科蒂集團 (COTY) 2023 Q4 法說會逐字稿

Good morning, and good afternoon, everyone. My name is Leo, and I'll be your conference operator today. At this time, I would like to welcome everyone to Coty's Fourth Quarter Fiscal 2023 Question-and-Answer Conference Call. As a reminder, this conference call is being recorded today, August 22, 2023.

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 for the company risk factors that could cause actual results to differ materially from these 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.

(Operator Instructions) We'll take our first question from Filippo Falorni of Citi.

Congrats on the strong fiscal '23 results. First question on kind of the assumptions embedded in your initial guidance for fiscal '24. And also, you mentioned the category at the Prestige level, particularly in fragrances, remains strong. Just what did you assume in your guidance, are you assuming a continuation of the momentum, are you assuming a little bit of a slowdown with the more uncertainty in the macro environment? Just any color on that would be helpful.

Filippo, let me give the mic to Laurent for the (inaudible).

Yes, absolutely. Filippo, so I mean, first of all, indeed, as you highlighted, what's important is really that where we are positioning the fiscal '24 guidance. I mean at the top of the midterm guidance and following, as you highlighted, I mean, a very good landing of our fiscal '23.

So to make it short, I mean, really, our assumption is that the momentum is here to stay. Definitely, we are seeing the beauty categories are very resilient. And here, I'm talking about both categories, Prestige and Consumer Beauty. So definitely, and this is what is confirmed also by our retailers that beauty is definitely the darling category of the retailers.

So definitely, both on Prestige and Consumer Beauty, we're keeping this great momentum for fiscal '24, and this is amplified also by the strong initiatives that Coty is putting in place again on both divisions.

Great. And just a quick follow-up on pricing. I know you guys are planning for an additional price increase in Q1. Is it mainly in Consumer Beauty? It seemed like -- you mentioned closing the gap versus competition. And can you comment a bit on like response from retailers? What you're seeing in the market from the conversation that you're having?

Yes. So I mean, pricing, as you know, we implemented, I mean, successfully pricing across fiscal '23, so I mean this was -- this went very smoothly with retailers, but also with consumers as there was definitely no elasticity impact. So we share that we continue in Q1 fiscal '24, we are implementing a mid-single-digit pricing, and this is on both divisions. This is really important.

In the case of Prestige division and also in Consumer Beauty, so we are doing this, number one, because yes, inflation is here to stay in H1 fiscal '24, so this is really part of our plan; number two is also because we are seeing, as I said, very resilient categories.

And also, we are making sure, as usual, and we keep the methodology that this price increase is done in a very granular manner, in a very disciplined manner. We have a pricing office, and we have a lot of data based on the last 2 years. So we know exactly where we can increase price, again, without having any elasticity.

Last element I want to highlight is also that we are making sure that this price increase is combined with value creation for retailers and also for consumers. And definitely, we are investing money in sustainability agenda. This is something which is really well received by retailers and consumers and also is here also to -- is helping to accept a price increase for this Q1 fiscal '24.

Your next question is from Javier Escalante of Evercore ISI.

And also congrats on terrific results. I have a couple of questions. One on the Consumer side and the other on Prestige. On the Consumer side, to you made comments on CoverGirl, and it feels that in your view, it's an issue of tapping digital marketing through TikTok. So if you can comment on the situation more on the stores, right, whether your shelf space going into the fall?

And also in Consumer Beauty, your [plans] in Brazil is a massive mass fragrance market. So I would love to hear your views on that. And lastly on -- any update on the skincare launches in Asia will be awesome, okay?

Of course. Javier, thank you for the question. Indeed, you're right to mention these 2 elements, which I believe are the 2 next white space opportunities for our Consumer Beauty business. The first one is indeed makeup opportunity. We believe we have done, let's say, 70% of the job, if I may say. If you look at CoverGirl, we've fixed the net category. Today, our net category under CoverGirl is among the fastest growing in the market.

We've done the same thing with the eye category. The two most-recent launches from CoverGirl, which are Yummy Gloss, which is this viral product that is today going to sell something like 6 or 7x higher than what we have expected; and the upcoming launch, which started in July, which is Cleantopia mascara that saw the advertising during the earnings presentations.

These are, in a way, going to consolidate this 2/3 of the work that we have done. Of course, we are doing all the necessary efforts to really use the 70% to 75% of ANCP we are spending on this brand that are mainly digital ANCP towards Gen Z, towards advocacy, towards creating viral moments as we've been able to achieve it with Yummy Gloss, to take one example.

So the next phase is to fix the face category, which I believe is a category that has been driving the growth of some of our -- one of our competitors, to be very direct. It's really the face category. And this is inside the [cooking] right now.

So hopefully, once we have the face category joining lip and eyes, the 90%, 95% of CoverGirl will be positioned for the future the way I want this brand to be positioned using modern marketing, of course, mastering advocacy, mastering marketing and TikTok and all this kind of digital ecosystem that was missing until recently, and then we started to matter, I have to say.

So to answer your part around the shelves, which is an important one, we can confirm that the shelf space of CoverGirl has been stable post spring 2023 resets and is confirmed to be stable for the fall '23 resets. So any net space that other brands may be discussing is coming from other brands and not from CoverGirl. This is number one.

Number two, and this is a fundamental information that I shared with you already, and it's important to share it again and again, is that there are 2 brands gaining penetration in the U.S.: It's CoverGirl and [e.l.f]. And CoverGirl's frequency, I have to say is, I would say, 2.5x higher in terms of purchase frequency versus the category and versus key competitors. And this, for me, confirms that these brands' positioning, the new communication, the new innovations are strongly resonating with today's consumers.

Last but not least, it's very important to say that, in fact, we are doing two things. While most of our competitors are focusing on one target, CoverGirl is not a Gen Z brand. It's a Gen Z, millennials, Gen X and boomers brand. And we are going to play with these 2 key targets, the right way adopting the right marketing per target. So it's very important for us to also continue to remain as relevant as ever with Gen X, who are more loyal and who are more spending on this category.

So that's what I will give you in terms of answer when it comes to how we see CoverGirl brand [reconnect] that started 2 years ago.

Now I move to the second part of your question, which is around Brazil, if I'm not wrong. This, indeed, is something we started to discuss during our Investor Day back in July. We have strong capabilities. We have great capabilities in fragrances. And I'd say a word about this probably later, given the super-strong start of some of the new innovation in our Prestige, but we are applying the playbook of creating winning fragrances in both divisions.

And we are also applying this in Brazil. So -- and we have also a top-notch fragrance portfolio in mass market. And you're right to mention that Brazil is a big market. It's a $4 billion opportunity.

So we started the journey over there in April. We are entering in retailers where traditionally, we used to sell our Prestige portfolio. But at the same time, we are also opening opportunities in direct stores, putting our fragrances in the shelves of this kind of channel, which is very new for the Brazilian market, I have to say.

So in total, we started with 2,000 doors, with the potential to ramp up, up to 15,000 doors. So we are still at very early stages of this rollout. But you can imagine that we are super excited about how much this opportunity represents for the Consumer Beauty portfolio, especially given our mass fragrances are highly [dilutive] to our mass portfolio.

Last part is, very quickly, probably on skincare and in Asia. Again, the launch that happened in Asia was the Lancaster Ligne Princiere that started in March. As presented during the earnings presentation, this launch is achieving every milestone we are looking for, be it in terms of ability to create buzz on social media, its ability to meet consumers' highly demanding pace in terms of efficacy, in terms of textures, in terms of sensing, in terms of look and feel, all of these, we have advocacy ratings that are very, very high.

And as we said during the speech and the script of the earnings call, now our job is really to increase the traffic towards the brand. And this has a lot to do with mastering the ecosystem between [RED], Douyin, WeChat and all this ecosystem with, of course, creating content and creating the fantastic story behind the brand on RED , taking people to do live streaming on Douyin and, of course, creating community management into WeChat.

So everything is on track when it comes to our skincare agenda, and we are entering a new phase today, mastering much better than in the past our Chinese digital ecosystem.

And I have to say that the fact that this is a skincare brand, and that's a skincare brand that we own in a way, helped us also to have the possibility to play with 360 degrees of the Chinese ecosystem, which has never been the case up to now because makeup and fragrances are not as sophisticated categories as skincare is in this market. So that's also a fantastic school for Coty China, but also for Coty overall and globally.

We'll take your next question from Anna Lizzul of Bank of America.

Yesterday, you announced the expansion of the Marc Jacobs license with the build-out of the beauty side. I was wondering, how should we think about that build-out versus your initiatives with owned brands in your portfolio like Infiniment Coty in fragrance and Lancaster in skincare?

Yes. So in fact, this announcement we have made yesterday is, first of all, a continuity of a 20 years long-standing relation with Marc Jacobs Fragrances. We've been together -- married together since 20 years. And the outcome of this collaboration is, I have to say, fantastic. During fiscal '23, the second fastest-growing brand of Prestige was, indeed, Marc Jacobs, high double-digit growth. And this is really something that is the result of this long-standing collaboration.

We've decided to extend this collaboration in the coming decades, but also we've decided to bring back the highly coveted and [craved] Marc Jacobs makeup. If you've seen the -- some of the titles of people who have already published around this new collaboration around makeup, there is a lot of talk, following for this brand.

And this brand is fantastically positioned to do makeup in the area of -- in the mid [scottiere], which is really where the market is heading to and where you can really find the biggest part of the growth of the market.

If you talk about our owned brands, it's a parallel story. This company is the go-to destination for licenses, very long-term licenses. In this case, we are adding a new category which has strengthened our portfolio of color cosmetics, specifically in Prestige, but all our other color cosmetics brands, especially in mass market, our owned brands, again, think of CoverGirl, Max Factor, Bourjois, [Orveda], to name the 4 most important ones.

So this is really -- it's an end. You know how I love to work. I love to do and rather than either or rather. It's really this and this at the same time. So actually, Coty is on track. The launch -- the PR launch is going to be in October. And we hit the first stores, including a global DTC, in Jan 2024. And Lancaster, again, I have made the comments around Lancaster.

Last but not least, we are opening today the sales of what we do believe in skincare, is probably one of the most potent serum of all time behind the Orveda skincare line. This serum is called OmniPotent Concentrate, and it's open to be sold to a longer queue of consumers waiting for this since May today at the end of the day.

Your next question comes from Korinne Wolfmeyer of Piper Sandler.

Congrats on a great quarter. So first, I'd like to touch a little bit more on the guidance for next fiscal year and really the quarterly cadence that you alluded to, and it looks like there is a bit of a slowdown that may be implied in the back half of the year. And I know you're coming up against some more challenging comps in the back half.

But I was wondering if you could touch on if there's anything else that you're factoring into guidance for the year beyond that in regards to the cadence.

Korinne, so I mean, first of all, indeed, the fiscal year '24 guidance, top line, so is really a bit top of midterm guidance, 6% to 8%. So what we shared is that H1, we are positioning H1 from 8% to 10%. So indeed -- and this is definitely based on the strong start on fiscal '24 that we are currently contemplating. So this is really giving us full confidence.

And again, as I shared before, because the categories, both categories are really growing fast, and then Coty really brings some very successful initiatives on both divisions. So I mean, on top of what Sue has just explained, which is really the momentum of the initiative that we kicked off last year, such as skincare, Consumer Beauty, we started.

We have also some great initiatives in Prestige. Prestige fragrance I want to name. And you saw during the presentation on Burberry Goddess, which currently, I mean, what the data we received from retailers and consumers, I mean, are really stellar. So again, this is really giving a very strong start of the year.

Consumer Beauty also, we are seeing very good momentum. Yummy Gloss that we launched recently, sales are 8x higher than our initial forecast. So you really need to see as a combination of very dynamic market growth, again, on Prestige and Consumer Beauty and amplified by, definitely, all the initiatives and the work that Coty has implemented and has built over the last 3 years.

So there is nothing structural implying slowing down in H2. And we have good visibility to the strong momentum in H1 at this stage, this is really what I can tell you.

Very helpful. And then if I could just touch a little bit on the segment margins, I believe there was a bit of a contraction in Consumer Beauty. Can you just touch on it as we think about going forward over the next couple of quarters and years, on how to think about the proper run rate for margins for each of the segments? And where will we really see the most expansion from?

So definitely -- I just want to remind that when you look at the EBIT margin fiscal year for Consumer Beauty, I mean the EBIT grew 21% and by 70 basis points. So it's growing. And definitely, all the work that we kicked off 3 years ago, which is really the revamp of the brand, and Sue share the example of CoverGirl, this is -- we are also doing this work on gross margin.

So definitely, in our midterm algorithm is really that gross margin expansion and EBIT [margin] expansion is definitely on both segments, Consumer Beauty and Prestige. What I can add to your question is that I would say Consumer Beauty was most impacted by COGS inflation during fiscal '23.

And then that's why, okay, we implemented some price increase, and we continue, as I said, in Q1 fiscal '24. And we are continuing definitely on our innovations. I can definitely tell you that the innovation that we are currently launching, and we launched in the second half of last year at the gross margin, in some cases, which is equivalent for Prestige.

So we have really all the elements in our hands. We need to build sustainable, profitable growth for Prestige and also Consumer Beauty. And we have also some productivity actions on Consumer Beauty. One big one, we shared a few times with concrete example, is about platforming. So it's really to have a standard platform on all our brands. And definitely, it is going to create really some optimization. And of course, we will see some expansion in both businesses, Consumer Beauty, in the coming years.

Your next question is from Olivia Tong of Raymond James.

Congrats on a very strong year. My first question is around the pricing actions in Consumer Beauty. If you could just elaborate a little bit on the range of price plans that you have, key categories where you see the biggest gap and then, whether it's coming with new product plans along with that.

So pricing on CB, as I usually repeat, is very granular, okay? So there is not a simple answer. It's really that we are reviewing brand-by-brand, segment-by-segment, market-by-market and really making sure that our pricing is really matching consumer needs and also what retailers are working in.

What's very important, as you know, is that the price [partition] is quite extended on Consumer Beauty. We are starting from $4, $5, and we can go up to above $20. So this is also what we are reviewing in detail. So this is on the existing portfolio.

What I want to add on top is, of course, is about innovation. We have a great pipeline of innovations, and we shared already some example as Yummy Gloss, mascara Cleantopia, [Lash Brow]. And we are making sure that all these initiatives are really launched with a premium and definitely -- so we are taking opportunity of these innovations to increase price. So this is definitely a lever.

But again, because these are high-quality products and this is amplified by the GMV and there is really strong appetite from this product, and as I shared before, is also combined with a clean vegan sustainable products.

Last, the third element I really want to bring to you is that we are -- we have now kicked off streams on strategic revenue management. And definitely, these are programs that we are going to amplify in all the key markets. And it's really a way, of course, to increase value of our products and always to make sure that we share this value with retailers and Consumer Beauty.

So we have really a very detailed plan, very granular, and this is going to enable, of course, the improvement of the gross margin of Consumer Beauty in the coming years.

Great. And then my follow-up question is just around the fragrances and the licenses, given that you've renewed a number of fragrances for your [fragrances] as of late. And in some cases, are you [earlier] or are they all just kind of coming up for exploration or for renewal around the same time? And if you are renewing earlier, could you talk about terms, whether anything has changed in terms of length of partnership or terms around it? And if so, what's driving that?

Yes. Let me take this part. So indeed, fragrance licenses, some of them are renewed before the renewal period, if I may say, and some of them are renewed earlier, which is a great sign of confidence towards Coty as the leading destination for this fashion brands that are willing to go into beauty, not just fragrances, but also makeup. We've seen this recently also with Marc Jacobs. So that's very important in terms of mood.

And again, let me remind the audience that we've renewed and extended and sometimes enriched in terms of [queries 4] contracts recently. This is really also something that I wanted to stress.

Second, it's very important that everyone hears also the fact that there is a momentum today in terms of fashion companies reaching out to Coty to create beauty businesses together. And again, it's very important that we have this ability to make new brands, new territories, new visions and beauty part of the Coty portfolio. That's something that's very important.

There have not been any material changes in licensing terms, this is something I can confirm to you. And again, it's really a great occasion for me to say how much Coty is seen today as a partner of choice. And again, I welcome any fashion brand willing to enter the beauty industry to partner with Coty because the ecosystem we're proposing is unparalleled, in fact, in terms of reach, in terms of R&D, in terms of ability to operate multiple categories and in terms of marketing.

And this gives me the occasion to say a few words about one of the launches of the company. They are all important for me, but one is very dear to my heart, which is the one of Burberry Goddess. Burberry Goddess, for me, have a look at this launch, this is the best of Coty know-how in terms of creating, winning users. I've been talking about this since many, many quarters. We are there, finally. It takes time to put in place these kind of methodologies to craft the launch. That is a 5-star launch at this level.

To execute it, we started to do this in Travel Retail in July. And now we are expanding globally. And what we are seeing is, in a way, giving a direction or flavor of what could be the upcoming innovations from Coty in this area, and therefore, for our partners, when it comes to fashion houses. So this is really something I want to stress during this earnings call.

Your next question is from Chris Carey of Wells Fargo Securities.

So I realize it's been asked several times, but just a couple of quick follow-ups on pricing and impact. Number one, with the high end of the 6% to 8% sales outlook, is it reasonable to assume that your full-year sales expectations are exclusively price-driven? And can you comment on what you expect for volumes this year?

And the second question is with the pricing around in Q3 and Q1, I guess I'm a little surprised that gross margins would be down in the front half of the year, even with the inflation, which doesn't sound like it's getting worse. It's just lingering. And so can you perhaps expand a bit more on what's driving the gross margin down year-over-year, despite the incremental pricing and inflation, which doesn't seem to be building?

So thanks for those two just on price-risk volume, I guess, for the full year and the gross margin question for those in the front half.

Yes, sure, Chris. So let me take these two elements. I mean, I want to make it very clear that, I mean, volume is absolutely key.and -- definitely. And this is what we are seeing already in the second half of fiscal '23 that the growth is driven by pricing, by mix, but also by volumes, okay?

So it's -- and definitely, the model we are building for fiscal '24 and beyond is really a balanced-growth algorithm, which is really the combination of pricing, mix and volume. So I'm really insisting on this.

And we gave very concrete examples, just what we shared. I mean Burberry Goddess, all what we are doing in Consumer Beauty, [as all the] launches. So these are definitely volumes -- additional volumes in our equation. And volumes are also very important because it's really showing penetration, increasing of market share. And of course, for our factories, our footprint, is also a positive way to absorb the fixed cost. So this is very, very clear in our model.

On your second point, which is gross margin, so first of all, I really want to highlight, I mean, the great landing that we are doing on gross margin, we shared several times that there will be a modest gross margin expansion, fiscal year '23. And this is exactly where we are landing and even with a very good result in Q4. So you see that all the work we are doing in gross margin, despite inflation, has delivered strong results.

So we confirm also that for fiscal '24, there will be also modest gross margin expansion. So gross margin will keep growing. And we also confirm to be in the [mid-60s] by fiscal '25 exactly, as per our midterm algorithm that we shared more than 2 years ago. Now to tell you, indeed, so we highlighted that there will be some phasing, H1 from H2, definitely H1, so the big few elements.

Number one is that we are expecting -- price inflation is here to stay in H1, as I said. And we have also some, I explained a few times, accounting treatment that inflation COGS are capitalized during 4 months. So between the moment that we have inflation and the moment it's released in the P&L, there is a lag effect of 4 months. So that's why we still see this inflation in H1, but there will be some easing in H2, okay? So that's number one.

Number two, also, which is important for you to know, is that last year, due to [service-level] challenges and also component shortage, we had to make a decision really to reduce gift sets in Prestige. And as you know, I mean -- and this year, in H1, now that we have solved all supply chain issues and component shortage, now we are really back towards the normal share of gift sets in Q1 and Q2.

And as you know, gift sets gross margin is a few points lower than the standard [scale]. So this is also something which is explaining the [feeling]. But it's absolutely in control. It's also supported by business decision and fully embedded in our fiscal year '24 algorithm and midterm algorithm.

Your next question is from Andrea Teixeira of JPMorgan.

I wanted to sort of take this opportunity around, you mentioned, the phasing for gross margin. And can you talk about SG&A because you gave a 10 to [30] basis point EBITDA margin expansion? How we should be thinking of your long-term algorithm essentially that now would be the year where the inflation just -- you just closed inflation of 2%, you had pricing/mix [upstand]? Isn't that -- right now, I understand all this good [sense] on the phasing of gross margin.

But as we go into 2020 -- fiscal 2024, especially the second half, wouldn't you be able to trickle down more? Or you're just having the cost base and all this gap between pricing and inflation be reinvested into greater SG&A or greater marketing investments, as you mentioned (inaudible) and all the other influences that you became more, I'd say, (inaudible) of that? Is that away or it's mostly the investment in Prestige and especially skincare into China?

Okay. So I mean, on your [points], remarks, I mean, this is definitely the constant focus and work that we've been doing over the last 3 years. So it's really focusing on productivity, focusing on gross margin expansion and then definitely allocating these resources, this money to support all the strategic initiatives.

And you are currently, I mean, seeing that this model works with really the 17% growth in Q4 and also improving our margin and improving our profit. And again, as you see, we are improving our EBIT margin this year by 170 basis points, and we're improving our EBITDA margin by 40 basis points. So the model is in place.

Now looking forward, as I shared, I mean, definitely, the midterm algorithm is fully in place. So it's really reaching the mid-60s gross margin by fiscal '25, and it is supported by all the actions I shared before in productivity.

On SG&A, definitely, we have a strong focus, and it's fully included in our All-In To Win program. So definitely here, we continue some productivity initiatives. But also, we are making sure that when we are talking about resource allocation, indeed, we are allocating in ANCP to support the strategic initiatives, to support also all the white space opportunities that we are seeing. And Sue shared a few, of course, we continue -- China program/plan is really midterm strategic, very, very important plan.

We talked about Brazil, so these are really fantastic opportunities. And we're also improving in our capabilities. We shared the example of R&D. So we have a very strong footprint on R&D that we keep investing.

So we continue really to improve productivity, to allocate the resources, which create profitable growth. And at the same time, we continue to improve our margin. And we just -- our midterm algorithm, which is a 6% to 8% net revenue growth; and EBITDA improvement, 9% to 11%, doesn't change. So your question is definitely the daily world that we operate in.

Your next question is from Linda Bolton of Davidson.

I was wondering if the pressures in the Hainan region with still waiting to have more travelers return to that area, if that impacted your ability to get shelf space for the Lancaster launch? Could you have gotten more shelf space, but for the pressures in that region, is that affecting? And also, is that affecting Gucci and Burberry growth at all in the region?

Linda, let me take this question. So in fact, what we are seeing in Hainan is that our shelf space for Lancaster has not at all been affected by all the pressures we are seeing. We are just doing the job as step-by-step. In fact, we don't want to open a massive number of doors and -- while at the same time, creating the business model of success of this brand.

So we are doing this very carefully in terms of investment, be it cap investment, media investment, et cetera. And therefore, in Hainan and also in Mainland China, we are making the productivity of the doors that we have opened so far as high as possible before starting to expand the number of doors and the expansion of the shelf space.

When it comes to the other brands that you have mentioned, which are Gucci and Burberry, there was no impact from what's happening in Hainan. Today, these 2 brands that were doing great on makeup, are recovering, thanks to the back of makeup consumption in the country. They were growing very fast on the makeup area. This has been, in a way, limited during the lockdowns and the fact that since the opening of the country beginning of calendar '23, it's chasing step-by-step in this area.

But I wouldn't say that the -- what's happening behind, I guess, that you are referring to the [Daimaru], et cetera, et cetera, is affecting our brands because we are not exposed to this kind of phenomenon, given our small size, but also given how much we are willing to pay a very strong attention to preserving the brand equity of the brands we had in [Coty].

Your next question is from Mark Astrachan of Stifel.

Just a follow-up on one of the prior questions back to price and volume assumptions. So we carry over the pricing in 4Q, and I know there was some incremental pricing in 4Q. It would certainly suggest that most, if not all, at least the first half, is pricing driven. So I just wanted to, again, understand that. And if you could just give the specifics in terms of your underlying volume assumptions.

And then maybe a bigger picture, how do you think about pricing and mix on a longer-term basis in terms of composition to overall sales growth within that 6% to 8% algorithm? And sort of related to kind of both of them, how do you think about the A&P spend? What's the optimal level for the business over time, the gross margins sort of modestly increase relative to where we ended fiscal '23?

Yes. Thank you, Mark. So I mean, just to make it very clear, and again, so we are positioning our fiscal year '24 top line at the top of the guidance and really is higher in H1, so it's 8% to 10%. And as I shared, it's absolutely confirmed by a strong start of fiscal '24. And this is built, yes, with the pricing carryover, we continue also mix improvement, and it also includes volume growth. And we shared, again, some very concrete example, Burberry Goddess is a very obvious case. So this is really a part of it.

Now looking ahead, and I said it is -- we are really making sure that starting H2 fiscal '24, definitely that our growth algorithm is really well balanced between pricing, mix and volume. So this is really the combination of three. So once we are out of this really high inflation period with high pricing, we enter more a normalized model in terms of growth.

And the second part of your question, again, our algorithm, our methodology doesn't change. So it's really definitely -- and as I shared, we continue this All-In To Win program, so meaning that next year, we will deliver $100 million savings, and in fiscal '25, $75 million. So the objective of this productivity plan is we need to continue to improve our gross margin, to optimize our G&A and then to reinvest to support all our strategic initiatives.

So concretely, what does it mean? It means that in terms of ANCP, we are -- now we are at the level of the high 20s, and this is really a level that we are going to keep and reallocate in a very perfect manner, always focusing on ROI on both divisions and on all the [new] initiatives that we are launching.

Your next question is from Ashley Helgans of Jefferies.

So just first on the pricing action, I'm just curious if you could talk a little bit about the key indicators you're using to gauge consumers' willingness to spend more on clean beauty? And then maybe you can just give us a little bit more color on planned investments in the first half that's offsetting some of the pricing benefits.

So definitely, on the key indicators, I mean, what I can -- I mean, we have a strong, powerful team, C&I team. So -- and again, when we say that over the last 3 years, we rebuild strong capabilities, of course, we talk about ANCP. We just talked also about R&D.

But indeed, I can add that for the consumer research in terms of teams, we have very good teams, and we have also tools, okay? So it's really that we can really capture data from consumers. And we have -- thanks to CRM and so on, we are really expanding and we have very good understanding. And of course, so listening always what's going on in social network and so on. And we get also some good indications and data from our retailers, which are very precious.

So it means that, again, when we -- all the actions, all the work we are doing on clean beauty is really based on very -- and I would say, scientific data.

But I also want to add that, in fact, these data, they don't come as a surprise. So I was referring to CoverGirl. Clean beauty in CoverGirl is not something new. It started at the beginning when the brand was launched. So it's also reigniting things which are obvious for the brand. So again, this is -- and again, on this clean beauty, this is really well accepted, and this is the case on Consumer Beauty, and this is also the case on Prestige.

If you allow me, clean beauty is the only area where consumers, in all the studies that are published by us, but also by any company studying consumers, move, et cetera, is the only category where people -- clean and sustainable beauty, where people are ready to spend more money on. And that's very important because they believe they are doing the right choice for the planet and for them and for their skin health, by the way.

So I think we can close the call after this question. If you allow me, Laurent, everyone, I would like to do some closing remarks. The first one is also to clarify again, if needed, how we see the white space opportunities phasing, it's very important that you see that the immediate white space opportunities for this company are female fragrances, ultra-premium fragrances, Prestige cosmetics, Travel Retail [initiative] issue, Brazil, if you want.

And then there are the midterm opportunities, which are skincare in China. It's very important that this is, in a way, understood by all of us and all of you who are watching Coty.

And last but not least, I wanted to say that we are very proud for the second year of double-digit growth. I have to say that this is really a great region for price for all Coty teams around the world. And we are very, very happy to see Q1 starting very strongly. Thank you very much.

This does conclude today's conference. You may now disconnect your lines. And everyone, have a great day.