Core Viewpoint - L'Oreal's acquisition of cosmetic and fragrance brands from Kering for $4.7 billion is expected to solidify its position in the beauty sector, particularly with the inclusion of 50-year licenses for brands like Gucci [1] Group 1: Acquisition Details - The deal involves L'Oreal purchasing brands from Kering, which includes significant licenses that will enhance L'Oreal's portfolio in the beauty market [1] - The acquisition is valued at $4.7 billion, indicating a substantial investment aimed at expanding L'Oreal's market share [1] Group 2: Market Implications - This strategic move is likely to confirm L'Oreal's dominance in a growing segment of the beauty industry, reflecting the increasing importance of luxury brands in cosmetics and fragrances [1] - The long-term licenses, particularly for Gucci, are expected to provide L'Oreal with a competitive edge in the beauty sector [1]

Core Insights - A new individual business named Qilin District Li Yan Fragrance Oil Studio has been established, with a registered capital of 10,000 RMB [1] Company Overview - The legal representative of the studio is Sun Fenyu [1] - The business scope includes traditional spice products, cosmetics wholesale and retail, daily chemical products sales, and health food sales [1] - The studio is also involved in internet sales, agricultural product wholesale, and various consulting services [1] Business Activities - The studio's operations cover a wide range of activities, including the manufacturing of daily chemical products and the sale of pre-packaged food [1] - It is permitted to conduct business activities autonomously based on its business license, except for projects that require approval [1]

Core Insights - Coty Inc. is integrating its Prestige Beauty and Mass Fragrance businesses to refocus on its heritage and core strengths, aiming for sustainable profitable growth and accelerated value creation [1] - The company has initiated a comprehensive strategic review of its Consumer Beauty business to unlock its full potential [1]

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]