Financial Data and Key Metrics Changes - The company expects full-year EBITDA to be above $1 billion, despite headwinds from tariffs impacting gross margins [11][72] - The major gap in EBITDA for the full year is driven by tariffs, which if excluded, would result in slightly negative EBITDA [11][70] - Free cash flow is projected to grow in fiscal 2026 [12] Business Line Data and Key Metrics Changes - The prestige fragrance category remains healthy, with low to mid-single-digit growth, while mass fragrance is also performing well [7][21] - The skincare category outperformed the market by 11%, driven mainly by e-commerce, with Lancaster growing significantly in China [27][26] - The mass fragrance category accounts for approximately 7% of net revenues and is experiencing growth due to the Treatonomics phenomenon [20][21] Market Data and Key Metrics Changes - The Asian travel retail market is still heavily affected, but the beauty market in China is gradually improving, with prestige beauty showing positive growth [51] - The U.S. market is experiencing increased promotional activities, particularly in consumer beauty and color cosmetics [29][41] Company Strategy and Development Direction - The company is focusing on increasing profitability in the color cosmetics category while managing promotional activities cautiously [17][29] - There is a strategic emphasis on innovation, particularly in the fragrance category, with significant launches planned for the second half of the year [13][14] - The company aims to make travel retail a discovery channel for new products, enhancing exclusivity and consumer attraction [49][50] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current macroeconomic challenges but expresses confidence in returning to growth in the second half of fiscal 2026 [10][72] - The company is committed to divesting its stake in Velar and is actively contemplating options for this divestiture [62][102] - Management believes that the fragrance market will continue to grow, driven by consumer trends and the importance of scenting in daily life [39][40] Other Important Information - The company is implementing a new forecasting tool to improve inventory management and cash flow [81] - The management is focused on cash deleveraging as a top priority, with plans to refinance certain debts in 2026 [80][82] Q&A Session Summary Question: Can you provide more detail on the second half outlook? - Management expects sequential improvement in Q1 and Q2, with a return to growth in H2 as retailer inventory headwinds ease [6][10] Question: How is the company addressing the higher promotional environment? - The company is managing promotional activities cautiously and focusing on strategic revenue management to protect brand integrity [29][30] Question: What is the outlook for travel retail? - Travel retail is being positioned as a discovery channel, with exclusive product launches planned to attract consumers [49][50] Question: Are there any pullbacks in specific demographics for prestige fragrances? - Management reports no pullbacks in key demographics, with continued growth among Gen Z and Hispanic consumers [96][98] Question: What are the refinancing expectations around the 2026 maturity? - The refinancing will be consistent with the current secured structure, and the company is actively working on this [101][102]

Financial Data and Key Metrics Changes - The company expects full-year EBITDA to be above $1 billion, despite headwinds from tariffs impacting gross margins [10][71] - The major gap in EBITDA for the full year is driven by tariffs, which if excluded, would result in slightly negative EBITDA [10][71] - Free cash flow is projected to grow in fiscal 2026 [11] Business Line Data and Key Metrics Changes - The prestige fragrance category remains healthy, with low to mid-single-digit growth, while mass fragrance is also performing well [6][19] - The skincare category outperformed the market by 11%, driven mainly by e-commerce, with brands like Lancaster growing significantly in China [25] - The mass fragrance category accounts for approximately 7% of net revenues and is experiencing growth due to the Treatonomics phenomenon [19][20] Market Data and Key Metrics Changes - The Asian travel retail market is still heavily affected, but the beauty market in China is gradually improving, with prestige beauty showing positive growth [50] - The U.S. market is experiencing increased promotional activities, particularly in consumer beauty and color cosmetics [27][39] Company Strategy and Development Direction - The company is focusing on increasing profitability in the color cosmetics category while managing promotional activities carefully [16][27] - There is a strong emphasis on innovation, with significant product launches planned for the second half of the year, including the Hugo Boss Beyond bottle [12][19] - The company aims to make travel retail a discovery channel for new products, enhancing exclusivity and consumer attraction [48] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current volatility in the market but expresses confidence in returning to growth in the second half of fiscal 2026 [8][71] - The company is committed to divesting its stake in Velar and is actively contemplating options for this divestiture [61][100] - Management believes that the fragrance market will continue to grow, driven by consumer trends and the increasing importance of scenting [37][96] Other Important Information - The company is implementing a new forecasting tool to improve inventory management and cash flow [81] - The management is focused on cash deleveraging and maintaining a healthy trajectory on cash and refinancing [80][82] Q&A Session Summary Question: Can you provide more detail on the second half outlook? - Management expects sequential improvement in Q1 and Q2, with a return to growth in H2 as retailer inventory headwinds ease [6][8] Question: How is the company addressing innovation fatigue in color cosmetics? - The company is shifting focus to traditional advertising for key products while dedicating innovative products to younger consumers [16][17] Question: What is the outlook for travel retail? - Travel retail is being positioned as a discovery channel, with exclusive product launches planned to attract consumers [48][50] Question: How is the company managing promotional activities? - The company is managing promotional activities cautiously to protect brand integrity while exploring new formats like paint sprays [27][39] Question: What are the expectations for refinancing and deleveraging? - The company plans to maintain a secured structure for refinancing and is focused on improving EBITDA trends to support deleveraging [99][100]

Financial Data and Key Metrics Changes - Fiscal year 2025 net revenues declined by 2% like for like, with Q4 revenues declining by 9% [17] - EBITDA grew at a CAGR of 9% from CHF 760 million in fiscal year 2021 to CHF 1.08 billion in fiscal year 2025, with an EBITDA margin expansion of 190 basis points to 18.4% [8][21] - Adjusted EPS for fiscal year 2025 was $0.50, reflecting a 4% growth despite lower operating income [22] - Free cash flow for fiscal year 2025 was CHF 278 million, slightly below the target of CHF 300 million [22] Business Line Data and Key Metrics Changes - Prestige Fragrance business grew to a £3.5 billion segment with a CAGR of 10% from fiscal year 2021 to fiscal year 2025 [6] - Consumer Beauty business achieved a 2% CAGR from fiscal year 2021 to fiscal year 2025, recovering from previous declines [7] - In Q4, Prestige sellout grew low single digits, while Consumer Beauty sellout declined high single digits against a modestly positive market [20] Market Data and Key Metrics Changes - The U.S. Prestige beauty market grew by approximately 4% in fiscal year 2025, but the company experienced a mid-single-digit percentage decline in like-for-like sales [13] - The mass beauty market in the U.S. declined by roughly 1% in fiscal year 2025, with the company's like-for-like sales declining by a mid-teen percentage [13] - In Asia, excluding China, sellout grew approximately four times ahead of market growth [58] Company Strategy and Development Direction - The company is refocusing on core strengths in fragrances, which represent over 60% of revenues, and aims to drive growth in structurally profitable beauty categories [36][37] - A strategic shift is underway to prioritize investment in high-return areas while rebalancing resources away from less profitable segments like mass cosmetics [45][66] - The company is implementing the "All in to Win" program to deliver CHF 130 million in annual fixed cost savings through fiscal year 2027 [23] Management's Comments on Operating Environment and Future Outlook - The management acknowledged challenges in fiscal year 2025, including retailer inventory buildup and execution weaknesses, which impacted performance [11] - There is an expectation of sequential improvement in sales and profit trends in fiscal year 2026, with a return to growth anticipated in the second half [30][73] - The company is actively preparing for multiple scenarios regarding tariffs and geopolitical uncertainties, with mitigation strategies in place [29][25] Other Important Information - The company has received 12 consecutive debt rating upgrades, positioning it just one notch below investment grade [9] - The company is committed to sustainability, achieving a Grand EcoVadis rating placing it in the top 5% of companies globally for sustainability performance [71] Q&A Session Summary Question: What are the expectations for sales trends in fiscal year 2026? - The company anticipates a like-for-like decline of 6% to 8% in Q1 and a decline of 3% to 5% in Q2, with sequential improvement expected throughout the year [31] Question: How is the company addressing the challenges in the U.S. market? - The company is taking decisive actions, including new leadership and a more agile regional structure, to address underperformance in the U.S. market [58] Question: What are the key initiatives for cost savings? - The company is targeting approximately CHF 200 million in combined fixed costs and productivity savings in fiscal year 2026 [50]