail is an important channel, and our goal is to maintain our focus on brand building rather than pursuing quick wins through promotions. As always, we prioritize our retail and wholesale partners consistent with our established strategy. In 2024, direct sales to retailers, including travel retail, represented approximately 49% of our net sales, up from 47% one year earlier. As previously disclosed, beginning in 2024, our Italian hub began managing sales in Italy for all our brands. This model has proven successful, and we are actively exploring opportunities to expand it into new markets, including the UK and Spain. Much of the success we achieved in 2024 is due in part to our omnichannel services, including our e-commerce business, particularly on Amazon and Divabox, one of the largest e-commerce channels in France. We recently launched our own page on TikTok Shop, which started small but has gained momentum rapidly, with purchases increasing week over week since its inception. Consumers are increasingly becoming content creators and influencers across various social media platforms, sparking excitement around niche and luxury scents. This digital shift has not only fueled discovery but also increased online fragrance sales. One of our greatest strengths is our ability to stay ahead of emerging trends. From the growing demand for premium, ultra-premium, and luxury fragrances to the rise of multi-scent collections, we anticipate what consumers want. We have seen a surge in fragrance use among males, particularly teens, along with a shift towards gender-neutral scents and highly concentrated, long-lasting formulas. Our brands are in demand globally, as evidenced by increased sales in all major markets in 2024 compared to 2023. We understand the art of capturing a consumer's attention and enticing them to pick up a fragrance, experience its scent, and connect with it on a deeper emotional level. This engagement, where our fragrance becomes a true reflection of their identity, is how we evaluate our brands and new opportunities for growth. While the past two years focused on expansion, in 2025, we will introduce bold new fragrances that energize our brands. From new blockbusters to pillars and elevated extensions, we are crafting high-quality, highly concentrated scents aligned with the evolving preferences of today's fragrance consumers. With regards to product launches in our 2025 pipeline, we have blockbusters debuting for Ferragamo, as I mentioned before, as well as for Rochas, and Cavalli. We will also have fragrance duos for Karl Lagerfeld and new collections for DKNY, MCM, and Guess. Guess will see an iconic format in stores in the spring. Furthermore, we have extensions across nearly all our portfolio, including our three largest brands: Jimmy Choo, Montblanc, and Coach. A new main extension for Montblanc will debut, we are expanding the multi-scent collection with Starwood, and we are also expanding the Explorer family with Explorer Extreme. Coach for men will welcome a new version early this year in response to the increased demand for highly concentrated, long-lasting scents. 2025 will also see the creation of our first proprietary brand called Solferino, a collection of ten niche fragrances developed by star perfumers to be launched initially for an ultra-selective distribution channel with no more than 100 points of sale. We will also open a store in Paris entirely dedicated to the brand, along with a dedicated e-commerce site. With the Solferino collection, our goal is to gain insights that can be applied across our portfolio while also strengthening our position in the robust high-end fragrance market. As we step into this market, we are also pruning our portfolio of smaller brands. In 2024, we discontinued Dunhill, and in 2025, the Boucheron license will expire. Both of these brands represent a small part of our portfolio, and we aim to compensate for these losses through new brands like Off-White and Solferino, while also growing our core brands faster. We are also streamlining our supply chain for our European-based operations. Historically, we relied on third-party logistic providers for packing, shipping, warehousing, and other fulfillment services. In the US, we recently decided to transition our warehouse in New Jersey, which we have operated independently for 30 years, to a 3PL model to streamline operations and reduce our overhead costs. This transition is expected to be completed by June 2025 and will enhance efficiency and better serve our customers while focusing on our core competencies. Looking ahead, the momentum in the global fragrance market continues on a positive trajectory, but at a slower pace than in recent years. We are also facing a range of other headwinds, including potential tariffs, regulatory challenges, and currency fluctuations. Regarding tariffs, we source components from multiple regions and are actively working with our suppliers, particularly in China, to navigate these potential tariff changes. We buy certain components from China, like plastic and metal caps. Although an increase in tariffs on components remains a possibility this year, we aim to mitigate cost impacts to avoid passing them on to our retail and wholesale partners. As an exporter of American-made finished goods to neighboring countries and an importer of finished goods made in Europe, we are closely monitoring potential changes in US import and export taxes. If these costs rise, we will explore all possible strategies to offset the impact on imports, including potential pricing adjustments. While these factors pose challenges, we believe they do not represent significant cause for concern as we feel most of the industry is taking this approach. On the regulatory side, our team will continue to ensure our products meet the highest standards of safety and compliance worldwide. We are prepared to navigate the complex regulatory landscape to mitigate any potential disruptions, including chemical safety, where we are reformulating many of our products as necessary to ensure compliance while continuing to innovate within safe parameters. We expect to reformulate about 80% of our formulas and packaging over the next three years due to several banned substances that are prevalent in many fragrances. We successfully navigated a similar process when Lilial was banned recently. Additionally, the modernization of the cosmetics regulation act, called MOCRA, represents a significant shift in FDA oversight of cosmetics. We have implemented rigorous compliance measures to meet MOCRA requirements regarding mandatory product listing, safety substantiation, and facility registration. Given the emphasis on deregulation, we are also anticipating and preparing to navigate increased legislative activity at the state level. To conclude, our innovative and creative expertise, combined with the strength of the current fragrance market and the depth and diversity of our brand portfolio, position us well for another year of record sales and earnings. While economic and geopolitical uncertainties prevail, our agile workforce and ability to adapt to evolving conditions are essential to sustaining our success. I will now turn it over to Michel for a review of our financials.

Thank you, Jean, and good morning, everyone. I will begin by discussing the consolidated results before breaking them down into our two operating units, European and US-based operations. Overall, as you have seen from our earnings release, we delivered significant top-line growth while expanding margins. We also beat our sales and earnings guidance. As we reported, consolidated net sales grew 10% in both the final quarter and the full year to $362 million and $1.452 billion, respectively, for the year. Gross margin was broadly in line with the prior year periods at 64.5% and 63.9% for the fourth quarter and full year. SG&A as a percentage of net sales was largely consistent with 2024 at 44.7%, which is up only 10 basis points from one year earlier. We maintained significant investments in A&P to strengthen brand awareness, stay competitive, and support ongoing growth, particularly with two new brands in our portfolio. In total, we devoted $281 million in A&P, 7% higher than last year. However, as a percentage of net sales, A&P was 19.3%, which is below our target of 21%, as we phase some of our A&P investments into the first half of 2025, where we believe we will see a higher ROI. Royalty expenses, included in SG&A, averaged approximately 8% in 2024, generally in line with our five-year run rates. This brings our 2024 consolidated operating income before impairment loss to $279 million, a year-over-year increase of 11%, with an operating margin that is best in class at 19.2%, slightly ahead of the prior year. Our effective tax rate for the year was 24.2%, which is a blended rate between our US, French, and Italian entities. This rate improved by 60 basis points from 24.8% in 2023 when we had a $3 million tax assessment. Moving to our different segments, for our European-based operations, we finished the year on a strong note, achieving a 6% sales increase in the fourth quarter, leading to a 10% sales increase for the year. Gross margins were lower by 30 basis points, at 67% for the full year, due to an unfavorable brand and channel mix, but they did expand slightly in the fourth quarter, by 20 basis points, reaching 69%. SG&A expense increased on a dollar basis for the fourth quarter and the full year, but decreased as a percentage of net sales by 80 basis points for the full year compared to the prior year period. As we phase some of our A&P expenses into the first half of 2025, we expect higher A&P expenses from our European-based operations in the first half of 2025 as a result of this shift. During the fourth quarter, our French subsidiary, which manages our European-based brands, recorded a supplemental nonrecurring noncash impairment charge of $4 million related to Rochas' fashion business. When we acquired Rochas in 2015, we acquired both the fragrance and fashion business for $108 million. We allocated $20 million to the fashion trademarks and the balance to fragrances. Fragrances continue to perform ahead of expectations in line with our core competency and expertise, while the fashion business has faced more challenges. At this time, we are actively discussing and seeking alternative solutions for the Rochas fashion business, which triggered the need to impair the asset. After this impairment, we will have $7 million left on our balance sheet of the original $20 million. Net income attributable to European-based operations grew 12% to $140 million for the full year. Now turning to US-based operations, the story is similar. We achieved a 16% sales increase in the fourth quarter, leading to a 12% gain for the year. Gross margin was down 60 basis points to 57.9% in the fourth quarter, driven by an unfavorable product and channel mix. However, for the year, gross margin expanded by 90 basis points to 57.9% due to a favorable brand and channel mix. As Jean noted, we are expanding our direct-to-retail channel in the US, which is gross margin accretive. We will continue to focus on this strategy while maintaining strong relationships with key wholesalers as our preferred partners. Similar to European-based operations, SG&A increased on a dollar basis, but as a percentage of net sales, it decreased 190 basis points from the prior year's fourth quarter. On a full-year basis, SG&A as a percentage of sales increased by 70 basis points to 40.5% due to continued investments in infrastructure and employee headcount to support business growth, along with increased A&P activities. Overall, net income attributable to US-based operations grew 8% to $69 million for the full year. We closed the year in a strong financial position with $235 million in cash, cash equivalents, and short-term investments, and working capital of $582 million. With 10% sales growth, we managed to keep inventory flat compared to last year as the benefits of our inventory optimization program started to materialize throughout the year. We also significantly improved our cash conversion cycle, delivering operating cash flow of $188 million in 2024, which is 92% of net income, up from $106 million or 56% of net income in 2023. Our long-term debt approximated $157 million, primarily driven by loans taken out to acquire our headquarters. Cash flow-wise, accounts receivable was up 17% from the prior year 2023, with days outstanding increasing from 62 to 66 days in 2024. This reflects the change in our channel mix as mentioned, but with strong partnerships, we do not anticipate any issues with collections. As announced in our press release yesterday, given our confidence in our long-term growth prospects, operating cash generation, and solid balance sheet, our board of directors approved a 7% increase in our annual dividend to $3.20 per share, up from $3 per share in 2023, representing a 60% payout on 2025 expected EPS. Now, regarding our 2025 guidance. As Jean and many of our peers have noted, the fragrance market's momentum is continuing at a more modest pace. While we did beat our guidance on sales and earnings in 2024, competition has slowed and operating margins have contracted as the category becomes more competitive. We are also experiencing foreign exchange headwinds for the first time in two years, with the euro reaching 1.02 against the dollar in January, down from 1.08 throughout most of 2024 and 1.09 in January 2025. We anticipate these FX headwinds will impact us in the first quarter of 2025 by approximately two points and possibly extend into the rest of 2025. Despite these headwinds and eroding competitive margins, we remain confident that 2025 will be another record year with our guidance intact at $1.51 billion in net sales and an EPS of $5.35 per share, representing 4% growth across the board. We will update this guidance as the year progresses.

Thank you. We will now be conducting a question and answer session. You may press star two to remove yourself from the queue.

Yes.

Thank you. Our first question comes from the line of Linda Bolton-Weiser with D.A. Davidson. Please proceed with your question.

Yes. Hello. So I was wondering if you could talk about, I think in the press release, there was a mention of destocking in the industry. I was curious if you could give us a sense of what's going on there because I know you had that issue last year in 2024, but I thought it was completed and that you felt things were in good shape. Can you just kind of tell us where you think the channel inventory stands at this point? Thanks.

Hello, Linda. Thank you for your question. I will say that we did a good selling in November and December, anticipating a strong holiday sell-through, which occurred. The gap between sell-in and sell-out has reduced over the last two to three months. So it's not going to be as severe as it was throughout the entire year of 2024. Michel, do you want to add something?

Yeah. I would say, as you know, Linda, we saw about two to three points of destocking effect, the gap. Most of that happened in the first nine months of the year. There was still a small difference in the fourth quarter, but it was really moderate. At this point in time, we're feeling comfortable that the worst is behind us in this area.

Okay. Sounds good. I was also curious about your comments on competition. The category has always been competitive, with big players and yourself, gaining market share over time. What do you mean by competition changing, and do you expect to gain market share in 2025?

Okay. So Linda, if you look at the data, we like to look externally and understand what's really happening out there. We are looking at our competitive peers, obviously, the publicly traded ones. What we see is that overall growth in our peer group has been below the overall market. While the market has been very strong, the sell-in, which is reflected in our peers' sales, has been lower. I believe the destocking effect has probably impacted the broader industry, not just us. Regarding margins, we've been able to hold our operating margins flat, whereas most of our competitors have reported eroding margins. It's always challenging to go into specifics based on disclosed information, but we are witnessing a clear trend of eroding margins across competitors. The industry was surprised by market growth and invested less accordingly. As the market slows down, competition is becoming more intense.

I tend to agree. Do we expect to gain market share in 2025? We believe that the level of innovation from most of our brands is impressive. We have blockbusters for Ferragamo, Rochas, Cavalli, MCM. It's an important year for blockbusters. We have significant extensions on important brands like Jimmy Choo, Montblanc, and Coach. Yes, I think we can continue to gain market share, albeit at a more moderate pace, but we have the tools to do it.

Thanks. My last question is about the Ferragamo blockbuster launch. What month or what part of the year do you think it will launch, and will it be a gradual rollout or a global launch?

It's going to start in the second quarter. We're going to begin seeing some selling in the second quarter, accelerating in the third quarter. Important markets will be the USA, but I'm going to China next week to observe opportunities there. Even though we have faced challenges in China, we believe that, with the right promotion, we can market the new fragrance effectively. As you know, our market share in China has been low, only 4% for us. However, we believe we have interesting potential with Ferragamo. The major markets will be Italy, the US, and Mexico, where we have a significant market share.

Okay. That's it for me. Thanks a lot.

Thank you, Linda, for your questions.

Thank you. Our next question comes from the line of Ashley Helgans with Jefferies. Please proceed with your question.

Hi. Thanks for taking our questions. You mentioned that you expect the market to remain robust but moderate compared to the strong years of the past. Can you talk about specific markets where you are seeing more moderation? As the market normalizes, what should we expect concerning promotional levels?

Okay. If you take the market overall, things started off really strong in 2024. I'll give you a few data points: the US market increased by 20% in both the first and third quarters. The fourth quarter exhibited a more moderate growth rate of 11%. That illustrates the trend we've seen at a global level, finishing the year with about 11% growth for the top markets we track. Overall, the industry is moving toward mid-single-digit growth, which has been our historical growth rate. On promotionality, Jean, would you like to address that?

Yes. I don't expect promotional levels to change significantly in 2025 compared to 2024. We're looking at maintaining a similar approach. As Michel mentioned in his remarks, our investment in advertising and promotion is substantial. We have invested nearly $300 million in advertising and promotion, excluding what our partners and distributors are spending, which is estimated to exceed $100 million. This investment in the market is vital for driving our future sales.

Expanding on Jean's thoughts, this is not a category where discounts are typical. When we speak of promotionality, we're referring more to offers rather than price reductions. We observed an increase in gift set offerings during the fourth quarter, likely in response to other brands increasing their prices significantly. We did not raise our prices in 2024, and we are not planning to take any in 2025.

Thanks so much. That's super helpful. I'll pass it on.

Thank you.

Thank you. Our next question comes from Korinne Wolfmeyer with Piper Sandler. Please proceed with your question.

Hey, good morning. Thanks for taking the question. I'd like to touch a little bit on the building blocks of performance by brands in 2024. I understand that the addition of Lacoste and Cavalli added approximately nine points. There was possibly a headwind from Dunhill. The press release stated that the top 70% grew about 4%, if I remember correctly. This implies that the remaining portion of the business struggled a bit or saw less growth. Could you elaborate on some of those softer performances and what gives you confidence in their recovery in 2025? Thanks.

Michel?

Yeah. Korinne, as you add many brands, both new and large, you naturally focus on the most significant parts of the portfolio. Some declines can stem from several factors. For instance, the decline in a brand like Lanvin can be attributed to its footprint, heavily reliant on markets like Russia and Eastern Europe, where issues persist, as well as in China, where the market has slowed. Our focus is on ensuring we grow our larger brands disproportionately and provide the necessary attention and investment for our smaller brands, which are inherently more volatile and responsive to innovation and market dynamics.

Absolutely. We work diligently on our smaller brands. They are not less significant, but naturally smaller. Oscar de la Renta is crucial for us in the US, but international markets pose challenges for us. We're managing to maintain sales, and we've also been able to preserve sales for Van Cleef & Arpels, which is another smaller brand in our portfolio. Of course, in this highly competitive environment, maintaining sales levels for these brands is already a positive outcome. Innovation is key for smaller brands as well, which can be influenced by timing. For instance, MCM is primed for growth in 2025 because of a great new collection we're launching now.

Very helpful. Thank you so much for the insights. Michel, could you provide more context on what you're anticipating for gross and operating margin performance throughout the year, considering quarterly factors? Thanks.

Sure. As you know, we don't generally provide quarterly guidance as we prefer to plan over the long term rather than on a quarter-to-quarter basis. Overall, on the top line, two factors will affect us in the first quarter. The loss of Dunhill will impact the first three quarters, as we phased it out at the end of September. That's expected to affect us by about a point over the year. Additionally, FX will impact us as mentioned in my prepared remarks, with the euro fluctuating between 1.04 and 1.05 right now. We anticipate that for the first quarter, it will be around flat, mostly due to the combined effects of the Dunhill phase-out and FX. Regarding gross margins, we don't expect significant fluctuations, apart from the normal seasonal patterns of gift set sales and channel distribution. Overall, however, we are not expecting considerable changes in our gross margin for the year, nor on a quarterly basis. On the SG&A side, as indicated in my comments, we are phasing some A&P into the first quarter. We believe this strategy will yield better ROI for our promotional efforts behind our blockbuster launches. Therefore, expect A&P to be higher, likely impacting operating margins in the first quarter.

Great. Thanks so much.

Thank you. Our next question comes from Susan Anderson with Canaccord Genuity. Please proceed with your question.

Hi. Thanks for taking my question. Following up on the brand performance question, can you provide some insight on how the performance of your top brands will trend in 2025? Should we anticipate larger brands to exhibit low single-digit growth while newer launches like Ferragamo and continued growth from Lacoste could provide some upside?

I'll respond, and then perhaps Jean can add. Overall, innovation is crucial for us. Brands such as Guess, Ferragamo, Cavalli, Lacoste, MCM, Donna Karan, and DKNY are expected to drive significant growth due to strong innovation. Conversely, larger brands like Montblanc, Jimmy Choo, and Coach, where innovation will lean more towards flankers, will see more moderate growth. We are ramping up innovation for 2026 for all three to further boost growth.

I would like to emphasize that brands like Jimmy Choo, Montblanc, and Coach will indeed see contemporary extensions. We have substantial plans for 2025, including 2026 and 2027 strategies, that guide us towards achieving our growth forecast of 4% for 2025. It will also be interesting to observe that this growth will come with profitability. We are not anticipating more gift sets or promotions next year; instead, we will take a balanced approach.

That’s very helpful. Could you share what you're seeing so far in 2025 to start the year? Feel free to provide general trends around fragrances, particularly the dynamics between sell-in and sell-out, and whether beauty is showing any improvements in your regions?

To address your question regarding sell-in versus sell-out, in the first nine months of the year, we observed a significant variance of around two to three points. By the fourth quarter, this gap significantly reduced. We currently feel positive about the situation. As I mentioned in response to Linda’s question, we believe this trend represents a broader industry trend and applies to the competitive set we observe. Customer dynamics have generally remained consistent, particularly in the US and worldwide. We are noticing an increasing interest among men in fragrances. Historically, the fragrance market has seen lower male penetrance compared to female. We are witnessing what seems like a generational shift where younger men are entering the category. Additionally, consumers are seeking more long-lasting fragrances. I believe this trend will persist as individuals grow more sophisticated in their fragrance preferences. It’s akin to how individuals progressively transition from basic products to more refined options in various sectors, whether it be beer, wine, or fragrances. Regarding quarterly performance, we typically avoid giving quarters' guidance. However, we are targeting a 4% growth for the year. The first and second quarters will likely see lower performance compared to the third and fourth quarters due to the rollout of our blockbusters.

Thanks so much. That's very helpful. Best of luck in 2025.

Thank you, Susan.

Thank you. We have reached the end of the question and answer session. I would like to turn the floor back to Michel Atwood for closing remarks.

Alright. Thank you very much. Thank you all for joining our call today. Before I conclude, I would like to express my gratitude to our teams for their hard work in 2024. Our success is a direct reflection of our people and their unique contributions daily. The extent of our efforts across brands, geographies, and functions has brought us to where we are, which is evident in our results. I'd also like to mention a couple of upcoming events. Tomorrow, I will be hosting meetings at the TD Cohen Growing Ahead Beauty Summit here in New York City. Then on March 7th, Jean and I will be participating in the D.A. Davidson Best of the Breed Conference, which will be held virtually. Linda, thank you for inviting us. If you have further questions, please contact Karin Daly from the Equity Group. Her contact details can be found in our recent earnings release. We look forward to our next conference call. Thank you and have a good day.

Thank you. This concludes the conference, and you may disconnect your lines at this time. Thank you for your participation.