Financial Data and Key Metrics Changes - The company is experiencing a mid-single-digit sales decline in Q3, primarily driven by the Consumer Beauty segment, which is still in a phase of addressing operational gaps [34][38] - Gross margin for Q2 was lower than expected, with a contraction of 200-300 basis points attributed to high promotional activity, tariffs, and foreign exchange impacts [44][46] Business Line Data and Key Metrics Changes - Consumer Beauty is underperforming, with significant declines in iconic brands like COVERGIRL, although recent initiatives have shown early signs of improvement [5][40] - The Prestige division is seeing a sequential recovery, with improved synchronization between sell-in and sell-out, although challenges remain in the U.S. market [41][46] Market Data and Key Metrics Changes - The company has reported over 30% sales growth in its prestige portfolio on Amazon, indicating a successful adaptation to changing consumer purchasing behaviors [14][15] - The promotional environment has intensified, with competitors increasing markdowns, which is expected to continue into Q3 [59][60] Company Strategy and Development Direction - The company is focusing on streamlining its portfolio by prioritizing iconic brands and reducing SKU proliferation to enhance market share and sell-out growth [5][13] - Future initiatives include launching sharper, more focused product bundles and leveraging AI for cost-effective asset creation [8][32] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that recent financial performance has not met expectations and emphasizes a commitment to transparency and disciplined execution moving forward [69] - There is confidence that the changes being implemented will lead to improved performance over time, although it will not happen overnight [69] Other Important Information - The company is actively investing in new channels such as TikTok and e-commerce to capture emerging consumer segments, particularly Gen Z [17][62] - The exit from the Gucci license in 2028 is prompting the company to focus on building its existing brand franchises and exploring new growth opportunities [20][22] Q&A Session Summary Question: Future performance improvement plan for Consumer Beauty - Management is focusing on iconic brands and streamlining product offerings to improve sales and market share, with expected benefits materializing in fiscal 2027 [4][9] Question: Changes in channel strategy - The company is investing heavily in online and e-commerce channels while also protecting existing retail channels to cater to diverse consumer demographics [17][19] Question: Managing business after Gucci license ends - The company plans to drive growth in existing franchises and explore new brand opportunities while adjusting cost structures as needed [20][22] Question: Impact of SKU rationalization on top line and gross margin - SKU rationalization is expected to improve operational efficiency and gross margins over time, with a focus on driving top line growth as a priority [66][67]