Estee Lauder : 2025 Q2 Conference Call Transcript

Corrected Transcript

04-Feb-2025

The Estée Lauder Companies, Inc. (EL)

Q2 2025 Earnings Call

	Total Pages: 19
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The Estée Lauder Companies, Inc. (EL)	Corrected Transcript
Q2 2025 Earnings Call	04-Feb-2025

CORPORATE PARTICIPANTS

Laraine A. Mancini	Akhil Shrivastava
Senior Vice President-Finance and Strategy & Head-Investor Relations,	Chief Financial Officer & Executive Vice President, The Estée Lauder
The Estée Lauder Companies, Inc.	Companies, Inc.
Stéphane de la Faverie
President, Chief Executive Officer & Director, The Estée Lauder
Companies, Inc.

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OTHER PARTICIPANTS

Bryan D. Spillane	Dara Mohsenian
Analyst, BofA Securities, Inc.	Analyst, Morgan Stanley & Co. LLC
Lauren R. Lieberman	Oliver Chen
Analyst, Barclays Capital, Inc.	Analyst, TD Cowen
Dana Lauren Telsey	Olivia Tong
Analyst, Telsey Advisory Group LLC	Analyst, Raymond James Financial, Inc.

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MANAGEMENT DISCUSSION SECTION

Operator: Good day and welcome to The Estée Lauder Companies Second Quarter Fiscal 2025 Earnings Release and Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Ms. Rainey Mancini. Please go ahead.

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Laraine A. Mancini

Senior Vice President-Finance and Strategy & Head-Investor Relations, The Estée Lauder Companies, Inc.

Hello. On today's webcast are Stéphane de La Faverie, President and Chief Executive Officer; and Akhil Shrivastava, Executive Vice President and Chief Financial Officer.

Since many of our remarks today contain forward-looking statements, let me refer you to our press release and our reports filed with the SEC, where you will find factors that could cause actual results to differ materially from these forward-looking statements.

To facilitate the discussion of our underlying business, the commentary on our financial results and expectations is before restructuring and other charges and adjustments disclosed in our press release. Unless otherwise stated, all organic net sales growth also excludes the non-comparable impacts of acquisitions, divestitures, brand closures and the impact of foreign currency translation. You can find reconciliations between GAAP and non- GAAP measures in our press release, and on the Investors section of our website.

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The Estée Lauder Companies, Inc. (EL)	Corrected Transcript
Q2 2025 Earnings Call	04-Feb-2025

As a reminder, references to online sales include sales we make directly to our consumers through our brand.com sites and through third-party platforms. It also includes estimated sales of our products through our retailers' websites. Throughout our discussion, our Profit Recovery and Growth Plan will be referred to as our PRGP. During the Q&A session, we ask that you please limit yourself to one question, so we can respond to all of you within the time scheduled for this webcast.

And now, I'll turn the webcast over to Stéphane.

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Stéphane de la Faverie

President, Chief Executive Officer & Director, The Estée Lauder Companies, Inc.

Thank you, Rainey, and hello to everyone. Akhil and I are pleased to be with you today for our first earnings call as CFO and CEO of The Estée Lauder Companies. We are incredibly honored to lead our iconic company defined by our core values and portfolio of beloved brands.

Having met with many employees, retailers, business partners, investors and other stakeholders since being named CEO three months ago, I am more convinced than ever that our fundamental are strong.

We have a strong foundation to leverage given our brand equities, high-quality products and exceptional talent. Our focus is clear, restore sustainable sales growth and achieve a solid double-digit adjusted operating margin over the next few years as we aim to become the best consumer-centric prestige beauty company.

Let me begin by reflecting on the drivers of our challenged performance over the last few years before turning to how we plan to realize our ambition for much improved results. Subdued consumer sentiment in China greatly pressured the prestige beauty industry and our business. Given our strategically strong share in prestige beauty with the Chinese consumer, we were disproportionately impacted.

At the same time, the increasing complexity of our organization, coupled with a narrow focus on too few markets and channels to drive growth, prevented us from tapping into the prevailing strength of prestige beauty around the world. This was especially true in North America. Simply said, we lost our agility. We did not capitalize on the higher growth opportunities quickly enough in channels, markets, media and prestige price tiers, nor fuel new consumer acquisition aggressively enough.

We also did not deliver sufficient levels of on-trend innovation in our time-to-market often put us behind trend. This happened as prestige beauty became nimbler, driven by both incumbents and new entrants as we learn with our own indie brand, The Ordinary, along with faster-moving consumers magnifying our issues. Compounding matters, lower sales in higher-margin areas of our business coincided with our overall expense base becoming too large as we invested in capabilities ahead of growth that didn't materialize.

Our bold new strategic vision of Beauty Reimagined is designed to address these factors to restore sustainable sales growth and deliver a solid double-digit adjusted operating margin over the next few years. We are reimagining our operating model to be leaner, faster and more agile through the biggest transformation in our history to best serve consumers globally.

Beauty Reimagined has five action plan priorities to achieve our ambition. First, accelerate best-in-class consumer coverage. We are going to put the consumer at the heart of our business. To do so, we plan to rapidly expand our portfolio presence in consumer-preferred, high-growth channels, markets, media and price tiers to fully participate in the growth opportunities of prestige beauty.

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The Estée Lauder Companies, Inc. (EL)	Corrected Transcript
Q2 2025 Earnings Call	04-Feb-2025

We have numerous area in which to capitalize, geographically in the US, the UK, and emerging markets; and by channel from travel retail in Western markets to online platforms, specialty multi globally and pharmacies in Europe. By doing so, we expect to better diversify our growth drivers.

Second, create transformative innovation. We aim to deliver fast-to-market, on-trend innovation with an eye towards in-demand subcategories, benefits and occasions. For instance, there are several dynamic subcategories in Skin Care like body, of Makeup like multi-benefit lip products, and of Fragrance like lifestyle for home for our brands to either enter or expand.

We will innovate across price tiers from entry prestige to luxury, making sure to bring products to market at attractive price points for new consumer acquisition. As we look to step-change our innovation, we are committed to tripling the percentage of our innovation that is launched in less than a year.

Third, boost consumer-facing investments to accelerate new consumer acquisition. First and foremost, we plan to do this by increasing visible advertising spending, optimizing marketing programs, and eliminating current A&P spending that is unproductive. Moreover, this also includes greater investment in selling to support our freestanding store acceleration for our luxury and artisanal fragrance brands to drive growth.

Fourth, fuel sustainable growth through bold efficiencies with today's announcement of our now expanded PRGP. We've made significant progress to-date in the PRGP, having delivered over 60% of our fiscal 2025 objective in the first half of the fiscal year. This has primarily been driven by addressing elevated excess and obsolescence, realizing strategic pricing through fewer discounts, lowering professional service expenses and restructuring our workforce.

However, greater expense reduction is necessary. We have experienced further volume deleverage since the plan's inception, driven by moderated industry growth projection and geopolitical uncertainty as well as the company-specific issues I've described. We must redesign our expense structure for an evolving mix of business, to better align with prestige beauty growth drivers and given the significant changes in the travel retail industry.

We're embarking on our biggest operational transformation in our company's history, enabled by now an expanded PRGP. We are redesigning how much and where we spend, further rationalizing our non-consumer- facing investments and significantly evolving our operating model to be more efficient.

The new areas we have identified and adopting a more competitive approach to procurement, improving supply chain network efficiencies and outsourcing of select services, the latter of which we plan to do with proven global partners. We are advancing well in the design of the outsourcing program with our potential partners.

We are laser-focused on rightsizing expenses with the dual mandate to meaningfully reinvest in consumer-facing initiatives to drive top line growth and achieve a solid double-digit adjusted operating margin over the next few years. And as we return to delivering sustainable sales growth, we will be positioned once again to realize operating leverage to further improve profitability. We plan to give more detail on our growth algorithm once we have more fully operationalized the action plan priorities of Beauty Reimagined.

Fifth, reimagine the way we work. We are removing complexity and simplifying our organization. In doing so, we will provide for greater focus on execution excellence for the consumer. Moreover, we are unburdening our smaller brands so they can be more successful in a large organization, while driving greater benefits of scale for our larger brands. As we make these changes, we will empower faster decision-making, in part through a flatter and leaner organization.

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The Estée Lauder Companies, Inc. (EL)	Corrected Transcript
Q2 2025 Earnings Call	04-Feb-2025

The foundation of our Beauty Reimagined strategic vision is a new framework, where we are clear on our strengths so that we can more optimally allocate resources. Our strengths are where we will lead and excel: brand desirability, consumer experience, innovation, quality and end-to-end execution.

In support of our strengths and for certain other areas of our business, we are hardwiring AI through the organization. We are in an exciting moment in time for the company with AI, as we've been working with the best- in-class technology partners. Their resources, technology and investments combined with our use cases and proprietary data are enabling us to deploy AI in a cost-effective manner to drive efficiencies with high-quality and differentiated output.

As one example, we are leveraging AI to forecast our demand and plan for our material and production needs, which has resulted in our weighted average forecast accuracy reaching new heights. This better synchronize our demand and supply and delivers significant improvement in inventories, added proof that the initiatives that we are deploying to restore stronger operating margin are sustainable.

We are ready to dramatically scale the integration of AI into our workflows from product development to marketing, supply chain, back office, and beyond to accelerate processes and improve decision-making. What's most exciting, we expect AI to free up resources to unleash even greater creativity by our brand teams for the consumer. As part of the expanded PRGP, we also plan to work with other external partners to outsource areas of our business that are not core to where we want to lead and excel.

Since I became CEO, we've moved quickly to jumpstart Beauty Reimagined in my first 30 days. First, we announced this morning, we established a new consumer-centric executive team through a combination of elevated top talent internally and recruiting externally. The new flatter, leaner team structure and governance model are designed to significantly improve collaboration and speed of decision-making, with clear accountability across brands, regions, and function in support of our action plan priorities.

Second, and as I said few minutes ago, we strategically expanded PRGP, including its restructuring program, with the full support of our board of directors. This was a decision we did not take lightly, and it will result in a reduction of several thousand additional positions.

Third, we dramatically simplified certain work streams across brands, regions, and functions to enable teams to focus more on external execution to drive sales growth. As we execute Beauty Reimagined, we are embracing a test and learn mentality. When we see an early win, we will endeavor to move with speed to scale it. Conversely, we will seek to move quickly to exit what's not working. We are putting a new organizational structure in place to empower colleagues to act as owners as we improve communication, accountability, and collaboration to be more decisive and faster to action.

Encouragingly, as demonstrated in the second quarter, we have some momentum on which to build across the five action plan priorities of Beauty Reimagined. As we accelerate best-in-class consumer coverage, nine brands have now launched on the US Amazon Premium Beauty stores, including the successful launch of The Ordinary in January.

Last March, Clinique was our first brand to launch on Amazon storefront, at which time, it also doubled down on its authentic dermatologist heritage with strong commercial execution across all channels. Given Clinique's resounding success in the US, demonstrated by eight consecutive months of prestige beauty share gain through December, it launched in Canada Amazon Premium Beauty stores during the second quarter.

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The Estée Lauder Companies, Inc. (EL)	Corrected Transcript
Q2 2025 Earnings Call	04-Feb-2025

Across markets, in Asia Pacific, we continued to build our presence on TikTok Shop, LINE, and Shopee, with more brands launching in some markets on these high-growth platforms. And we are thrilled that The Ordinary is debuting in Mainland China this month with its proven disruptive launch strategy.

We also realized excellent results as we extended the reach of our luxury and artisanal fragrance brand with our experiential in-store offerings, led by Le Labo and Editions de Parfums Frédéric Malle, as each delivered strong double-digit organic sales growth.

As we deliver our plans to create transformative innovation, Clinique, Estée Lauder, and La Mer strategic launches for the nighttime usage occasion demonstrate the gains we can deliver, where we have the right to play and win. In Mainland China, La Mer grew in retail, in contrast to the industry's decline in prestige skin care, driven by its new rejuvenated night cream.

Clinique CX, the brand's new advanced post-procedure treatment franchise for China, further epitomizes our aspirations. Clinique CX debuted in November at the Chinese Dermatologist Association with medical device through classification after less than 12 months development from concept to launch. We also announced the opening of a new BioTech Hub in Belgium in December and the collaboration with MIT in January to further accelerate the company's cutting-edge biotechnology innovations.

Finally, we saw the fruits of our labor when we boosted consumer-facing investment to reach new audiences, as seen by Jo Malone London's significant growth with men in the second quarter.

Before I close, I want to speak briefly about our third quarter outlook. While we are not satisfied with third quarter outlook, it primarily reflects weak retail sales trend in our Asia travel retail business, which deteriorated in the second quarter driven by Korea. While our retail sales trends in Hainan were still negative in the second quarter, they improved sequentially, fueled by our retail activations.

For the third quarter, we expect overall soft retail trends to persist in Asia travel retail, significantly pressuring our organic net sales despite the improvement we made with our in-trade inventory levels in the first half of fiscal 2025, which we intend to maintain across current levels.

In order to reignite our retail sales growth, we are strategically increasing consumer-facing investments around the world in the third quarter. We expect the benefits of the PRGP to both fund these investments and modestly offset the meaningful operating deleverage from the sales decline.

In closing, while we have much work to do, we are confident that Beauty Reimagined is the way to realize our ambitions to restore sustainable sales growth and achieve a solid double-digit adjusted operating margin over the next few years.

To our employees, thank you for your passion and contribution at this pivotal moment in our company's history. I am grateful for all the ideas that you've shared with me over the past months, and I'm energized for what we can achieve together. This is our shared vision.

I will now turn the call over to Akhil.

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Akhil Shrivastava

Chief Financial Officer & Executive Vice President, The Estée Lauder Companies, Inc.

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The Estée Lauder Companies, Inc. (EL)	Corrected Transcript
Q2 2025 Earnings Call	04-Feb-2025

Thank you, Stéphane, and hello, everyone. It's an honor to be with you today in my new role as CFO of The Estée Lauder Companies. I'm energized to partner with Stéphane as we boldly drive the execution of Beauty Reimagined, our transformative strategic vision. While we've made progress with initiatives under our PRGP, we recognize there's still much to accomplish. As we collaborate with our global teams to simplify processes and execute with speed and agility, we are confident we can achieve a leaner cost structure through significantly expanding our PRGP. We believe this evolution positions us to invest more in consumer-centric activities that drive recruitment and fuel sustainable profitable growth and cash generation for the long term.

I'll discuss this in more detail shortly. But first, let me recap our second quarter results, covering overall performance, organic net sales by region and product category, margin, cash flows, restructuring charges and other items.

Organic net sales declined 6%, at the high end of the outlook range we gave in October. Adjusted EPS was $0.62 in the quarter, exceeding our outlook. This reflects better-than-expected gross margin expansion given a higher- than-expected category mix in Skin Care. It also reflects disciplined expense management, while we continued to invest in consumer-facing activities to support growth in key areas of the business.

Starting with our regions, in Asia Pacific, net sales decreased 11%, primarily driven by double-digit declines in Mainland China, Korea and Hong Kong SAR, mainly due to subdued consumer sentiment. The decline in Korea also reflects our November 2024 exit of Dr.Jart+ from the travel retail channel as well as the impacts of recent political and social unrest. These declines were partially offset by double-digit organic net sales growth in Japan, where both domestic and traveling consumers continued to fuel growth across nearly all channels of distribution.

Organic net sales in EMEA fell 6%. This reflects continued retail softness in our Asia travel retail business, which resulted in lower replenishment orders. Organic net sales were flat in the Americas. This was mainly due to the 1% decline in North America, where we still have relatively high exposure in slower growth channels. This was partially offset by double-digit online sales growth, which included early shipments for The Ordinary's launch in Amazon's US Premium Beauty store in January.

Moving on to product categories, organic net sales decreased 12% in Skin Care and 8% in Hair Care. The challenges in Asia Pacific and our Asia travel retail business have the greatest effect on our Skin Care category. This more than offset the sales growth we saw in the Americas led by double-digit growth from The Ordinary.

In Makeup, organic net sales decreased 1%. The collective decline from TOM FORD, M·A·C and Smashbox more than offset the high-single-digit growth from Clinique's launch last March in Amazon's US Premium Beauty store. Fragrance organic net sales increased 2%. Le Labo continued to excel with strong double-digit sales growth across all geographic regions driven by hero products and innovation.

Now turning to our margins, for the quarter, our gross margin expanded 310 basis points compared to last year. This reflects net benefits from our PRGP that drove the reduction in excess and obsolescence, lower discounts, benefits from our strategic pricing actions and operational efficiencies.

Operating expenses increased 500 basis points as a percent of sales during the quarter. This reflects a 210 basis points increase in advertising, promotion and innovation expenses. This includes our investments to fuel performance during holiday and key shopping moments and drive consumer engagement for new product launches. We also saw an increase of 130 basis points from higher selling expense. This reflects higher costs to support key activations including during holiday and our distribution expansion. And our sales deleverage offset the net benefits realized under the PRGP. I'll expand on this later.

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The Estée Lauder Companies, Inc. (EL)	Corrected Transcript
Q2 2025 Earnings Call	04-Feb-2025

Operating income decreased 20% to $462 million, and our operating margin contracted 200 basis points to 11.5% compared to 13.5% last year. Our effective tax rate for the quarter was 42.6%, compared to 37.7% last year. The increase is primarily due to the unfavorable impact of previously issued stock-based compensation and a change in a global mix of earnings.

Diluted EPS was $0.62 compared to $0.88 last year. As of December 31, we have recorded $403 million of charges under our PRGP restructuring program. These charges primarily relate to initiatives aimed at transforming various functions, brands and regions.

During the quarter, we recorded $861 million of impairment charges related to TOM FORD and Too Faced. This reflects challenges in Asia Pacific and our Asia travel retail business for TOM FORD and continued underperformance from Too Faced. The increase in the weighted average cost of capital also contributed to the impairment charges for both brands.

Moving now to our cash generation, CapEx investments and dividend payments. For the six months, we generated $387 million in net cash flows from operating activities, compared to $937 million last year. Lower net cash flows from operations this year as compared to last year is due to the decrease in earnings adjusted for non- cash items and an unfavorable change in operating assets and liabilities. This includes the fact that last year, we made a very significant year-on-year reduction in our inventory.

We invested $273 million in capital expenditures compared to $527 million last year. The reduction in capital expenditures was primarily driven by the prior-year payments relating to the manufacturing facility in Japan. It also reflects the improvements we have made to optimize expenditures as we are determined to improve our free cash flow.

Turning to dividends, we returned $366 million in cash to stockholders. Looking ahead, to harness the full growth potential of our strategic vision as we transform how we operate and invest in our business, we must boldly pivot with a consumer-centric mindset, focused on cost discipline, optimizing our resources for growth and fueling consumer-facing investments to further ignite our brands.

Now I'm going to elaborate on our PRGP that is a critical enabler of this strategic vision. We have made significant progress in executing our plan thus far. While we remain on track to deliver the previously communicated $1.1 billion to $1.4 billion in net benefits, the current headwinds we are facing are now expected to partially offset these benefits.

To-date, the net benefits we have realized thus far have been more than offset by our operating deleverage. Our profitability has been pressured by our sales volume declines, mix, ongoing inflation and a cost base that was scaled in anticipation of growth that did not materialize. We have also continued to invest in consumer-facing activities and distribution expansion to fuel sustainable growth.

To address these challenges and accelerate our return to sustainable sales growth and profitability, we have made the decision to further expand the PRGP, including its restructuring program. Anchored by the five key action plans Stéphane discussed, the expanded PRGP is essential to our operational transformation, fueling investments for growth, not ahead of it.

We are focused on improving operational efficiencies, optimizing our cost structure to be leaner and enhancing leverage across the business, especially during periods of volatility and low sales growth.

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The Estée Lauder Companies, Inc. (EL)	Corrected Transcript
Q2 2025 Earnings Call	04-Feb-2025

This transformation enables us to reallocate resources, allowing us to better prioritize and increase consumer- facing investments. By doing so, we are better positioned to address changes in our mix of business whether driven by internal or external factors.

Related, we have made the difficult decision to expand our restructuring program. With all initiatives under the program, we now expect a net reduction of 5,800 to 7,000 positions globally, including approvals to-date.

Approvals for specific initiatives under this restructuring program in total are still expected to be completed by the end of fiscal 2026. In the now expanded restructuring program, we expect to take total charges of $1.2 billion to $1.6 billion and generate annual gross savings of $800 million to $1 billion before taxes.

A portion of these savings is expected to be reinvested in consumer-centric activities and additional investments to fuel growth. The actions under the PRGP, including its restructuring program, are expected to be substantially executed in fiscal 2025 and 2026 and completed in fiscal 2027. We expect nearly all of the full run rate benefits to be realized during fiscal 2027.

Overall, we aim to accelerate our return to sustainable sales growth and deliver a solid double-digit adjusted operating margin over the next few years. We are moving with a sense of urgency to execute the action plans of Beauty Reimagined to start delivering annual sales and margin improvement quickly. As Stéphane said, we plan to share more details once the Beauty Reimagined action plans are operationalized.

Let me now discuss our outlook. We expect our business to continue to be challenged by subdued consumer sentiment in China and Korea, pressuring Asia travel retail. In light of this, along with evolving global geopolitical uncertainty, we anticipate continued volatility and low visibility in the near term. As a result, we are only providing an outlook for the third quarter.

We expect a strong double-digit sales decline in our global travel retail business in the second half of the fiscal year. This reflects shipments based on our expectation of persistent industry retail softness and incremental pressure from the change in selling policies at several Korean retailers.

Additionally, recall that we resumed replenishment orders in the third quarter last year, making for a difficult comparison. However, we are encouraged that for the second quarter, our retail trends, while still negative, improved sequentially in both Mainland China and globally, excluding travel retail. We anticipate our retail sales trends, excluding travel retail, to significantly improve in the third quarter as we increase consumer-facing investments.

Given that context, let me walk you through our specific outlook for the third quarter. We expect organic net sales for our third quarter to decrease 10% to 8% compared to last year. As I previously mentioned, this is primarily driven by a strong double-digit decline in our global travel retail business. In the rest of the business, we expect the net sales decline to moderate. Currency translation is expected to negatively impact reported net sales by 2 percentage points.

For the third quarter, we anticipate moderate gross margin expansion, reflecting a tailwind from the in-period charge last year, which was triggered by the previous pull-down of production. We also expect continued benefits from the PRGP as an offset to our expected sales volume de-leverage and continued consumer-facing investments.

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The Estée Lauder Companies, Inc. (EL)	Corrected Transcript
Q2 2025 Earnings Call	04-Feb-2025

We expect our third quarter effective tax rate to be approximately 36%, compared to 30.5% last year. The increase primarily reflects the estimated change in our geographical mix of earnings. We expect third quarter adjusted EPS of $0.20 to $0.30, primarily driven by the expected strong sales decline in global travel retail. Currency translation is expected to dilute EPS by $0.04.

In closing, we acknowledge that we have a lot of hard work ahead, but we are empowered by a Beauty Reimagined vision. With its mandate to pivot boldly with the consumer-centric mindset, speed and agility, we are confident and better positioned to accelerate our return to sustainable sales growth and long-term profitability.

On behalf of Stéphane and our new leadership team, I want to extend a heartfelt gratitude to our talented employees around the world. Together with you, we are driving the critical transformation to unlock the full potential of our beloved company.

That concludes our prepared remarks. I'll now turn it over to the operator to begin the Q&A session.

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QUESTION AND ANSWER SECTION

Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question will come from Bryan Spillane with Bank of America. Please go ahead.

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Bryan D. Spillane

Analyst, BofA Securities, Inc.

Q

Thanks, operator. Good morning, everyone. Thanks for all of the detail today, very helpful. And I know there's a lot that you've got going on. But Stéphane, maybe just to step back for a sec, I guess as we were - I was just reading through the press release this morning and listening to the prepared remarks, some of what I'm hearing or what it comes across is there's some prioritization happening, meaning by changing the organization structure internationally, it's going to create, I think, more focus in some of those regions that maybe needed them.

And in that light, can you talk a little bit about the portfolio? I know there's been some new stories about the potential to maybe sell some brands. But absent that, just how are you looking at the portfolio and prioritizing where the investments go, and maybe there are certain brands or categories that you'll run more for cash? Just trying to get a better understanding of maybe how you're looking at the portfolio itself and prioritizing.

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Stéphane de la Faverie

President, Chief Executive Officer & Director, The Estée Lauder Companies, Inc.

A

Thank you, Bryan. No, thank you, very good question. I'm happy to discuss. So, first of all, your question is on the organization. Obviously, you saw, as part of the press release we put out this morning, obviously, the change and the evolution of our organization.

First and foremost, this organization was thought through to be leaner and faster. Obviously, we are - if you look at the organization as three block, one about the regions, one about the brand, and one the operation, we've really looked at every single of the element to be able to just, like, act faster and to deploy and execute the Beauty Reimagined strategy in a much faster way.

To your point, Bryan, the realignment of the regions across four clusters allow us to have a much more focus, one on the Americas, looking at it on a total region; one in Asia with the integration of travel retail as part of this region,

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