Next up this morning, we are pleased to welcome back The Estée Lauder Companies' President and CEO, Stéphane de La Faverie, and Executive Vice President and CFO, Akhil Shrivastava. Stéphane is going to first take you through a short presentation, and then we will do Q&A, and Stéphane and Akhil will both join me for that. Thanks. Thanks.
Okay. Good morning, and thank you very much, Lauren. Akhil and I are very grateful to Barclays for hosting us again 12 months after, and to be back on stage and having the opportunity to share some of the updates as we are kicking off our fiscal 2027 fiscal year. Many of you know The Estée Lauder Companies, hopefully. Maybe some of you are new to the story, so I will just take a few minutes to highlight a little bit where we are in our turnaround and the momentum that we are seeing. I need to remind me to just do that. So the team remind me, I have to say that can we note that the information on this slide regarding forward-looking statements and non-GAAP disclosure, which applies to this presentation as well as Q&A with Lauren. So I had to say it.
It is not the most glamorous things to do, but now it is done. Okay. It has been really an exciting and busy 12 months since we were on stage here last year. Last year when we were discussing it with Lauren, we were moving with urgency to deploy the five action priorities of Beauty Reimagined. Today, what I am really happy is to say how different of a company we are 12 months later, and this is through Beauty Reimagined. We made our amazing brand portfolio even stronger. Jo Malone London and TOM FORD join an amazing portfolio of brand, of Clinique, Estée Lauder, La Mer and M·A·C into the Billion Dollar Club. This is actually unprecedented into the prestige industry and beauty industry.
Now we have six brands in the Billion Dollar Club, and as you may have listened during the earning calls, we have one, The Ordinary, that is coming very close to that for the near future. Five of the six delivered sequentially improved organic sales performance in fiscal 2026. With their scale, sorry, premier brand desirability, breakthrough innovation, and consumer reach, these brands are poised to just continuous acceleration in the near future. We also radically transform our company. One of the things I am extremely proud of what we have done is through our One ELC, which is our new model, our new operating model. We are now better positioned to compete in prestige beauty, accelerating our speed at which we are driving the pace of the demand of the consumers, but also the competition of the indie brands today.
As we move further, we won't just match the speed of the indie brand. Our intention is to push past their speed. Speed of innovation for us is absolutely key, and I'm sure we'll talk about it with Lauren in more detail. We are a simpler organization today, much more agile as one team, with fewer layers and silos and greater accountability as we are exiting the PRGP two-year restructuring program, as you know, that we've just concluded on June 30th. We're also a nimbler organization. We've refined ownership between who does what in the organization, between brand, between region, and between the operation within the company. That has really helped us to strengthen our brand building, between brand and around the world, and also to be much more strategic on how and where we are spending our consumer-facing investment.
We are much bolder organization, more united, and transformative-oriented organization through all the beauty commitment that we've deployed that now have been cascaded to all the written organization around the world. Finally, we are more efficient organization, having evolved how, and how we intend to work between us, but also with our partners. It's not always the most glamorous thing when we talk about our enterprise business services. Today, I have to say, the deployment and the work that we've done with our partners has helped us to consolidate dramatically the number of our partners that we are working with, and we are already seeing a lot more agility, simplification, and speed with the ability to scale.
In a certain way, think about a lot of the back of house that is not visible to our consumers are becoming increasingly efficient so we can deploy more resources towards investment into consumer- facing. Also, I'm really proud, frankly, of what we've achieved in fiscal 2026. Many things have been achieved with great momentum. You're seeing here on the screen, reported sales rose 5% and organic like 3% with positive sales performance in every single quarter. Gross margin expanded 150 basis points, primarily driven by the benefit of the PRGP, our Profit Recovery and Growth Plan. Operating margin expanded 320 basis points as operating leverage enhanced the gross margin expansion. Diluted EPS grew 66%. We also increased our consumer-facing investment by 7%, and this is something was very clear last year and will continue to just accelerate our consumer- facing.
Cash flow from the operation increased 39%, and that despite much higher restructuring costs, obviously, due to the PRGP. I think, frankly, it shows that our strategy, Beauty Reimagined, is really in motion. Obviously the PRGP has give us the benefit that we were looking for to just reinvest into the business. As we are exiting fiscal 2026, we're exiting with strong momentum into fiscal 2027. We have an amazing portfolio of brands today. We have an exceptional portfolio of 25 + brands that spans across entry prestige with The Ordinary, to prestige with Estée Lauder, to name a few, and obviously luxury with brands like La Mer, Le Labo, and many others that we have in the portfolio. I just wanted to highlight three examples that are very important. Take M·A·C as the long-standing number one makeup brand in the world.
M·A·C had strong brand love, always had very strong brand love, but the sales been declined for many years, especially in fiscal 2025. Here we've deployed every single pillar of Beauty Reimagined. That is, one, making sure that we have the right distribution, especially in the U.S. We have the deployment of M·A·C at Sephora, but also in the Middle East. Accelerating Sephora's deployment on TikTok Shop with the U.S., the U.K., and Germany. But also really, frankly, accelerating innovation in makeup that is highly demanded by the consumer. All of that, we've seen M·A·C organic sales growth improve from a high single-digit decline in fiscal 2025 to mid-single- digit increase in fiscal 2026. But also going back to market share again and the number one position in Q4 in the U.S.
That's really the proof that, again, when we apply Beauty Reimagined to all our brands, it's basically working. The second one, KILIAN PARIS, while a much smaller brand in our portfolio, is another great case study of how powerful Beauty Reimagined is. During the course of 2026, we've really deployed the brand in more channels, like more retailers around the world. We've invested in innovation, and today we are proud to say that we have a 19 percentage point acceleration in organic sales growth from fiscal 2025 to fiscal 2026. So again, from a large brand to a smaller brand, the model is working. Last but not least, The Ordinary, certainly the biggest of the indie brands that we have in the portfolio of The Estée Lauder Companies, it shows really the power of Beauty Reimagined as it really works as an indie brand. We're accelerating best-in-class consumer coverage.
We're continuing to just deploy more innovation. As a result, The Ordinary has been one of the three fastest growing brands in the company, alongside KILIAN PARIS and Le Labo. Now, I just wanted to highlight all of that because it's very important for us. Even the last two brands, KILIAN PARIS and The Ordinary, are two examples that the brand has created an alternative model to be able to accelerate indie brand within the portfolio of The Estée Lauder Companies. That's new from the model that we had in the past, and mainly operationalized by Beauty Reimagined, so we can create the next big brand for the future that will add more building block of growth for the company in the future. So we think that we really have a winning playbook. We expect to accelerate growth sales in fiscal 2027 from 3%- 5%.
This is what we said at the earning calls, and we confirm today again that the range of 3%- 5% on organic sales growth is what we are working towards. We are looking at operating margin expansion of 150 - 230 basis points on top of the great improvement that we've done in 2026. And diluted EPS to increase 24% - 34% over the prior year. So again, great expectation, great ambition that we have for fiscal 2027. I could go on a lot on the outlook, but then there will be nothing for Lauren to ask me. So I'll just leave it at that. I'll conclude soon.
I just wanted before we start the discussion and Lauren grills me and Akhil on stage, just wanted to give few other things on innovation, because I think it's very important that part of the second pillar of Beauty Reimagined was this acceleration on innovation. Across basically all category, we are accelerating it, and we are seeing actually really good momentum at the beginning of the fiscal year. To give you a few example, obviously the PDRN innovation that we have both on Clinique and The Ordinary. You know that the industry is moving to longevity at the speed of light, and this is actually also showing the speed at which we are adapting and bringing the right innovation to market. But also in night, with Estée Lauder on luxury, Bobbi Brown, you name it, we have innovation in skincare, very strong throughout FY 2027.
When you look at the next categories, we have great innovation coming in M·A·C, which is fueling the momentum that we are seeing today. In fragrances, we have many new innovation that's coming from luxury fragrances, from TOM FORD to KILIAN PARIS with Cocktails, or even Jo Malone London. But also, we were very clear, the acceleration in prestige fragrances, especially with a brand like Estée Lauder Glimmer that is off to a very strong start, or the continuation of the push that we are making with TOM FORD that has been one of the highlights for us in 2026, and we're expecting it to just continue. Balmain Beauty, in prestige beauty, that is off to a very strong start. So we are really continuing to build strong momentum throughout our brands.
What you're seeing here on screen in the room, and sorry, on the webcast, you won't be able to see the videos, is also for us, for these launches and all our hero product. We are really capitalizing on the new unified global media model that we've deployed with WPP. This is, if you remember, as of April 1st, we've moved to a global agency, and we're already seeing positive momentum, which allows us to buy at scale through centralized and AI-enabled system. We have media agents that are allowing us to optimize always in real time. We have real-time analytics that allows us to just pivot all the time and to adapt our campaign to just be much more efficient. Again, as I said, we are already seeing the strong benefit of that.
Building on this exciting work with WPP, we've also created momentum with Shopify, setting the stage for agentic commerce, which is very important. Again, another thing that is disrupting and changing the industry to be much more targeted for the consumers. That allows us in our direct-to-consumer business, that is increasingly important for us, to be much more targeted. We're seeing today, we've done it when we were at the earning calls. We've announced the deployment of M·A·C Cosmetics on Shopify in the U.S. Since then, we've already also deployed it in the brick-and-mortar stores of M·A·C, especially in our freestanding stores, and Clinique USA brand.com is launching soon. We are seeing actually the benefit with much higher conversion already, which is going to make our direct- to- consumer even stronger. So when you all put it together, the transformation is very clear.
If there is one thing or two things that I want you to retain, we are a very different company at the moment where we are addressing yourself today, and we have a momentum as we are exiting fiscal 2026 into 2027. Now I will be very happy to take some questions with Akhil from Lauren. Thank you.
Great. I will go on this one here. Perfect. Okay, great. Thanks so much for that.
Of course.
Last year when we were sitting here, I had asked you what success would look like a year later. You mentioned being able to prove more consistent market share gains beyond the U.S. and China.
Yes.
In the fourth quarter, you started to see much more diversified growth and market share gains in Korea, Japan, and the U.K. So how would you assess progress on the breadth and what breadth should look like another year from now?
Yeah. First of all, thank you, Lauren. I think, look, like I said earlier, I am very proud of the momentum and the improvement that we have done throughout fiscal 2026, and we have many proof today, and it was very important that we have, as we discussed last year, throughout the year, that we can prove ourselves and prove the world that we are capable of growing in multiple geographies around the world. China has been a highlight for us, like obviously 9% sales growth in net sales last year, but more importantly, six consecutive quarter of market share gain in the market. I just come back from China two weeks ago. I was in Beijing, and I was in Shanghai, and frankly, we have strong momentum, great presence of our brand, and we all continue to do so.
Korea, you mentioned it, I was also in Korea after China. Now we are in market share growth. We have actually in Korea, 11 brands in growth, of which nine are in double-digit growth in the last quarter. So it has been absolutely phenomenal. Japan is also in market share growth. So throughout Asia, I think we are very well diversified. Just one thing in China, it is no longer just a story of La Mer and Estée Lauder. We have a very diversified growth across many of our brands, where we have six brands in double-digit growth and many more brands in positive. Now, when you just move to the West, we see great momentum in Europe now starting especially at the beginning of the fiscal year.
I am happy to report that we have, I would say, great momentum in many of the European market. Mainly Italy, Spain, France, and Germany, which have been challenged, but we are actually seeing great momentum. In the U.S., the most important one, and I am sure we will deep dive more into this one, we are seeing continuous improvement in our result. It is true that July the market was a little bit tempered because of the move of Prime Day, Amazon Prime Day, from July to June. But the market is back to single digit growth in August, and we are seeing continuous momentum for us in the market.
I think it is very broad-based, and we intend to just continue this momentum throughout the year, because the promise behind Beauty Reimagined, it is really a balanced growth between East and West, and frankly, also North-South, depending on the region and where we're looking at.
Okay, great.
Lauren?
Yeah.
If I could add one thing to what Stéphane said. When we started on this journey, we talked about long-term value creation focus, and of course, we have famously kept repeating growth margin and cash. Stéphane talked about the breadth of sales growth and the acceleration of sales growth. We are also very much driving the breadth of profit pools and pillars in the company. You know that skincare, Asia, and China are very strong profit-wise. We are committed to driving significant acceleration also on other geographic segments, and, from a category perspective, makeup and fragrance. Well, in our margin guide of 12.7% - 13.5%, this is included, but this is not only for this year, this is something we should see sequential progress in years to come.
Okay, great. Let's talk more about North America.
Like you said, clearly you've made progress moving from decline into stabilization in fiscal 2026. Volume shares are growing, but what needs to happen to realize value share growth and for the gap between retail sales and organic sales to narrow in North America? I know Amazon and platform, as they become a bigger part of the mix, some of this gap may remain, but what does it take to get into value share growth?
Yeah. I think first of all, the first part of the question is really the value share growth. Don't get me wrong, we are not there yet, and we're just working towards it. There's still some work to do. I'm happy to see the acceleration and the momentum that we are seeing. I would say simply, we need to continue to deploy the playbook of Beauty Reimagined. The first thing, we are accelerating innovation. The U.S. is actually a very interesting market. In a sense, it's very well-balanced between the three main category, between skincare, makeup, and fragrances. In the past, while we have very strong position in skincare and makeup, we have a relatively smaller position, especially when you look at Circana, because many of our sales in fragrances is not reported, especially brand like Le Labo, that are more direct to consumer.
But we are accelerating, actually, the deployment of our prestige fragrances, Balmain Beauty , the new launch of Estée Lauder Glimmer, but also all the collection of the signature collection from TOM FORD. I'm happy to report that everywhere we're seeing strong momentum on this new innovation. This is definitely going to help us. The second thing is we need to continue to deploy our brands into the fast-growing channels. When I talked about M·A·C, we're not done with the full rollout at Sephora into the U.S. We have a plan working with our partner to just continue to roll out. We'll certainly continue to seek right momentum. But we have more opportunity with TikTok Shop.
We are just at the beginning of the journey, and today we have clear indication that TikTok Shop may well be the first point where consumer shop or discover the brand and enhance the entire ecosystem. Today we know that, for instance, when we do great activation on Clinique, we have repurchase on Amazon. When we do great activation on M·A·C, we see great repurchases at Sephora on our freestanding stores. So we have a real indication of the consumer journey through the ecosystem. It was almost like we were looking at a puzzle and we were missing a few pieces, and today we have all the pieces in place for us to just accelerate. The one thing that is less visible from the external, we just completed a complete revamp and realignment of the sales force in North America.
We had few misalignment on where we could support the brick-and-mortar. As you know, our online business is doing really well, and we continue to accelerate, but our brick-and-mortar is where we needed to just make some changes. This realignment of the sales force that is now in place as of September 1st is allowing us to be closer to our partner, closer to the retailers, and to accelerate what I call the retailtainment on top of great conversion that we are having online, especially with partners like Shopify.
Okay. So that revamped sales force, we should think about seeing the impacts in department stores-
Department stores.
-Ulta, Sephora.
Ulta, Sephora, pretty much the entire brick-and-mortar network, including our freestanding stores.
Okay.
Now we are rationalizing some of our freestanding stores also as we are accelerating distribution in specialty nodes, especially for M·A·C. But on the opposite, we are accelerating the deployment of freestanding stores in the U.S. with brands like Le Labo or KILIAN PARIS, Frédéric Malle, et cetera, because we're seeing great potential to be able to enhance the retail experience in this category.
Okay, great. Let's switch and talk about China and the broader China ecosystem. You've already had a meaningful improvement in China. You've emphasized the growth is now more balanced across brands, channels, and categories. What are you doing differently in China today that gives you confidence that the share gains can continue?
Okay. Like I said, I just come back from a few days in Beijing and Shanghai. First of all, I think our team is doing a fantastic work there. To be able to be consistently gaining market share for six quarters in a row is really fantastic in such a competitive market. I think what is interesting is many of what we are doing for Beauty Reimagined around the world, we tested it early on in China. We were the first to move to Tmall. We were within the first one to just move to JD.com, one of the first one to move to Douyin. We also now accelerating freestanding store that is actually a preferred brick-and-mortar model. It was the first market where we unified our media with WPP also, before we did it in the rest of the world.
Many of the elements of Beauty Reimagined are visible. The one thing that is actually enhancing our growth today is the efficiency of the R&D center that we've opened in Shanghai. If you remember, we inaugurated the R&D center in March 2023. Obviously, at the beginning, we had to just set the operation. Today, 30% of the innovation for the world is coming from China, and two of the top 10 biggest innovation that we have in the world came from China. We have one on Estée Lauder, on a treatment lotion, and also an emulsion for La Mer that are proving to be extremely successful and have been helping to drive momentum there. Now we're putting more brand into also in our innovation center.
It's not only Estée Lauder, La Mer, but we have a plan to deploy more innovation for our brands in makeup and in skincare, in innovation for China, for China. I really believe many of this innovation that we're going to do in China, or doing, will have benefit for the rest of the region, and frankly, for the world, and will help travel retail. I would say we are in a really good position. Consumer confidence is slightly bouncing back in China, so it's still not to the pre-COVID number, don't get me wrong, but at least it's best since the Shanghai lockdown, and we are seeing consumers, especially younger consumer, coming back to the category, and our strong position both in distribution, in consumer facing, and now innovation is helping us to really accelerate the market share gain in the market.
That's great. Let's switch to travel retail and Chinese travelers.
Yes.
Travel has now moved from being a source of major volatility at the total company level. It's reset to a more manageable size. How should we think about the role that travel retail plays within the business from here?
When you say it's more manageable, I think it's perfectly manageable at 15% now, and clearly we've reset the business to be 15%, which is in line with industry trend. I think it's important to see that travel retail is no longer just a story of the Chinese consumer. Same as we are trying to rebalance growth between geographies, between brands, and so on, we are doing the same thing in travel retail. The fast deployment of especially our perfume brands in the West, in the Americas, in Europe, is helping us in this moment in time to just continue to just do the rebalance. But what I find very encouraging in the China ecosystem or the overall East ecosystem of travel retail is, one, Hainan is back to be very strong. If you remember, I think even last year, foot traffic was high, but conversion was low.
Now conversion is picking up, and we are double-digit growth and gaining market share in Hainan. Very happy to see also that is broad-based between our brands. But the Chinese consumer are trying to travel within the region again. Prime destinations are Korea, Hong Kong, and Thailand, and we are seeing the direct impact. We've always been ready to welcome the Chinese consumer within the ecosystem. So it's a much more balanced model now that is not only within the China ecosystem, and I think there is a clear stabilization because of, if you remember, all the transfer of operators, Shanghai, Beijing, the apps, all of that now is set and is really set for acceleration. But we're seeing Korea, Thailand, Hong Kong, and then the West being up to a strong start.
I want to be very clear, on travel retail, as I said it, we are shipping to the demand, but we are really pushing experiential retail in a massive way. So travel retail is more than ever becoming a window for our brands, and we are investing, but we are investing behind, obviously, a strong foot traffic and retail demand in the channels.
Okay.
Lauren, if I may add to what Stéphane said, that's an important point there he made about shipping to retail demand. So travel retail is super critical for the industry and for us because of discoverability of the brands and consumer acquisition. The other aspect that we have done specifically, the three things we have instituted, is really strong discipline and operating controls, which Stéphane alluded to. Secondly, it's really accountability, and I'll double-click on that in one moment, and then oversight. So this was critical as we came through on Beauty Reimagined. This is what we promised. What we have done here is, what Stéphane announced, a brand-new team for travel retail. So that's a total new team, and it's really performing well. It's reflected in our results.
Secondly, this team works very closely with Mainland China team so that we have a 360 view of the traveling Chinese consumer. We really build our activations in a close coordination, and we are doing that in every place Chinese travelers are traveling or other traveling cohorts. Thirdly, we are shipping to forecasted retail, and then we have corrective mechanisms to test this constantly. Every time we feel there is a variance, we are making the correction. We have made significant progress not only on the business but also on the operating discipline that was necessary to drive value in this channel.
Okay, great. Let me ask you a quick question on pillar, I don't know if it's two or three, of Beauty Reimagined, which was on innovation.
Two.
Two. Thank you. One thing that we'd noticed was R&D was down in fiscal 2026, both in dollars and as a percentage of sales. How should we interpret this? Is it a function of better use of external resources? It was something that stuck out to us in the 10-K.
Just one second.
Well, thanks, Lauren. Research and innovation, along with creativity and brand building, is heart of the company, as Stéphane showed earlier, and this is the lifeblood. We will continue to invest here. You are definitely referring to the changes and the reductions we did, which were very much planned as part of the PRGP restructuring. What this does is this sets up a very effective and efficient R&D platform for us to help us be the best consumer-centric company. Within that, the percentage of funds going against the consumer and growth orientation within innovation is also happening. As we look to 2027, we definitely see clear investments going into R&D on that much stronger and efficient base, area of cutting-edge consumer insights, area of ingredients, area of formula, area of platforming.
Also, what we intend to do is that, look, as we said in the earnings call already, we have a very strong slate of innovation, especially in the front half. Some of this is already starting to reflect when Stéphane gave the call-out of faster innovation and larger innovation in key categories. We are starting to see that, and you will see us invest in a very disciplined but in a very methodical way to drive because this is a growth driver for the company.
Remember also, one thing we have not mentioned the word "AI" so far, but AI is allowing us also to be much more efficient in R&D. I think one of the thing that we are seeing is like ability to just predict better what is going to be the outcome of the kind of the testing, which allows us to cut time and to just reduce failures or redoing formulation if need be. So that also just makes us much more efficient. I think the other thing is also we are today mining all this data in a much faster way to just be able to just create new ingredient, new complex, new ideas, for the future.
One thing I have been very clear, while I believe in the strengths of the R&D that we build at The Estée Lauder Companies and will continue to do it, we are also partnering with outside partners, like biotech firm that is in China, in the U.S., or frankly, our historical partners in the perfume houses that are mainly European-based. There is very broad stroke on how we are using internal and external that makes us much more efficient. Today, when you think the main R&D center based in New York, outside of New York, then Shanghai, we also have Blaine, Minnesota, for haircare, and then we have the Atelier in Paris for fragrances that you visited last year. I think now we are really set, really for acceleration of innovation, but in a very efficient way.
Okay, great. Where do you think you stand? This is pillar three, on consumer-facing investments? Do you think you have the right level of spending now as you focus on recruiting new consumers into the portfolio, or are there areas where you really still want to step up spend?
Look, I think, like we said in the numbers, we increased by 7% the consumer-facing last year, and it's been very clear we intend to continue to use some of the benefit of the PRGP and, frankly, also the growth to continue to invest in consumer-facing. And we're seeing the proof that it's working. Many places around the world, many geography brands and categories, we're seeing acceleration. I'm not going to, in the essence of time, that is in China, in the U.S., Korea, Japan, Europe, even Latin America, where we're seeing great momentum. It is because so. Do we have the right level of investment? I think what we are working with partners like WPP is making sure that we have a lot more efficiency for every dollar we spend, how we can target more consumers than ever before. So not only we are increasing the amount of dollars that we are putting towards consumer-facing, but we are also making sure that it's much more efficient. So we are going in the right direction, and I think we have the tools, we have the partners, we have the creativity, because it's not only about high performance, it's also about the emotional values and cues that we are communicating through our brand to just to continue the momentum.
Okay, great. I do want to talk about the P&L and margin recovery, versus sales growth. So when you announced Beauty Reimagined, you talked about getting back to a solid double-digit operating margin, and we've been of the view that mid-teens is sort of a good run rate to anchor our models towards. You've made fast progress, rate targeting 13.5% at the high end this year, while still increasing consumer-facing investments. So investors are again wondering if high teens is on the table. So I wanted to get your response to that.
Thank you, Lauren. We have, as we said, Stéphane and I, we have significant runway on margins. We, of course, a couple of things we said right from the get- go. We said, "Look, margin progression would be a marathon, not a sprint." We also said that while we grow margins, we will fuel our brands. Those are things we will not compromise. The great news, as you said, is that, look, in last 2026 and 2027, we would've grown margin by 500 basis points. I think we are sprinting the first part of the marathon, which we are proud of. However, we are also investing in the business, which is what is all the share progress that Stéphane talked about. As we look at 2027, the reminder of the key components were PRGP drives growth.
We have leverage on non-consumer- facing, and gross margin will drive modest progress. However, the PRGP programs, we were very clear that as the run rate builds through the year, the full year annualized benefit then also flows through to 2028. So 2028 will have that benefit. It will also have the benefit of what Stéphane and I have constantly talked about, reducing of fixed costs. With a certain amount of sales growth, we will have more leverage now than in the past. So that's also there. In addition, we have said that, look, we will improve segment profitability, which I know you have asked us question as well. We haven't yet scratched the surface on driving efficiency on consumer-facing investments, which we are right now driving as we are getting the whole value creation story going.
With all of that, we believe we have good confidence in driving consistent growth, diverse growth, and significant operating leverage ahead of us. I think what we are proving is every time we are coming to those guidance points, we are hopefully giving great and strong visibility.
Think about it like, I think not much to add to what Akhil said. We started this journey, it was the PRP, was Profit Recovery Plan.
Right.
Then we went to PRGP. We've added the growth. Now we are in growth modes. With the type of growth margin that we're having, and even we've guided to a modest improvement of the growth margin. We're continuing to work on some ideas to continue to make future innovation accretive to gross margin and so on and so forth. You'll see progress. We are flipping the P&L on its head with less fixed cost and a much more variable cost. That allows us to really show the top line. And with this type of gross margin, obviously, there will be a lot of flow through from the profitability.
Okay, great. All right. We're going to wrap it there.
Yes.
Please join me in thanking Estée Lauder for being-
Thank you.
-with us at the conference.
Thank you, Lauren.
Thank you.