Nicolas HIERONIMUS Chief Executive Officer WORLD LEADER IN BEAUTY €44Bn €6.4Bn 2025 SALES 2025 NET PROFIT1 >7Bn >150 UNITS SOLD COUNTRIES 95,000 ~ €200Bn EMPLOYEES MARKET CAPITALIZATION2 1 Net Profit excluding nonrecurring items after non controlling interests. 2 As of 31 May 2026. PERFORMING TRANSFORMING ACCELERATION TO PREPARE FUTURE GROWTH ENGINES 1 2025 like-for-like sales growth, adjusted for the phasing related to the 2024 and 2025 IT transformation. 1 ~ +3.5%1 MARKET 1 L'Oréal beauty market estimates ...

With a market cap of $30.6 billion, Ulta Beauty, Inc. (ULTA) is a specialty beauty retailer offering a wide range of branded and private-label products across cosmetics, fragrance, haircare, skincare, and bath and body, along with in-store beauty services such as hair, makeup, brow, and skin treatments. It operates across the United States, Mexico, and Kuwait through its stores, digital platforms, and mobile applications. Shares of the beauty products retailer have surpassed the broader market over the p ...

Financial Data and Key Metrics Changes - The company reported a solid start to fiscal Q1 2026, with results modestly ahead of expectations, driven by strength in North America offsetting softness in international markets [8][10] - Organic net sales decreased by 50 basis points, with North America showing growth while international markets faced declines due to product development phasing [10][22] - Adjusted EPS was reported at a loss of $0.03, and adjusted EBITDA was $38 million, both better than the outlook [22] Business Line Data and Key Metrics Changes - Organic net sales in Wet Shave declined approximately 4%, while sun and skincare organic net sales increased by approximately 8%, with sun care growing nearly 20% [22][24] - Grooming organic net sales growth was approximately 7%, led by significant growth in Cremo and Bulldog, while Wet Ones saw a decline of about 15% [24][25] - North America organic net sales grew just under 1%, driven by sun care and grooming, while international markets showed double-digit growth in Oceania and Greater China [22][23] Market Data and Key Metrics Changes - In the U.S., market share declined by 100 basis points overall, but branded volume share increased by 50 basis points, indicating some resilience in brand performance [23][24] - Outside the U.S., share gains were noted in key markets including Australia, Europe, Canada, and China, with over 70% of markets either growing or holding market share [11][12] Company Strategy and Development Direction - The divestiture of the feminine care business is seen as a pivotal step in the company's transformation, allowing for a sharper focus on core categories like shave, sun, skincare, and grooming [9][10] - The company aims to drive sustainable growth and stronger margins by reallocating capital and resources towards these core businesses [9][10] - The strategy includes a focus on international growth, innovation, productivity, and U.S. transformation, with plans for increased brand investment and improved distribution [12][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to organic net sales growth, driven by mid-single-digit growth in international markets and a more stable performance in North America [19][20] - The company anticipates gross margin expansion supported by productivity gains, despite facing inflationary pressures and tariff impacts [20][21] - Management remains focused on disciplined capital allocation, prioritizing free cash flow generation and debt reduction following the divestiture [35][36] Other Important Information - The company declared a quarterly dividend of $0.15 per share, returning approximately $7 million to shareholders [28] - Adjusted free cash flow is expected to be in the range of $80 million to $110 million for the year, driven by working capital improvements [35] Q&A Session Summary Question: Thoughts on portfolio construction post-Fem Care divestiture - Management highlighted the strategic move to divest the Fem Care business, which was growth dilutive and capital intensive, allowing for a more focused approach on core categories [39][40] Question: Expectations for fiscal Q2 organic sales - Management expects organic net sales to be down about 3% in Q2, with timing shifts affecting performance, but remains confident in achieving the full-year outlook [50][51] Question: Implications of Fem Care dilution into fiscal 2027 - Management discussed the transitional services agreement with Essity and the need to address stranded costs, indicating a stronger portfolio and improved cash flow recovery in fiscal 2027 [53][58] Question: Organic sales phasing and category growth expectations - Management confirmed that category growth rates remain relevant, with expectations for improved performance in the second half of the year driven by better distribution and innovation [64][66]

Core Viewpoint - Estée Lauder Companies Inc experienced a nearly 22% drop in share price due to mixed signals on growth and profit pressures, despite a solid quarterly performance and an increased earnings forecast for the year [1]. Financial Performance - Q2 revenue reached $4.23 billion, slightly surpassing analysts' expectations of $4.22 billion, with adjusted earnings per share (EPS) of $0.89, exceeding forecasts of $0.83 [2]. - Organic sales grew by 4% year-on-year, an acceleration from a 3% increase in Q1, driven by a 13% surge in Mainland China [2]. Strategic Initiatives - The Profit Recovery and Growth Plan (PRGP) contributed to a 290 basis point increase in adjusted operating margin to 14.4%, helping to mitigate some tariff pressures [3]. - Management reported progress in cost-cutting, workforce reductions, and operational improvements, indicating that the most severe inventory and travel retail volatility is behind them [3]. Future Outlook - For fiscal 2026, the company expects adjusted EPS between $2.05 and $2.25, slightly below the Street consensus of $2.19 [4]. - Projected organic net sales growth is anticipated to be between 1% and 3%, with modest growth expected in Mainland China and flat performance in the Americas [4]. - Tariff-related costs are projected to reduce operating profit by approximately $100 million [4]. Segment Performance - Skincare led sales with $2.05 billion, a 7% year-on-year increase, followed by fragrance at $812 million (+9%), makeup at $1.16 billion (+1%), and hair care at $168 million (+6%) [5]. - Geographically, sales contributions were $1.22 billion from the Americas, $1.18 billion from Europe/Kem, $900 million from Asia/Pacific, and $928 million from Mainland China [5]. Market Reactions - Jefferies noted that while Q2 sales and EPS exceeded expectations, the full-year EPS guidance fell short of Street models, indicating investor caution [6]. - Investors are expected to focus on commentary regarding travel retail consumption in Asia, operating margin levers, cash flow allocation, and ongoing innovation initiatives across Estée Lauder's brands [6].

Core Insights - Estee Lauder Companies Inc. and e.l.f. Beauty, Inc. are key players in the cosmetics industry, competing across overlapping product categories while operating at different market segments [1][2] - The cosmetics industry is evolving due to digital engagement, changing consumer preferences, and a focus on value, innovation, and brand differentiation [1] Estee Lauder Overview - Estee Lauder has a market capitalization of approximately $41.3 billion and is recognized as a leader in the prestige beauty sector with a diverse portfolio [2] - The company has shown a return to organic sales growth, with a 3% increase in organic net sales in Q1 of fiscal 2026 and a 300 basis point expansion in adjusted operating margin to 7.3% [3][9] - Adjusted gross margin improved by 60 basis points to 73.3%, driven by procurement efficiencies and reduced promotional intensity [4] - Estee Lauder is gaining market share in key regions such as Mainland China, the U.S., and parts of Western Europe, with strong performance from brands like La Mer and TOM FORD [5] - Product innovation is crucial for Estee Lauder's growth, with new launches enhancing brand relevance and consumer engagement [6] e.l.f. Beauty Overview - e.l.f. Beauty, valued at around $5.1 billion, focuses on affordable, trend-driven products and has achieved its 27th consecutive quarter of net sales growth, with a 14% increase to $343.9 million in Q2 of fiscal 2026 [7][9] - The company gained 140 basis points of market share in its core brand during Q2, reflecting its ability to attract value-conscious consumers [8] - e.l.f. Beauty's growth is supported by expanding distribution and a digitally native operating model, with management projecting a net sales increase of 18-20% for fiscal 2026 [11] Financial Performance and Estimates - The Zacks Consensus Estimate for Estee Lauder indicates a year-over-year sales growth of 4.6% and an EPS increase of 43.7% for the current fiscal year [12] - For e.l.f. Beauty, the current fiscal-year sales estimate suggests a 19.3% increase, while EPS is expected to decrease by 15.3% [14] - Over the past year, Estee Lauder's shares have increased by 39.3%, outperforming the industry growth of 13.2%, while e.l.f. Beauty's shares have declined by 19.8% [15] Valuation and Investment Outlook - Estee Lauder has a forward P/E ratio of 43.8, above its one-year median, while e.l.f. Beauty's forward P/E ratio is 24.71, below its median [17] - Estee Lauder presents a more compelling risk-reward profile due to its operational turnaround and strong earnings growth outlook, while e.l.f. Beauty faces rising margin pressures [19] - Estee Lauder holds a Zacks Rank 2 (Buy), whereas e.l.f. Beauty has a Zacks Rank 3 (Hold) [20]

Core Insights - Ulta Beauty, Inc. (ULTA) demonstrated strong performance in its third-quarter fiscal 2025, particularly in the skincare segment, which is becoming increasingly vital to the company's overall product mix [1] Skincare Performance - Skincare achieved high single-digit comparable sales growth, marking it as one of Ulta Beauty's fastest-growing categories and a reliable source of demand amid varied consumer spending [1][9] - The growth in skincare was primarily driven by the strength of prestige brands such as Tatcha and Dermalogica, alongside the exclusive launch of Fenty Skin Body, which bolstered prestige skincare sales [2][9] Mass and Wellness Contributions - Mass skincare also positively impacted sales, with new product introductions and strong social media visibility enhancing demand for accessible skincare options [3] - The expansion of Ulta's wellness product assortment further supported the performance of the skincare category during the quarter [3] K-beauty Influence - Ulta's exclusive K-beauty offerings, including brands like Peach and Lily, played a significant role in driving engagement and reinforcing the company's position as a destination for emerging skincare trends [4] Overall Sales Growth - The robust performance of the skincare category contributed to Ulta Beauty's overall comparable sales growth of 6.3%, highlighting the sustained consumer interest in routine skincare products [5]

Summary of China Cosmetics Sector Conference Call Industry Overview - The China cosmetics sector is expected to experience a reset for higher-quality growth in 2026, moving away from reliance on high-cost Key Opinion Leaders (KOLs) and focusing on popular core SKUs. This shift has led to a contraction in Net Profit Margin (NPM) due to deleveraging impacts, despite improvements in Return on Investment (ROI) [1][2]. Key Trends and Insights - **Consumer Acquisition Costs**: Monitoring new consumer acquisition costs will be critical, especially as channel migration benefits diminish and the ingredient cycle remains ambiguous. Anti-involution policies will also play a significant role [1]. - **Branding Strategy**: Branding is anticipated to be the most effective strategy for consumer engagement and new product launches in 2026. Companies with high repurchase rates and cost-efficient omni-channel strategies are better positioned for success [1][2]. - **Market Dynamics**: The cosmetics market is expected to grow at a normalized rate, with growth projected at less than 1x GDP growth. The market is forecasted to see a 2.1% increase in beauty spending in 2026, with a mix of onshore and offshore market performance [17][18]. Company-Specific Insights - **Mao Geping Cosmetics (MGP)**: Upgraded from Neutral to Buy with a target price increase from HK$89 to HK$105, reflecting a 27% upside. The company is noted for strong branding and a balanced channel presence, with a forecasted sales and net income CAGR of 23% and 22% from 2025 to 2027, respectively [2][9]. - **Giant Biogene**: Maintained as Buy, with a target price lowered from HK$71 to HK$46, indicating a 36% upside. The company is expected to recover with new skincare products and a focus on medical aesthetics, projecting sequential growth of -8%/+12%/+17% YoY for 1H26E/2H26E/2027E [2][9]. - **Shanghai Jahwa**: Target price reduced from RMB 31 to RMB 28, with a 22% upside. The company is on a turnaround trajectory with improving margins and cash flow [2][9]. - **Proya Cosmetics**: Remains Neutral as the company is expected to moderate organic growth while awaiting more execution on white space exploration [2][9]. - **Botanee Biotech**: Neutral rating with early signs of a potential turnaround but lacking clear growth drivers [2][9]. - **Bloomage Biotech**: Maintained as Sell due to downside risks in skincare and muted growth in medical aesthetics amid a mature product cycle [2][9]. Market Performance and Projections - **E-commerce Trends**: Tmall is expected to maintain strong growth momentum, supported by anti-involution measures. Douyin's performance has been softer than expected, with a significant decline in KOL channel performance [19][21]. - **Sales Growth Expectations**: The cosmetics sector is projected to see sustained GMV growth on Tmall, while Douyin is expected to experience a narrowing gap in growth rates compared to Tmall [20][21]. Conclusion - The China cosmetics sector is poised for a shift towards higher-quality growth in 2026, with branding and strategic channel management becoming increasingly important. Companies that adapt to these changes and focus on core products are likely to outperform in the evolving market landscape [1][2][19].

Core Insights - Coty Inc. has been downgraded by Santander to a Neutral rating, with the stock price currently at $3.14, amidst significant strategic changes within the company [1] - The company has sold its remaining 25.8% stake in Wella to KKR & Co. Inc. for $750 million in cash, which is part of its strategy to concentrate on core beauty and fragrance businesses [2][5] - The sale is expected to enhance Coty's financial flexibility and reduce its net leverage to approximately three times by the end of 2025 [3][5] - Following the announcement of the Wella stake sale, Coty's stock saw an increase, indicating a positive market reaction despite the downgrade [4] Financial Position - The sale of the Wella stake is anticipated to provide Coty with the ability to reduce both short- and long-term debt [2] - Coty's market capitalization is approximately $2.74 billion, with a trading volume of 7,709,091 shares on the NYSE [4]

Core Insights - Ulta Beauty is experiencing increased consumer demand despite economic pressures, with comparable sales rising by 6.3% year over year in Q3 [1] - The launch of the UB Marketplace has expanded product offerings, introducing over 120 new brands [2] - Foot traffic in stores increased by 3.3% year over year, indicating strong customer engagement [3] Sales Performance - The average customer spending per purchase increased by nearly 4%, and the number of transactions rose by 2.4% [1] - Ulta Beauty has raised its sales expectations for fiscal year 2025, now predicting a growth of 4.4% to 4.7% compared to the previous estimate of 2.5% to 3.5% [12] Product Categories - Fragrance was the strongest growing category, followed by skincare and makeup, while hair care sales grew by mid-single digits [5] - Despite price increases due to tariffs, Ulta Beauty is working with brand partners to manage pricing changes [6][8] Consumer Behavior - The beauty industry is seeing a surge in demand as consumers prioritize self-care and wellness, with 59% of consumers feeling cautious about the economy [14][18] - A significant portion of consumers (one-third) plan to gift beauty products during the holiday season, indicating a shift in spending priorities [16] Market Trends - Prestige beauty sales reached $24.1 billion, a 4% increase year over year, while mass market beauty sales increased by 5%, totaling $54.5 billion [15] - The overall beauty industry is positioned for strong performance during the holiday season, with consumers focusing on value and strategic purchases [14][16]

Core Insights - Ulta Beauty has been rated "Overweight" by Morgan Stanley, with a price target raised from $600 to $640, reflecting strong market confidence in the company's performance [1][6] Financial Performance - Ulta reported a 12.9% increase in net sales for its fiscal third quarter, reaching $2.9 billion, surpassing the estimated $2.7 billion [2][6] - The company's earnings per share remained flat at $5.14, exceeding expectations of $4.60, attributed to increased business investments [3] - Ulta's gross profit increased by 14.9%, amounting to $1.16 billion, or 40.4% of sales, despite a decrease in operating income [5] Market Position - Ulta's stock surged over 12% following the announcement of improved sales and profit forecasts, with fiscal third-quarter results exceeding Wall Street expectations [4] - The company has raised its fiscal 2025 outlook, projecting net sales of approximately $12.3 billion, an increase from previous estimates [4][6] - Ulta's market capitalization stands at approximately $26.97 billion, with a trading volume of 3,395,556 shares [5][6] Competitive Landscape - Despite facing challenges from lower-priced alternatives and market saturation, Ulta has managed to outperform expectations [3]