Good day. My name is Chelsea, and I'll be your conference operator. At this time, I would like to welcome everyone to Coty's Fourth Quarter and Fiscal 2022 Question and Answer Conference Call. As a reminder, this conference call is being recorded today, August 25th, 2022. Please note that earlier this morning, Coty issued a press release and prepared remarks webcast, which can be found on its investor relations website. On today's call are Sue Nabi, Chief Executive Officer, and Laurent Mercier, Chief Financial Officer. I would like to remind you that many of the comments today may contain forward-looking statements. Please refer to Coty's earnings release and the reports filed with the SEC, where the company lists factors that could cause actual results to differ materially from those forward-looking statements.
In addition, except where noted, the discussion of Coty's financial results and Coty's expectations reflect certain adjustments as specified in the non-GAAP financial measures section of the company's release. With that, we will now open the lines for questions. If you would like to ask a question, please press the star and one keys on your touch-tone phone. You may remove yourself from the queue at any time by pressing star two. Once again, that is star one to ask a question. Our first question will come from Stephanie Wissink with Jefferies. Please go ahead.
Thank you. Good day, everyone. We have two questions. The first is just on travel retail, China and e-commerce. Those really stood out to us in the quarter and the year as big drivers of growth. Can you talk about your expectations for those drivers in your fiscal 2023 guidance, specifically China, if you can give us some sense of what you're assuming? Then, Sue, I'm gonna ask you a tough question. I'm hoping you're willing to answer, but there's been a lot made about the Kering relationship and that portfolio of brands. I'm hoping you can share a little bit about, since you've arrived at Coty, how that relationship has changed, the commitment you have to those brands, and maybe some of the performance indicators that you're looking at to reinforce that relationship. Thank you.
Yes. Good morning. Thank you so much for, you know, your questions. First, let me start with the first part, which is around the, you know, the strength of the business. Indeed, the travel retail, e-commerce and China, and I will say a few words about China later, are clearly for travel retail and e-commerce, key contributors to this, I would say, best-in-class performance that we had in Q4 and in fiscal 2022. I really hope that everyone will recognize today and now that, you know, this eight quarters of results on par or ahead of expectations, of our guidance's and of course, most of our peers, is clearly hopefully going to be recognized as a great achievement. That's very important point.
When it comes to travel retail and the fact that travel retail has been a key contributor, it's true that for all of us, specifically those who've been traveling, we've seen there is a huge surge in terms of travel worldwide. This surge in travel, of course, translates into you know, beauty figures, if I may say, specifically at Coty. Our travel retail channel has been doing fantastically well during the quarter. In EMEA, to take one example, it's three times triple-digit growth, sorry, in terms of what we are seeing there. This is across the board of categories. Our fragrances, and specifically our high-end fragrances and more artisanal niche fragrances are doing fantastically well, gaining market share thanks to travel retail exclusives, but also thanks to the level of innovations.
Our, you know, main category because we entered the, before the pandemic, travel retail was a one category channel. It was mainly fragrances. Now, travel retail is fragrances, prestige makeup, and of course, skincare. On prestige makeup there, we've been giving also fantastic figures thanks to, you know, the different brands, be it Burberry makeup, Gucci makeup, or more recently, Kylie Cosmetics, which has fantastic results in the top airports around the world. Last but not least, this channel is now fully benefiting from the repositioning of Lancaster from a sun care to a skincare brand that started first in Hainan, but that's currently spread into mainland China at Sephora as an exclusive partnership. We've seen that this brand has been posting a double-digit growth in fiscal 2022, which overall also had to do a lot with the travel retail performance.
E-commerce is clearly doing very, very well. This is clearly, I would say the case in the prestige division. It's even more the case on the consumer beauty division. This, honestly, I have to say it's a big satisfaction for us because our brands are becoming darling brands on social media, specifically, you know, CoverGirl, of course, but also Rimmel. We've done a recent launch called Thrill Seeker that happened at the end of the quarter and beginning of Q1. That's doing fantastically well, 100% co-created with TikTokers. Clearly this part of the business is a key contributor, and you can imagine that in the coming quarter, it's going to continue to be a key contributor.
When it comes to the China topic, on China, of course, like everyone, we've been impacted by the lockdowns at the end of Q3 and during Q4. What we have seen in Q1 now two months into Q1 is that China has, for Coty at least, strongly rebounded. You know, we are seeing double-digit growth, not at the level of what we had in, said, prior to the first, I would say, slowdown because of the restrictions, but very, very strong performance. Overall, Coty China had a +11% performance in fiscal 2022 to be compared to a market that was -1%. That's what I can tell you on the business side.
Now, concerning the second part of your question, you know, first of all, I'm not going, as you can imagine, to do a lot of comments on speculations. What I can tell you is that our long-term partnerships with our top fashion houses are continuing to be of great quality. The other thing that I would like also to stress, now that you're asking me the question, is that I'm taking again this opportunity to repeat that no key license is up to renewal before five years? Voilà. Everything else is speculation, but these are the two key elements I wanted to share with you today.
Thank you.
I hope this answers your two questions, Stephanie.
It does, Sue. Thank you very much.
Thank you.
Thank you. Our next question will come from Nik Modi with RBC. Please go ahead.
Thank you. Good morning, everyone. Sue, I was hoping you could just provide some context. Of course, you know, I think the resiliency of beauty is pretty clear during downturns. I wanted to understand, within your guidance, how you're thinking about the macroeconomic backdrop. You know, do you think this is gonna be some kind of gradual, very shallow situation, or are you expecting things to deteriorate further from here? That's the first question. Then the second question is just maybe an update on what's going on with inventories at retail, you know, given that they're managing their inventories very tightly right now. Just wanted to get some perspective on what's going on with inventory. Thank you.
Yeah. Good morning, Nick. Thank you for the question. Again, what I can tell you when it comes to the macro and what we are seeing currently, which is the best indicator of what we will hopefully oversee, is that the beauty category is not showing any sign of slowdown, specifically when it comes to prestige, but also the premiumized part of consumer beauty. Clearly, consumers are more than ever, I have to say, premiumizing, which is again, I guess, for all of us, a kind of surprise in the middle of all this pressure, inflationary pressure, but they are premiumizing more and more.
During Q4, what we have seen is the movement, if I take the fragrance category, moving from eau de toilette to eau de parfum, which are more expensive because more concentrated versions of scenting, this movement is confirmed, and it's only accelerating, I have to say. We don't see consumers trading down. We see them trading up in prestige behind categories such as fragrances, but also behind categories such as prestige makeup. On the consumer beauty side, the part that's the best preserved, and if you listen to what some of our partner retailers have been sharing, recently during their earnings, it's clearly the premiumized part of the consumer beauty that's doing fantastically well. Probably, I would say that in the past we were putting on one side, you know, things that are priced and things that are, you know, very, very affordable.
I do believe that in beauty today, the market will be all about cool or desirable brands, be it from mass or prestige, and not cool and not desirable brands, be it from mass and prestige. Those that are cool and desirable are by definition going to be protected, overprotected probably, because this has become, I would say, at Coty, we call it the fragrance index or the fragrance effect. It's clearly these products that are not only female, but also male. Fragrances are really consumed today by men, women, Gen Z, Latins, et cetera, in the U.S., to take this example. These are categories that I do believe, because they are making you look or feel better, are becoming more and more essential categories rather than what you could consider as, you know, categories that you would shop only when you, when you're okay.
I think it's really this that I see in terms of macro trends. In terms of inventory, to answer the second part, you know, the retailers have indeed excess inventories in some other categories, but not in beauty in fact. If you listen again to the earnings from the different retailers, if there is one preserved category, it's indeed beauty.
Excellent. Thank you very much.
You're welcome.
Our next question will come from Andrea Teixeira with Evercore. Please go ahead.
Good morning, everyone. My question has to do with the consumer division. If you can give us an update with regards to the supply chain challenges that CoverGirl had earlier in the quarter, and also how you see the profitability of the business going forward. It improved, at least more than I thought, in Q4. If you can expand that would be great. Thank you.
Yes. Adi, I will take the question. Hi.
Hi.
First question on supply chain. I would say, you know, it's not specific to consumer beauty. I will make a comment, you know, global on supply chain. Number one, indeed, I mean, the issue we raised last time in our last earnings call, this is resolved. You know, when we had the call, we were telling you that this was, you know, really in good progress. Now this is resolved. However, from a global standpoint, obviously, you know, as our peers, we are not immune, you know, from current supply issues. But definitely, you know, we are well protected, and, you know, we have a service level which is in the low 90s, which is a good performance.
Why, you know, we are protecting this is definitely because, you know, we work now for several quarters on dual sourcing, on local sourcing. We have some contracts on freight, you know, which could protect us. This is really the combination of all these levers. As you can imagine and as you know, you know, this is a daily focus from all the teams need to keep, you know, strong improvements and, you know, control on supply chain. There is another angle on, you know, on supply chain and transport is also that the demand, in fact is higher. It's also, you know, you have both elements, and this is indeed what we have to manage.
We are really in control and managing nicely the current constraints. Second part, indeed, you are absolutely right. Consumer beauty profitability, you know, moving better than expected. I mean, the reason is very simple. When I talk every time, you know, about the virtuous cycle, we apply, you know, this approach from both segments. This is a case for prestige, but this is also the case for consumer beauty. The recipe, which is really improve the gross margin, this is something which is really, you know, absolutely in the DNA of consumer beauty teams. Thanks to all the labor mix. Sue, you know, rightly just mentioned that we are premiumizing all the new innovations, Kind & Free. This is really a key element.
All the new innovations we are launching are really, you know, premiumized and really helping definitely the mix on the gross margin. We are doing pricing in the current context. I'm insisting every time in a very granular manner, in a very detailed manner, so it's very, very precise. Also optimizing cost of goods, because, you know, rationalization of the portfolio is platforming. This is really a key element. We raised a few times that when we are doing a strong innovation, for example, on CoverGirl, we can use, you know, the same platform then to replicate on Max Factor or on Rimmel. By doing this, we do save. That's really the virtuous cycle. Then of course, we are using this money to inject media and A&CP. You remember this is what we did in Q3.
Since you had the question that indeed in Q3, the level of A&CP was rather high in consumer beauty. This was a constant, you know, a conscious decision to support all those initiatives, and then indeed now delivering in a sustainable profitability on consumer beauty. Obviously we continue in fiscal 2023 and beyond.
Thank you. Our next question will come from Olivia Tong with Raymond James. Please go ahead.
Thanks. Good morning. My first question is on fiscal 2023 EBITDA expectations. Nice to see continued strong margin expansion plan. It looks like you're expecting about 200 basis points of margin improvement in the first half, but five from the second half. I was wondering if you could expand on that and what's driving the first half versus second half expectations. Then my follow-up question is around your view on celebrity influencer-led brands. It's obviously a space that you have great color into, but it is becoming more and more crowded. I'd love to hear your views in terms of relative success of your brand versus others and how these brands differ in terms of growth expectations and support levels relative to the rest of your portfolio. Thank you so much.
Thank you. I will take indeed the first part, you know, on the EBITDA expectation. First of all, I really want to indeed remind that, you know, on the metrics on top line and EBITDA, indeed, I mean, our fiscal year 2023 guidance is completely in line with the midterm guidance that we gave you remember in November. This is really confirming the robustness of the model and really, the strong achievements of fiscal 2022 and continuing in fiscal 2023 in a very consistent manner.
Definitely now, the math in our guide implies that this, but I would say it's still, you know, a little too early, you know, to go more in depth between H1 and H2. It is really definitely we continue the gross margin expansion, discipline on fixed costs, investing in the A&CP and, you know, delivering this full year guidance. Now, you know, navigating H1 and H2, it may be something, you know, that we adapt during the year, depending on, you know, evolution of all the metrics. Still too early, it's a little too early to debate on this.
Yeah, I'm going to take the mic now. This is Sue. I'm going to take the second part of the question, which is around celebrity and influencer-led brands.
If I remember well, the question was around is it more competitive. The answer is clearly yes. This is a very, very competitive part of the business. I think all of us, we see a lot of brands launched on a daily basis, almost today. It's very, very competitive. I do believe that there is a place where there is a kind of moment of truth, which is the brick-and-mortar. There, you know, there is a selection that's happening because the ability to have a go-to-market that's strong, a pretty strong go-to-market, you know, to be present in 100, if not 1000 of stores globally. This is clearly an element that selects a lot of D2C brands as potentially becoming bigger brands, and by definition makes the competition less important.
In terms of right level of investment, as you can imagine, these brands are born on social media. They have natural A&CP, if I may call it like this, because of the reach of the different, you know, people who are reaching to their communities on a daily basis. Therefore there is less need to over-invest in media like we do it on classical brands. It's really this kind of, I would say, compromise that we need to find depending on the brand and depending on the kind of innovation.
Thank you. Our next question will come from Chris Carey with Wells Fargo Securities. Please go ahead.
Hi, good morning.
Good morning, Chris.
Good morning.
New launch activity was, a theme that, you know, came up throughout the prepared remarks and a little bit in the Q&A session here. A lot of focus was on the Kim launch in the front half. You noted that you're at 20% of your full-year sales expectations already. Is there any way you can frame what the contribution from the Kim launch will be to the outlook this year and in general what the contribution from new launches will be to your fiscal 2023 overall on sales and potentially on profit? I have a quick follow-up.
Thank you, Chris, for the question. Again, when it comes to the first part, which is the contribution, as you can imagine, we do not share figures of how much this brand is going to contribute to the growth of the company. Clearly, the start of this new line is very good. You know, we are above our expectations. Something that for me and for all of us is a very, very strong sign is that the best-selling item is not a single product. The best-selling item is the full line of nine SKUs, which is priced about $575.
For us, if consumers are ready to spend $575 on a set of nine products, it means a lot in terms of how they trust, you know, the brand, how they trust what we are doing, together on the brand. This is clearly something that we wanted to share with you. What I can tell you about the fiscal 2023 guide, it's not dependent on this launch. It's clearly very broad-based, and this is another item I would like to insist on a lot. It's really that my job and Laurent's job and the job of all the people at Coty is to build a growth that's as balanced as possible in terms of geographies. We've seen that, in fact, not being overexposed to China protected us recently.
In terms of categories, we are working hard to make sure we have all categories in hand so that whatever happening on one category or the other, we can accelerate in one category versus another. In terms of brands, not being dependent from any brand. Clearly this is something that's a key element that is part of the way we are building the net revenues, not only for fiscal 2023, but also into our algorithm that we presented to you a few months ago. Well, in terms of what are the key building blocks for our, you know, fiscal 2023 fragrance launches and category growth are clearly the biggest building blocks that we have embedded into this algorithm.
Thank you, Sue. The quick follow-up would just be, Laurent, you did note some buckets of gross margin in the prepared remarks. It was also noted that Coty's expecting modest gross margin expansion for the year. I wonder if you could maybe just frame the cadence of gross margin expansion over the course of the year and then perhaps any of the key buckets, the puts and takes as you see them. Thanks so much.
Yeah. I mean, first of all, let me remind, as you noted, I mean, gross margin expansion in fiscal 2022, close to 400 basis points. You can really see that all the actions, all the initiatives that we put in place delivered strong results. Now, definitely we continue the journey. We still have some initiatives that we are implementing to continue gross margin expansion. Definitely not at the same rhythm as we have this year, and confirms really, as I just shared, you know, that we are very confident, you know, moving to the mid-60s% gross margin by 2025. What are the ingredients? What are the buckets? Let me take the key elements. Number one is mix. Mix is a key driver of the gross margin.
Again, we see concrete results of what we have achieved in fiscal 2022, which is really the premiumization of fragrance, of prestige items, fragrance, and also makeup. The next phase indeed is skincare. Also in consumer beauty, where definitely all the new innovations that we are launching are margin accretive and sometimes even at the same level of prestige. Mix is a key driver, and we continue in fiscal 2023, and it's part of the strategy and all the initiatives that we'll be having. Number two is definitely pricing, and I can elaborate a little on this because this is a key element. We implemented a low single-digit price increase at the beginning of calendar 2022.
We are currently, as we speak, implementing mid-single-digit price increase, and this implementation is going very smoothly, so there is no impact on volumes. Again, it's really quality of execution. We're also working, you know, preparing a new round of price increase, low-single-digits, in the beginning of calendar 2023. We are definitely from a top-line standpoint delivering this. On cost of goods, definitely there is a strong headwind, which is inflation. It's about, you know, roughly slightly above 2% of net revenue. This is what we have in Q4, and we have the same assumption for fiscal 2023. Okay, It's 2% and this also cost of goods. We have some strong and tangible actions which will help the gross margin.
Number one is we get the effect of the closure of the factory, fragrance factory in Germany. As you know, we announced 18 months ago this decision. We executed with the team during the 12 months, and this was perfectly executed without any disruption, and we are now getting the savings starting now. We are also working hard on, you know, platforming the value analysis, reviewing all the formulas, either consumer beauty or prestige, and really with the objective to simplify the formula, to standardize and also to have late differentiation. By doing this, we are making savings in procurement, but also in manufacturing. Here, you know, these are really the elements of of all this gross margin expansion.
This is then captured in the all including umbrella, and this will keep supporting gross margin expansion in 2023. Again, thanks, I will to keep fueling all the key initiatives that we have in the growth agenda.
Okay, great. Thank you both.
Thank you.
Thank you.
As a reminder, that is star one to ask a question. Our next question will come from Steve Powers with Deutsche Bank. Please go ahead.
Yes. Hey, thanks, and good morning. Sue, maybe building on your comments earlier around balance across the portfolio, I guess I was hoping you could frame for us in a bit more detail just base case expectations in terms of the contributions from prestige versus consumer beauty within the 2023 outlook. Given the macro comments you made earlier and current momentum, I'm guessing prestige is to again be an amplified driver of growth, but perhaps you could just talk through the magnitude and sensitivities there, number one. Separately on China, I guess just a little bit more specificity around your perspective on how that market is expected to grow in the year ahead, and just how dependent your own business is on resumed market growth in China at this point in its evolution in China.
Thank you.
Yeah. Good morning, Steve. Thank you for your question. Let's start with the first part, which is around, you know, how we are building in such fiscal 2023 growth. I think part of the answer was in your question. As you can imagine, there is what we call at Coty the fragrance index that's helping us a lot. This is clearly about this category clearly supporting the growth of the beauty category, not only in the U.S., but globally. This category is 20% above the levels of 2019 globally here again. We see it continuing to premiumize, to command higher pricing with a lot of innovations, either from artisanal niche brands or more mainstream brands. Clearly this is going to hold us, you know, clearly during fiscal 2023.
Clearly, we will continue to execute on our makeup strategy, prestige makeup strategy. There again, the brands that we are having in this area now are growing super fast, and therefore, they are going to be key contributors even if the base is smaller. By definition, in absolute value, it's less a contributor, but still it's a key one. Last but not least, we are, for the first time, starting to operate a full skincare line in China. I'm thinking about Lancaster. That's hopefully going to slowly but surely become a key contributor in our growth agenda. Prestige by nature because of the markets and because of the fact that we're adding categories is going to be, in a way, a key contributor to fiscal 2023.
I remind you that the prestige business is 60% of our net revenues, while consumer beauty is more or less 40%. We are also quite bullish on consumer beauty because we have incredible launches. Some of them started at the end of the quarter, beginning of Q1. I'm thinking about Thrill Seeker that started in U.K. behind the Rimmel brand, that's having fantastic first start. It's the first product that has been co-created 100% with TikTok in mind, with TikTokers as not only creating the products, but also part of the campaigns, holding and facing the campaign in front of consumers. Also in the U.S., CoverGirl, we are activating one of the most powerful franchise behind CoverGirl, which is Simply Ageless. Simply Ageless is a one of a kind line in the U.S.
It's really the only line that's so modern in terms of approach of the question around age. It's all about mixing, you know, beautiful skincare ingredients together with performing makeup ingredients. This line, every time we put money and investment behind, we see it growing super fast, and we are also seeing it improving recently in the most recent months. Clearly this is, I would say, the way I would describe how we have built fiscal 2023. Now, when it comes to China, what we are seeing is that, you know, of course, there have been lockdowns, there have been pressure on consumption, including on e-commerce.
What we are seeing now two months into the first quarter of fiscal 2023, at least for Coty, is that the spike in our sales is back to, I would say, levels that are not the same as the ones we had beginning of calendar 2022, but very, very strong double-digit levels. This is clearly something that we will count on. Again, for us, think about something quite simple, China is so small for Coty that anything we do, just doing the right things is a potential upside for the whole business there and therefore for the company.
Thank you. Our next question will come from Korinne Wolfmeyer with Piper Sandler. Please go ahead.
Hey, good morning, and thanks for taking the questions and congrats on the quarter. I'd like to first kinda push you a little bit more on what you're seeing in color cosmetics. Now, could some of the recent strength be coming, you know, from reopening and, you know, the summer season, having lots of weddings and events? Is there any way to kind a parse out how much could be coming from the reopening and how much, you know, it is more sustained strength going forward? Then just touching on the recent Ant partnership that was announced. First, we were excited to hear that. Can you just expand a bit on what this partnership means for Coty?
How can we expect this to kinda help the China and travel retail parts of the business ramp faster? Any financial implications here that you can share with us would be great. Thank you.
Yeah. Good morning, Korinne. Thank you for your question. Let me start with the first part, which is around what we are seeing in color cosmetics and how much of this is driven by reopening versus you know something that's more sustainable. To answer your question. What I can tell you is that what we are seeing is on top of the strong categories that were you know booming during the lockdown and post-pandemic, think of anything that has to do with eye products, be it mascaras, brow products, you know, lash growth serum, eyeshadows, et cetera. We are seeing the rest of the categories back to growth, including lip color, but not any kind of lip color.
Interestingly, the launches that are doing the best at Coty, and specifically I think about CoverGirl in the U.S., it's you know lip balms. Lip balms that probably are mixing the right things that people are looking for, which is on one side a hint of color and on the other side a lot of care. This is for me a sustainable trend, if I may say. This is clearly going to be here to stand the test of time. There will be moments where people are going to look for more pigmented makeup, moments where they will look for less pigmented makeup.
Whatever will happen, what I call skin side makeup or healthy makeup, whatever is the right name, this is the key trend behind the consumption of this category in the U.S., but we also see the same things more or less around the world in other regions. Now, when it comes to the partnership that you are referring to between Ant and Alibaba, what does it mean for Coty and for the travel momentum? You know, we are of course studying the consequences of this partnership. The only thing I can tell you is that, you know, there is something very strong, is that, we are all waiting for the Chinese consumers to be back to travel, and therefore, to add on, you know, to the travel retail, huge figures.
Remember, I shared with you that travel retail is back to the levels pre-pandemic, but this is still with a -10% to -30% less passengers. Having, you know, all these consumers back to this channel can only confirm the importance of travel retail. I can tell you that this partnership also means that travel retail and China are more or less telling us the same story and are extremely linked to each other.
Thank you. Our next question will come from Mark Astrachan with Stifel. Please go ahead.
Yeah, thanks, and hello, everyone. I guess first just on marketing spend, or ad marketing spend, at 20% of sales in fiscal 2022, how do you think about where that goes in 2023 and beyond? Is there any particular benchmark you're using? You know, sort of more specifically, it was up 600 basis points as a percentage of sales year-on-year obviously contributed to strong growth. How do you think about the need to continue to increase that, and the correlation to sales growth going forward? Thank you.
Yes. Hi, Mark. Indeed, as you saw in 2022, I mean, we were able to step up significantly our level of A&CP and now to be in the range of high 20%. We are making very clear that high 20s%, you know, is really for us you know, zero, zero accurate level and definitely, you know, within our flywheel. This is something that, you know, we are taking also for fiscal 2022. Now, definitely, you know, within high 20% you know is really the way. And again, the granularity is really how we spend the money. Definitely is really the quality of execution. We are more than able to focus on ROI.
Definitely the allocation of this money, everything is defined, you know, through ROI KPI, both in prestige and in consumer beauty. Definitely, you know, capturing the trend that you have just explained. I want to build also, you know, on the, you know, well-balanced footprint, because then we can allocate the money per geography, you know, in a balanced manner, per category, and also per brand. This is definitely what we are doing, allocating per initiatives and really per ROI. Another element also, because of course we are talking about percentage of dollars, but is also, you know, within A&CP, we have also some productivity and optimization initiatives.
Definitely, if I take an element that, you know, we are calling other A&CP, which maybe is less visible, of course, you know, media is very visible. There are also some other areas which, you know, are, I would say are non-working, where we have also within the Ready to Win umbrella, some strong productivity initiatives. I can just give you some examples, you know, but sample, testers, marketing materials, which are definitely areas where we have some optimization. Always with the same mindset that optimization productivity we are doing on this line, we can reallocate in the working media and push definitely, you know, the business agenda.
Hello?
Yes, we are going. I can hear you.
Oh, okay, great. Sorry, just thought I got cut off there. Wanted to ask about just how to think about margin profiles across the prestige businesses. Any material differences in thinking about the license versus volume brands and by category, makeup, skincare versus fragrance? Thank you.
No, I mean, we don't enter this level of detail, but what I can tell you again is that, of course, Prestige gross margin, as you know, I mean, is higher than Consumer Beauty, so this is a fact. Again, as I shared several times, the gross margin agenda is valid for both segments. To elaborate a little more within Prestige but also Consumer Beauty, definitely all the initiatives that we are making, you know, Prestige makeup, e-commerce, but also geography. We mentioned, you know, about China. All these initiatives are really, you know, driving gross margin accretion. This is really, you know, the way we are taking the gross margin agenda.
Thank you, Laurent. Thank you, everyone. Again, thank you, Mark.
Thank you, Sue.
Again, we are ending the call right now. Super happy again to report these results. Again, best-in-class results, and we hope to talk to you soon about, you know, what's happening in Q1. Thank you so much.
Thank you. Bye-bye.
Ladies and gentlemen, this does conclude today's call and webcast, and we appreciate your participation. You may disconnect at any time.