Financial Data and Key Metrics Changes - For the first half of 2025, organic net sales rose by 3%, with net sales reported at $334 million for the second quarter, a slight decline from the same period in 2024 [5][21][22] - Gross margin expanded by 170 basis points to 66.2% for the first half and 150 basis points to 65% for the second quarter [22] - Operating income decreased by 9% to $59 million for the quarter, but increased by 1% to $134 million year-to-date [23][24] - Net income attributable to U.S.-based operations decreased by 26% to $18 million, largely due to lower sell-in [27] Business Line Data and Key Metrics Changes - European-based operations reported net sales growth of 7% in the second quarter and 6% on an organic basis for the first half [5][26] - U.S.-based operations saw a reported second quarter net sales decline of 20%, with organic sales down 14% [6][27] - SG&A expenses as a percentage of net sales increased to 48.5% for the second quarter compared to 45.6% in 2024 [22] Market Data and Key Metrics Changes - North America sales rose by 7%, while Western Europe sales increased by 3% [7] - Sales in Eastern Europe were up 14%, but Asia Pacific fragrances declined by 12% [8] - The Middle East and Africa region declined by 19%, reflecting the exit of the Dunhill license [8] Company Strategy and Development Direction - The company is focusing on product innovation, effective advertising, and promotional programs to maintain demand for fragrance products [4] - Plans to launch new fragrances and expand e-commerce presence, including flagship boutiques in Paris and an e-commerce platform [10][12] - The company is transitioning to third-party logistics to enhance operational efficiency [14] Management's Comments on Operating Environment and Future Outlook - Management noted that momentum eased in the second quarter, with challenges expected to continue into the second half of the year [4] - The company remains confident in achieving its full-year objectives, supported by a resilient fragrance category and tariff-driven pricing actions [28][29] - Management highlighted the importance of being agile to respond to potential surges in orders during the holiday season [39] Other Important Information - The company has been selected as the exclusive fragrance licensee for Laurentian, with plans to launch a women's fragrance in 2027 [11] - E-commerce channels are experiencing strong momentum, particularly on platforms like Amazon and TikTok [12][13] Q&A Session Summary Question: Can you discuss promotional levels and destocking trends? - Management indicated that destocking is difficult to assess but noted a slowdown in the market, with retailers being more prudent [34][35] - End demand was reported as good, with the market up 5% in the second quarter [36] Question: Are tariffs impacting retailer purchasing? - Management clarified that retailers are not subject to tariffs, but distributors are, leading to a more cautious purchasing approach [46] Question: Will the company continue to add new brands? - Management expressed a commitment to diversifying the portfolio and indicated capacity to take on more brands in the future [50] Question: What risks does retailer caution impose? - Management acknowledged the risk of revenue being pushed into Q4 due to uncertainty in purchasing [55] Question: Will smaller packaging be considered for TikTok? - Management confirmed that smaller packaging will be developed for certain brands on TikTok to meet price point demands [58] Question: What caused the increase in debt from Q1 to Q2? - Management explained that the increase was due to a loan taken out for asset purchases and additional office space [61]