Good day everyone and welcome to The Estée Lauder Companies' Fiscal 2025 Fourth Quarter and Full Year Conference Call. Today's webcast is being recorded. For opening remarks and introductions, I would like to turn the call over to the Senior Vice President of Investor Relations, Ms. Rainey Mancini. 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'll 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, references to net sales refer to organic net sales, which 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. As a reminder, references to online sales include sales we make directly to our consumers through our brand dot com sites and through third-party platforms. It also includes estimated sales of our products through 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. Now I'll turn the webcast over to Stéphane. Thank you, Rainey, and hello to everyone. Before we discuss our results for fiscal 2025 and 2026 ambition, let me begin with a moment of remembrance of our beloved Chairman Emeritus, Leonard A. Lauder, who passed in June. On behalf of myself, Akhil, the executive team, Board of Directors, and the Lauder family, we extend our heartfelt gratitude for the sympathies shared. We were profoundly moved by the outpouring of compassion from employees, consumers, peers, retailers, suppliers, media, analysts, and investors. Your condolences celebrated a life beautifully lived and a legacy deeply felt. Recognizing how Leonard uniquely shaped and revolutionized not just our company, but also the beauty industry. Leonard was a mentor to me as he was to so many others. He was a strong advocate for Beauty Reimagined when he entrusted us to lead. We are more committed than ever to regaining prestige beauty leadership in his honor and upholding the company's values it champions. Turning to our fiscal 2025 full year performance. Our results were in line with the revised outlook we provided in May and the expectation Akhil and I set in our first earnings call in February. Nearly 2/3 of our 8% organic sales decline came from travel retail as it decreased 28% driven by strategic decisions and prolonged weak conversion. Importantly, we ended fiscal 2025 much better positioned than fiscal 2024 with healthier trade inventory, especially in travel retail Asia. For currently forecasted demand, travel retail represented approximately 15% of reported sales, down 4 percentage points from fiscal 2024 and 14 percentage points below its fiscal 2021 peak reached during the pandemic, making it more similar to the channel global prestige beauty hare and reducing our exposure to its volatility. Gross margin expanded 230 basis points to 74% driven by PRGP benefits and better by 50 basis points than the outlook given in May. Despite significant volume deleverage, operating margin of 8% contracted 220 basis points driven by sales declines and increased consumer-facing investments. Diluted EPS decreased 42%. Since I became CEO, we have acted with urgency to operationalize our strategic vision of Beauty Reimagined, making strong initial progress across all five action plan priorities from January through June. In the second half of fiscal 2025, we gained prestige beauty share in China, Japan, and the U.S., demonstrating not only our ability to return quickly to share gain by building on our brands' high desirability but also early wins from new consumer coverage and uptake of enticing innovation globally. Le Labo and La Mer gained prestige beauty share in the second half, confirming their strong desirability, and The Ordinary accelerated to high single-digit retail sales growth in the fourth quarter. La Mer, Tom Ford, and Estée Lauder fueled our second half share gain in China, while Le Labo, Estée Lauder, and La Mer powered Japan. In the U.S., The Ordinary, Clinique, and Estée Lauder drove share gain, while Estée Lauder new Double Wear was considered ranked number one product launch in prestige makeup by Circana from January through June. In our first action plan priority, accelerate best-in-class consumer coverage, we achieved many accomplishments in the second half of fiscal 2025, particularly for our online business. Following The Ordinary's launch in the U.S. Amazon Premium Beauty store in the third quarter, Origins and Aveda launched in the fourth quarter, while Estée Lauder and Aveda opened in the Amazon Premium Beauty store in Canada. We now have 11 brand stores found in the U.S. and three in Canada, and in Southeast Asia, we built scale on Shopee and TikTok Shop across the third and fourth quarters. This action complemented second half growth from our existing presence in fast-growing online retailers like Tmall and OL. As a result, online organic sales growth accelerated from low single-digit in the first half to mid single-digit in the second half. Online reached 31% of reported sales for fiscal 2025, up 3 percentage points from fiscal 2024 to an all-time record, and we expect online mix to climb higher still. We continued our expansion in pharmacy in Europe and began entering the pharma channel in Latin America with Clinique, responding to rising demand for down brands. Moving to our second action priority, create transformative innovation and innovate across prestige price tiers to reach a wider audience. Throughout the second half of fiscal 2025, we introduced a robust slate of breakthrough, all-trend, and commercial innovation aimed at new consumer acquisition. As you can see on the slide, we are realigning our innovation portfolio to deliver gross margin accretive product quicker and better capture faster growing industry trend in skin care with night longevity and derms as well as across makeup and the still in demand much refined segment as well as hair care. Let me share a few highlights from the fourth quarter. Beginning with skin care, La Mer built upon the iconic success of its Treatment Lotion with the Balancing Treatment Lotion, which along with the brand's third quarter launch of Night Recovery Concentrate fueled La Mer's second consecutive quarter of double-digit organic sales growth in mainland China. Clinique and The Ordinary showcase their unique derm and scientific brand equities at entry prestige pricing. For Clinique, the brand launched a supercharged SPF version of its renowned dermatologist recommended DDML. For The Ordinary, its new UV Filter SPF 45 Serum offered consumer sun care protection in its signature serum format. In makeup, Clinique built upon its blockbuster Almost Lipstick franchise with a first shade Nude Honey. Since 2021, Clinique has driven strong sales growth of Almost Lipstick with volumes over 30x greater than four years ago, demonstrating our ability to leverage social media virality to further fuel demand and attract younger consumers. M.A.C born famous commercial innovation paired with the new Lip Glass Air contributed to strong share gain in the U.S. prestige makeup, lip color, and lip gloss subcategory in the second half. Aveda introduced Miraculous Oil, which is significantly outperforming initial sales expectations. For our third action plan, boost consumer -facing investment to accelerate new consumer acquisition, we increased consumer -facing investment at a greater rate of growth in the second half versus the first half to reignite retail growth in mainland China. This contributed to high single-digit retail sales growth and share gain in each of the third and fourth quarters, solidifying share gains for the fiscal year with every category improving share in the fourth quarter. Ten brands grew at retail to fuel share gains in every category and every channel. The incremental investment coupled with innovation drove outstanding performance for CIP 18 for La Mer, Estée Lauder, and Jo Malone London across online platforms and powered The Ordinary's successful launch in China with Sephora. We invested in our freestanding stores as we strategically drive a more productive fleet for the full year. We opened nearly 40 doors for our finance brand to much success and closed unproductive doors, primarily for M.A.C, Aveda, and Origins, for over 10 net new stores global. Le Labo continued its spectacular expansion with new stores, including the Beijing and Seoul Experience Center, while Jo Malone London enhanced navigation and experience to meet evolving consumer needs. Next, let me share an update on our portfolio review. We recently engaged external advisors as we consider evolving the portfolio to best align with the strategic vision of Beauty Reimagined and focus on our highest return opportunities over the medium to long term. We will share updates in due course. Let me now turn to our fiscal 2026 outlook. With three fiscal years of sales decline and operating margin erosion behind us, we enter fiscal 2026 with signs of momentum and the start of our turnaround, a return to top line growth in fiscal 2026, and the pursuit of a solid double-digit operating margin in the years ahead. For fiscal 2026, we expect to deliver low single-digit organic sales growth, maintain our now stronger gross margin despite the headwind of incremental tariffs, and expand our operating margin by 165 basis points at the midpoint. Akhil will describe the drivers in detail, but let me share a few overarching themes. For sales, we intend to significantly reduce discounting. We made good progress on this front in fiscal 2025 and believe there is much more that we can achieve. Our sales growth also embeds benefit from accelerating best-in-class consumer coverage, recognizing we still have a lot of work to do in markets with a high penetration of department stores. Finally, we are putting greater emphasis on accelerating in high-growth emerging markets given our still untapped potential, as emerging markets only represent 10% of reported sales. For operating margin, the organization has embraced the PRGP and its momentum is very encouraging. We achieved much more from PRGP than we expected in fiscal 2025, which gives us confidence that we can deliver meaningful cost savings in fiscal 2026 and fund incremental consumer-facing investments. To fuel our 2026 outlook, we are focused on executing with excellence Beauty Reimagined. Already in the first quarter, we are further accelerating best-in-class consumer coverage. The Ordinary launched on Tmall in China with a breakthrough service, the first AI-powered flagship stores co-developed with Tmall, and we are excited to be expanding on Amazon Premium Beauty store success beyond the U.S. and Canada, starting with The Ordinary in Amazon U.K., which launched in July, as well as Clinique in Amazon Mexico this month. In travel retail, we are greatly expanding our presence in the Americas through the all-new distribution with Duty Free Americas. This builds on progress in EMEA to expand the presence of our luxury fragrance brand in airports. Moving to our second action plan priority, create transformative innovation, we have identified our external hire for the new leader of R&D and expect to make this announcement in the coming weeks. For fiscal 2026, we are targeting innovation to be back representing over 25% of sales. With this pipeline, we are well on our way towards tripling the percentage of innovation launched in less than a year from 10% to 30%. In fiscal 2026, we are set to have 16% of our innovation that is launched within a year. Here are a few fiscal 2026 innovations already in the hands of consumers in skincare, reflecting our imperative to innovate from the entry prices through luxury tiers. The Ordinary launched Sulfate 10% Powder-to-Cream Concentrate, a breakthrough formula. Further up the price tier, Estée Lauder Advanced Night Repair franchise introduced a new eye cream, while Re-Nutriv launched a watery lotion powered by longevity science. In makeup, we are rebuilding on our gain in lip with M.A.C Lip Glaze Glossy Liner and Bobbi Brown's Cashmere Luxe Matte Lipstick. Following Tom Ford's recent success with cushion foundation, the brand launched Architecture Radiance Hydrating Foundation in France, the category poised to lead prestige beauty industry global in fiscal 2026. Jo Malone London's Raspberry Ripple, this year's seasonal limited edition cologne, is outperforming last year's limited edition runaway success. Tom Ford expanded the halo of its Oud collection with Oud Voyager and expanded its popular Black Orchid franchise with Black Orchid Reserve. We are also proud to mark the exciting relaunch of the Aramis brand with Intuition, a new fragrance fronted by Global Ambassador NBA Hall of Famer Dwyane Wade. For our third action plan priority boost consumer -facing investment, we are deploying a new media model that puts greater focus on demand generation through broader media tactics. We made significant shift in the mix of media budget to enhance consumer acquisition and improve ROI accountability. Our investment in AI have begun to show meaningful impact, transforming how we engage with consumers and operate internally from personalized marketing and media optimization to agile go to market execution. AI has driven a 31% increase in ROI from our North American media campaigns, enabling faster decision making and stronger real time market responsiveness. For our fourth action plan priority fuel sustainable growth through bold efficiencies, among our newer initiatives when we expanded the PRGP in February 25 is outsourcing. Our analysis revealed a significant gap versus industry benchmark, and we are rapidly advancing these initiatives. For our final action plan priority reimagine the way we work, as of July 1st, [Braz] owns global strategy, innovation and long range planning while [Region] have full responsibility for the P&L, allowing for greater local agility and consumer focus. We introduced the new ways of working playbook aligned to this structure to drive brand region collaboration, and we are very encouraged by the elevated engagement so far. In closing, we are energized as we are transforming our company through Beauty Reimagined. To our employees, thank you for bringing Beauty Reimagined to life in six short months through your tremendous passion and commitment. Together with all of you, I am excited for what we will accomplish. I will now turn the call over to Akhil. Thank you, Stéphane. Hello everyone, and thank you for joining us today. Before discussing the outlook, I'll briefly recap our fourth quarter results and highlight progress in key areas of the business. For more information on our full year and fourth quarter performance, please refer to a press release issued this morning. Overall, we delivered fourth quarter and second half results at the top end of our implied guidance range. Starting with top line organic, net sales declined 13% in the fourth quarter, reflecting declines across all product categories except fragrance, as well as across every geographic region, primarily driven by global travel retail as we expected. Encouragingly, we are seeing positive results with share gains in some key markets, notably in mainland China and Japan. In the U.S., we made significant progress in narrowing our share losses during the fiscal year and gained share in the second half. Now, looking at margins, our gross margin for the fourth quarter was relatively flat even as we faced the steepest sales volume decline of the year. For the full year, we delivered 230 basis points of gross margin expansion despite our sales deleverage landing at 74%. This meaningful expansion was driven by the relentless execution of our PRGP. Turning to operating margin, for the fourth quarter we delivered 4% compared to 9% last year. This was driven by a 580 basis points increase in consumer -facing investments as a percentage of sales. On the full year, consumer -facing investments increased 400 basis points as we invested in our brands as part of Beauty Reimagined to fuel growth and long term value creation. These investments were enabled through our PRGP, which fueled our continued progress in reducing non consumer -facing costs in the fourth quarter, ending the year with a 6% reduction in the fourth quarter. We also recorded $425 million of impairment charges relating to Dr.Jart+ and Too Faced. This reflects challenges in mainland China and Korea for Dr.Jart+ and continued underperformance in key geographies and channels from Too Faced. Our effective tax rate for the full year was 38.8% compared to 31% last year. This reflects a higher effective tax rate on our foreign operations due to our geographical mix of earnings and the unfavorable impact associated with previously issued stock based compensation. Our diluted EPS was $0.09 in the fourth quarter as compared to $0.64 last year. Looking now at our PRGP restructuring program, as of June 30th we recorded $610 million of total cumulative charges, primarily in employee-related costs. Moving to our cash generation for the year, we generated $1.3 billion in net cash flow from operating activities compared to $2.4 billion last year. This decrease is primarily due to lower earnings adjusted for non-cash items and an unfavorable change in operating assets and liability. This also reflects that last year we made a very significant year-on-year reduction in our inventory, which drove very strong CFFO in the base period. Additionally, the reductions reflect a significant increase in restructuring payments. We invested $602 million in capital expenditures, down 34% compared to last year, which reflected prior year payments relating to the manufacturing facility in Japan. This level of CapEx reflects a strong focus on optimizing capital expenditures and prioritizing consumer-facing investments. Free cash flow generation remains a strategic priority, and we are focused on driving improvements in working capital, CapEx, and operational efficiency to strengthen free cash flow going forward. Now turning to outlook, our priority is to execute our Beauty R eimagined action plans with excellence. The strategy is designed to drive long-term value creation and restore growth, improve margins, and drive cash. We are focused on driving sustainable sales growth in fiscal 2026 and beyond, as well as achieving a solid double-digit adjusted operating margin over the next few years. Beginning with fiscal 2026, we are providing only an annual outlook. This approach gives us more agility and flexibility to navigate ongoing volatility while better aligning with long-term value creation and strategic priorities. Also, as you may have seen in a press release issued this morning and consistent with prior years, we continue to develop our strategy and allocate resources by product category. Beginning with the first quarter, we will be reporting our fiscal 2026 and comparable fiscal 2025 results by reorganized geographic regions that align with our recent leadership changes. We plan to share more detailed financial information based on our new regional structures in the coming weeks. Now let me update you on our assumptions regarding evolving trade policies and enacted tariffs. As I mentioned in May, our task force has been moving with urgency, closely monitoring developments and evaluating various scenarios to mitigate some of the tariff impacts. Since then, our teams have acted swiftly to implement mitigation actions, including leveraging available trade programs and further optimizing our regional manufacturing footprint to bring production closer to the consumer, including through a facility in Japan. These efforts, along with the agility we have built into our supply chain, are helping to offset more than half of the expected impact and better position us to adapt quickly to address the evolving trade policies. Based on what we know today and net of our planned mitigation strategies, we expect tariff-related headwinds to impact profitability by approximately $100 million. We continue to evaluate additional strategies to further mitigate these impacts, including more PRGP initiatives and potential pricing actions. Turning now to our industry expectations for fiscal 2026, we assume modest global prestige beauty growth in the range of 2% - 3%, which is an improvement versus fiscal 2025. While there are early signs of stabilization in mainland China, travel retail conversion continues to be weak and challenges persist in the West, including subdued consumer sentiment in the U.S. and Western Europe. In terms of retail sales, our expectations assume retail sales growth in line with or ahead of prestige beauty in key markets. We also remain focused on improving our performance and narrowing the gap between retail and net sales growth globally in fiscal 2026. We aim to achieve this through tighter monitoring of inventory in trade and a significant reduction in discounts. That said, progress may take longer in some markets and is unlikely to be linear, particularly in North America. We ended fiscal 2025 with an approximate 5 percentage points gap between retail and net sales growth for the full year. While we expect the gap to narrow throughout the year, a greater disconnect is anticipated in the first quarter. Moving to top line for the full year, we expect organic net sales to be flat to up 3%. Our outlook assumes mid single-digit net sales growth in mainland China as well as meaningful improvement in our global travel retail business. It also assumes more broad-based improvements across the rest of the business compared to last year. Let me now share a few details. We expect full year organic net sales in our global travel retail business to return to growth at the midpoint of our outlook. This reflects the improvement in shipment compared to last year in Asia travel retail, particularly in the first half as we anniversary the impacts of action taken to improve retailer inventory levels along with the strategic decision to reduce our exposure to reseller activity. However, this improvement is expected to be offset to some extent by persistent challenges in the broader retail environment, including weak conversion. As a result, we expect a wider range of net sales growth in global travel retail in the second half, reflecting ongoing uncertainty in the rest of the business. We expect to deliver low single digit organic net sales growth for the full year, reflecting improvement in year-on-year growth rates across most markets relative to fiscal 2025. In terms of the first quarter, we expect organic net sales to be down low single digits to slightly positive. This reflects high single digit growth in our global travel retail business while maintaining a strategic initiative to keep the mix of business in line with industry norms. In addition, we anticipate a return to solid growth in mainland China and a more moderate decline in the remainder of the business. Turning now to our PRGP in fiscal 2026, we are continuing to execute with rigor, discipline, and clear purpose to optimize key elements across our cost structure to improve margins and profitability as well as create fuel for growth. We are pleased with the meaningful progress we have made in fiscal 2025 and remain focused on advancing our PRGP initiatives in fiscal 2026. Through our PRGP, we expect continued benefits in fiscal 2026 to gross margin and to operating expenses, specifically non consumer -facing expenses as we enhance overall productivity and rightsize our cost base. Now, looking at our restructuring program, we remain on track and continue to advance the initiatives inclusive of approvals through August and, relative to the high end of the total expected ranges we previously communicated, we have approved initiatives accounting for over 60% of expected gross benefits and nearly 50% of both anticipated charges and net reduction in positions. With that backdrop, let me walk you through our other full year assumptions. We assume an operating margin between 9.4% and 9.9%, reflecting greater expansion in the second half of the year as we expect benefits from a PRGP to build sequentially each quarter. In fiscal 2026, we expect margin progression despite year-on-year headwinds from incremental tariffs and normalized bonus levels. Our estimated geographical mix of earnings is expected to drive an effective tax rate of approximately 36%. This assumes a higher rate of approximately 40% in the first quarter with improvement over the course of the year as we expect to build profitability. In addition, we are monitoring certain provisions in global tax legislation that may expire in fiscal 2026, which, if not extended, could increase our effective tax rate. Diluted EPS is expected to range between $1.90 and $2.10. Assuming a weighted average share count of approximately 365 million shares, this reflects year-on-year growth of 26%- 39%. Turning now to cash generation in fiscal year 2026, we expect to generate net cash flows from operating activities between $1 billion - $1.1 billion. While this reflects a slight decline from last year driven by the anticipated peak in restructuring payments, we are confident in our ability to mitigate some of the pressures through a strong focus on managing working capital. We expect capital expenditures for the full year to be approximately 4% of sales, reflecting a more efficient and normalized level of expenditures along with a focus and determination to optimize CapEx overall and target the investments on consumer-facing areas to fuel growth. In closing, we remain confident in Beauty Reimagined grounded by a consumer-centric mindset that prioritizes growth-driving investments, cost discipline, and operational efficiency. While we are not providing an outlook beyond fiscal 2026, we are determined to deliver strong cost leverage through sales growth in fiscal 2027 and bring to bear with urgency PRGP benefits from optimizing our end-to-end operating model to drive cost savings, including through ongoing outsourcing initiatives, tax planning consistent with the strategic changes we are making in a mix of business, and a more competitive approach to procurement to our employees. Thank you for your dedication and excellence through this period of meaningful transformation. Your resilience and commitment drive our progress. Together we are turning strategy into execution and execution into long-term value creation. That concludes the prepared remarks. I'll now turn it over to the operator to begin the Q&A session. The floor is now open for questions. If you have a question, you simply press the star key followed by the digit one on your touchtone telephone. To ensure everyone can ask their questions, we will limit each person to one question, time permitting. We will return to you for additional questions. Just queue up again by pressing the star key and the digit one. Our first question today comes from Dara Mohsenian with Morgan Stanley. Please go ahead. Hey, good morning. Morning Dara. Clearly a lot of hard work occurring under Beauty Reimagined, significant plans in place in the five key action areas you mentioned. I wanted to touch specifically on simplifying the organizational structure and the restructuring there. How much progress have you made so far? What changes are left to be implemented in fiscal 2026? I just love to get your sense for how the organization's handling the change culturally both on the organizational front, but also just in a broader context. There's obviously a lot of change occurring for a company with a proud heritage and tradition. Are you satisfied with how quickly the organization's moving so far and how do you think this change is being suited culturally? Thanks. Yeah, no, thank you. Thank you, Dara, for your question. I think it's obviously at the heart of all the challenges that we are implementing and obviously delivering on the vision of Beauty Reimagined, like you said, on the five key action priorities. I think from an organization standpoint, you've heard me say in the prepared remark that we are going to announce in the next coming weeks the head of R&D, which will actually complete the new leadership team in place. We've done that in a very short six months since we've announced the new organization. Also, if you remember, we've announced the collapse of the seven regions into four. Today, and Akhil mentioned in his prepared remark also, the new geographical structure on which we are going to report, which is obviously the Americas, EMEA, Asia and travel retail, and China as a standalone region. All of that is already in place and very, very pleased with the progress that we are making. I think at this point the team is really committed on the changes that we are doing. We have had relentless communication throughout the organization. Personally, I've had multiple town halls through the organization. Many of my executive leaders also did the same thing internally but also externally. We spend a lot of time communicating with you guys, but also with our suppliers, our retailers, all the changes that we are making around the world. I've said it multiple times. This is the biggest organizational transformation that we have done in our history and we are changing compensation to just make sure that everybody is rewarding on the total and the execution of Beauty Reimagined. We are really laser focused on the time that we have left to deliver the PRGP. Obviously, you've heard both Akhil and I being very pleased on the progress that we are making on the PRGP, which obviously we exceeded our expectation in fiscal 2025 and we have more to go get in fiscal 2026 and continues the benefit in 2027. From an organization standpoint, we have the complete new organization in place from a leadership standpoint. I think it's not only at the level of my leadership team, it's throughout the organization. Last time, in the last earnings calls, we said that we were moving the responsibility of the P&L from the brand to the region and I reiterated that also. Today, as of July 1st, all of that is in place. I think the engagement that we're seeing throughout the organization, between the brand, between the region, between the function, throughout the organization, is extremely encouraging and very positive. We're seeing the collaboration and the speed of execution already that is paying some strong dividend. I think many of the progress that we've highlighted over the last six months since we've announced Beauty Reimagined are coming through. All these changes that we are making from the share gain that we have in China, that we have in the U.S., that we have in Japan, the acceleration that we're seeing in the emerging market, even though not yet satisfying to all of us, I think many of the changes are the result of the new organization that we are putting in place. I would say in conclusion, frankly, very happy with the progress that we are making, the speed at which we are making. I think, Dara, you mentioned, obviously the culture is evolving and is changing, but we are really pushing on ambition and accountability throughout every, I would say, pillars of brands and regions and function of the organization. I think this is only the beginning of the momentum that we are just going to see going forward. The next question is from Steve Powers with Deutsche Bank. Please go ahead. Great. Good morning everybody. This is a question perhaps for Akhil, although Stéphane, I'd obviously welcome your perspective as well. I was hoping you could just maybe better decompose the gap between retail sales and shipments that you see entering fiscal 2026. I'm curious as to how much of that is still the byproduct of elevated trade inventory in pockets versus the discounting you mentioned versus perhaps channel mix dynamics or otherwise. I guess as you look forward, just how you anticipate that gap looking, if it still exists as you exit the year versus the beginning. Thank you. Thank you, Steve. I would say if you look at the big picture from where we closed fiscal 2024 to where we closed fiscal 2025, and you look at our largest markets, travel retail, China, and U.S., in every single market, we have reduced inventory and we have brought it in a meaningful way to where we needed to be. That's the first step. I think in travel retail from where we see retail now, we are very much there. China, we have always kept lean inventory and we are in a good place there. In North America, while we have reduced inventory, we still, because of the retail environment, are just watchful of how we want to manage that going forward. We expect this gap to narrow. In terms of your big takeaway, our net should start to track retail much more closely than it has in the past. You should feel good about it. Of course, we'll give you quarterly guidance, which is why on quarter one in North America we gave you already the perspective that we see some challenges. However, overall your takeaway should be that we are shipping to retail. As Stéphane and I had said, we very much build retail, ship to retail. You could have a variance on the quarter, but we will never let it pass that we will adjust it right in the next quarter and of course we'll be very transparent in communicating that. In some of the markets like North America where we are as part of Beauty Re imagined changing a coverage and going to pure play retailers, moving more to specialty, multi, et c. There comes a channel mix which creates that dynamic. There come certain costs which go above the line versus below the line, which create that gap between retail to net. These are profitable channels and overall value-creating channels. I would say we have made dramatic progress. We are watching this very carefully and going forward we expect the gaps to be significantly narrow versus where we have been. Yeah, and I think just one thing to add to what Akhil was saying. I think you're seeing even in the algorithm for the year what we say that we have a modest growth for travel retail, mid single digit growth in China. For the rest of the business we are in low single digits. We're seeing gradual improvement from our net sales throughout the year because of what Akhil said, we are aligning retail and net throughout the year quarter -over -quarter. There is still a bit of a gap in Q1 as Akhil mentioned, but frankly you're going to see that and the exit of 2026, we will be in a much better position, frankly all time. The big work was done in fiscal 2025 on reducing dramatically the inventory in travel retail and we exited fiscal 2025 in the right place. Now it's fine tuning to make sure that the total net sales and the retails are aligned going forward. The next question is from Lauren Lieberman with Barclays. Please go ahead. Morning Lauren. Ms. Lieberman, perhaps your line is muted on your end. It's open on ours. Sorry. Good cash. Okay, I'm here. Good morning, Stéphane. Just wanted to hone in a bit on North America. Stéphane, your comment that markets with significant department store exposure would sort of remain more challenged. You've made great progress to North America presence on Amazon, et c., you know, market share gains in various periods. Tasha, how are you thinking about the balance of channels in North America and frankly how long it takes for the region to get to consistent sales growth given still that weight of department stores. I guess to go more pointedly, would you consider sort of more dramatic action, the way that you've taken in travel retail to effectively at this point proactively reduce exposure to the channel. Thanks. Thank you, Lauren. I'll start. I'm sure Akhil will just, like, you know, add to it. Now, when you look at North America, let me take a little bit of a step back because the market is very strong and we've seen it in fiscal 2025 really gradually improving sequentially quarter -over -quarter and even the beginning of fiscal 2026. What we see in the month of July is strong and we're strong. In our prepared remark, we said that we've been gaining market share for the first, the last six months of the last fiscal year. That's the first time in many, many years I've said it. Last quarter, said it again. This is a massive transformation to what you're pointing, Lauren. A lot is coming from obviously the first pillars of Beauty Reimagined, which is to increase the consumer coverage which we've made. We made it very intentionally and strategically. Today we have 11 brands on Amazon. The interesting thing with Amazon, obviously we are very pleased with our progress with Amazon and Clinique was, like, you know, the first brand to launch, Aveda and Origins were the last ones to launch. We're seeing even as we are lapsing the anniversary of Clinique launch, Clinique continues to be very, very strong, which tells us that we've been able to not just attract new consumers, but also re-engage with lapsed consumers over the past 12 months. Amazon not only is adding new consumers for us, but is also acting a little bit as a megaphone to our total business because Amazon is not only a commerce platform, but is also the majority of the beauty search that is happening in the market. We have been seeing a lot of positive momentum in retailers like Ulta where we are very, very strong. Obviously our online business, our own online business, online dot com, is also, like, you know, strong. We have a lot of work that still needs to be done on the more traditional channels like the department stores. Obviously, as a percentage of our total business, they continue to reduce. We are working very closely with our historical partners to make sure that we focus on the top stores to make sure that we are also recruiting the right consumers. There's still a lot of traffic and a lot of demand in the stores. We're seeing a good momentum and I have to say the early results that we're getting in July are extremely encouraging. We are, July again, we are in market share gain and we are not only market share gain on brands like The Ordinary, but we are also across Lauder, Clinique, and M.A.C, which gives us a lot of confidence that we are on the right track to make the changes. You will see the mix of new retailers like Amazon or specialty multi increasing in the total going forward. That's the intent that we have. Yeah. I would add a few things to what Stéphane said. Hello Lauren. I think overall we are very pleased with where the channel mix is evolving in North America. Stéphane said we now have a much more balanced view of what each channel brings. I mean department stores are probably less than 1/3 of our business. Probably they are 1/3, less than 1/3 of our business. We have built Amazon business, which is significantly a larger part of our mix of business. We have a large DTC business between brand dot com, between freestanding stores. We now have a much more diversified business than probably most people realize. What we intend to do is to really serve the consumers and underlying each channel as part of a very consumer-centric approach. There's a different consumer there. We are serving them according to that and over time we will continue to build. We do have opportunity to grow further in specialty multi and we are looking at every opportunity to go, as Stéphane said, wherever the consumer is, we are going there, of course, in a value-creating way. The next question is from Ashley Wallace with Bank of America. Please go ahead. Good morning. One of the data points that you gave at Q3 was organic revenue growth ex travel retail, which was -3% at the time. Are you able to share with us what Q4 ex travel retail organic revenue growth was? Whilst I recognize the market's not linear, I think reporting from global beauty peers does show a more supportive beauty backdrop in the U.S. and China in Q4 versus Q3. Maybe if you didn't see an improvement in your organic revenue growth ex travel retail, what do you attribute this to? Is this just a gap between your sell-in and sell-out or something else that's happening there? Considering we've seen the other players show improving trends there, when you think about the 2026 guide, can you help us understand when we should be expecting ex travel retail organic revenue growth to turn positive? The reason I ask this is it does seem that this is the part of your business that you can influence more heavily through product innovation and distribution, whereas the travel retail component feels still a little bit more out of your control and impacted by market dynamics. Thank you. Yeah, so our overall business excluding travel retail was in the similar range of single digit, low single digit decline. Our goal is to clearly improve that business. As we said in the guidance, we look to get to positive growth in fiscal 2026 overall in that and low single digit. That's our guidance. Part of the reason is what we explained. Net sales in North America, in spite of the positive retail, was negative, which we are working to close that gap for the earlier question from Steve as well. At the same time, what we have seen versus the first half of 2025 to back half of 2025, we did see slowdown in Europe, which is part of that business. Of course, we are working to accelerate that as part of the Beauty Reimagined pillar and emerging markets, more diversified businesses in rest of the world, including the strength we have seen in Japan, etc. We believe that we can get to stronger growth outside of travel retail. The good news is that the China business is starting to pick up. We had back half of fiscal 2025, we had mid single digit growth in our retail and growing share. Like you said, clearly travel retail, we are adjusting to retail. We are focusing on building retail there and shipping accordingly. In other parts of the business, namely China, positive retail in the U.S., opportunities in emerging markets, we believe that we can gradually, as Stéphane said, this will take some time but we are in the right direction in terms of driving this business. No, and actually just to add to what Akhil said, I just want to go back to what we've guided for the year. We have a modest growth for travel retail and we still have ways to influence like we did with the reduction of the inventory last year. It is true that we are starting from a lower base, but we have a new team in place in travel retail and we are really focused on accelerating retail. We'll be happy to just show you many of the activities that we are doing in travel retail across Asia, the Americas, and Europe where we are expanding distribution in the Americas and in Europe. There is still a lot of untapped potential for us in many airports around the world. Actually, just one data point was interesting. In the month of May, we turned positive in Hainan thanks to all the activities that we've put in retail with Estée Lauder, La Mer, Jo Malone, and you name it, pretty much across the brand. Now the rest of our business is gradually and sequentially getting better with the intent and the ambition that by the end of fiscal 2026 we will be in positive in the rest of the business. We are forecasting that China will be positive in the mid single digit. China is stabilizing. We are gaining share. The other data point is we have early signal in July that we are also gaining share after a very strong Q4 led by 618 where we are top ranks and very top performance for Estée Lauder, La Mer, Jo Malone, and many other brands. We are seeing gradual improvements from a net sales standpoint. From a retail, we are already there in North America. We are accelerating in the emerging market and we intend to be in double digit growth for the fiscal year in emerging market. As Akhil said, the challenge that we have to work on as The Estée Lauder Companies, but also because of the trend in the market, is the big Europe where we are seeing a decrease in consumer sentiment and obviously a little bit of a softening of the trend, especially in the key markets like France, Germany, and to a lesser extent in Italy and Spain. We are very conscious of that and we're working with the team, the new team in the U.K., to make sure that we are deploying more innovation in this market and adding the right consumer coverage with the right media investment to recruit new consumer to our brands. The next question is from Rupesh Parikh with Oppenheimer. Please go ahead. Good morning and thanks for taking my question. Just going back to the operating margin guidance for the full year, I was just hoping to get more color on the interplay between gross margins and SG&A, and as you guys make that progress towards a double digit operating margin target, where you see more improvement, on the gross margin or SG&A line. Thank you. Hello Rupesh. I'll start. So overall in the $9.4 - $9.9 guidance that we gave, we believe that we would have gross margin flat to positive in spite of the significant tariff offset that we made. In absence of that, we would have expanded gross margin on top of the 230 basis points that we expanded. As Stéphane said in his prepared remarks, we're looking at more opportunities to offset that through various PRGP and pricing opportunities which we have not yet implemented. As we look forward, which is your question Rupesh, we do think there is more opportunity in gross margin over a longer period of time. In 2026, we believe it's more in SG&A. A large part of our growth in margin in 2026 would come from SG&A, primarily from non consumer -facing. We will make sure that we have the right fuel to drive our brands and the overall Beauty Reimagined strategy. On everything else outside which the consumer doesn't see, whether it's SG&A, whether it's the shared services, whether it is our employee cost, where we had announced the significant restructuring amount to right size the business, we will be doing that within SG&A. Just a double click is that as Stéphane said in his prepared remarks, we are looking at end-to-end business model change and driving the outsourcing opportunity, driving procurement opportunity as well where we have a full-on project looking at every single OpEx in the company to look at how we can consolidate, how we can drive better efficiency, how we can procure better, how we can spend better or less. Our growth will come from SG&A in a primary way but also from gross margin. We believe there is opportunity both, primarily SG&A. Yeah, just one quick addition on this point. We are laser focused on growth. You know the PRGP, if you remember the G is growth. A lot of the savings that are coming from the PRGP, which we are already in completion of the first year and we still have one year to go. As I said in my prepared remark, we're very pleased with the progress that we've made. We are reinvesting a large part of this cost saving into consumer -facing. I said it in multiple calls before, we could have taken a very different position to just, you know, drop many more of these savings to just improve quickly or faster the operating margin. We strongly believe that with the strength of our brands, with the innovations that are coming and the new media model that we are putting in place, we need to fuel the growth going forward and the consumer acquisition that we just need to go back to historical growth algorithm and deep market share. When we get there with the new operating model that we are putting in place with lower SG&A, a better gross margin than what we have had over the last few years, we know that there will be a lot of leverage going forward. We need to be laser focused on activating retail and obviously as we make in the over question that we tighten the retail to net and this is just going to create a lot of leverage going forward. The next question is from Chris Carey with Wells Fargo Securities. Please go ahead. Hey everybody, thank you. Hi. Thank you for the question. I just, you know, a two parter, but regarding the quarter to date developments, specifically in Asia that you highlighted in the press release, I'd love to just get a bit more context on what you're seeing from the category and your own performance. Regarding Europe, you did mention they've just seen a bit of slowing in the category. I know there's some new leadership in the market as well, looking to drive accelerated penetration. What's your outlook for Europe specifically as we think about the next 12 months, both the category and your own performance, and what are appropriate benchmarks for success and sequential progress in the market. Thanks so much. Thank you, Chris. Let me just decouple when we talk about Asia, between the trend that we're seeing in China and in the rest of the Asia region, because obviously we have, and as we mentioned, we're seeing some very encouraging sign of stabilization in China and that's the most important thing. Consumer sentiment is getting a little bit better. It's still lower than what it was, like, you know, a few years ago. In our case, we have a very, very strong performance. We have growth in all categories and all channels in Q4, and that was exceptional. It's been a long time for us getting to this position. We had 10 brands who grew in retail, including our big brand, but in a much more diversified way. Obviously, Estée Lauder and La Mer continue to just, like, you know, do some very strong, strong actualities. We've seen tremendous retail acceleration on Jo Malone, on Tom Ford, including Tom Ford makeup, and so on and so forth. We have also a very successful launch of The Ordinary in China with Sephora that we are expanding as we speak on Tmall. We're seeing a lot of good momentum in China. Obviously, we are, there's still some work to do. The market is soft, but more importantly for us, we're getting market share. In the rest of Asia, I have to say we are seeing some slowdown. Japan continues to be strong for us. We are gaining market share, but we've seen a sequential reduction of the performance linked to FX and other reasons, which is obviously less tourists when, obviously, the FX has been swinging in the different direction. Korea has been soft, and we are working with the team. We have a new General Manager in place in the market and working with the team to really accelerate the market. I would say different views on China, stabilization, the rest of APAC, some work to do. Southeast Asia, I have to say, continues to be relatively strong and part of our new emerging market structure. Like I said, we have for the moment 10% of our sales that is coming from emerging market. We're seeing a lot more potential with an acceleration in double digit in this year and in the years to come. When it comes to Europe, yes, Europe is actually a bit more concerning from consumer trend standpoint. There is an erosion, obviously, of the performance with a sequential slowing in prestige duty across mainly the main market. France is the one that is the most challenging, followed by Germany. Some actually still positive in Spain and Italy. We're seeing generally speaking a slowdown on the overall performance. With the team, we are expanding consumer coverage. We have a lot of activities, especially in France. You know that Europe has been for now multiple months driven a lot by the activities on France in the market. We've demonstrated actually that both with brands like Jo Malone, with Tom Ford, with Le Labo, we are basically going from strength to strength and we are continuing to expand strategically our brand so we can capture our fair share of the growth that is in the markets. We are also strategically investing more into this market to make sure that we ignite growth and consumer and bring more consumers. I have to say all the work that we are doing on innovation is benefiting this market. The fact that we're accelerating our innovation that we're bringing to markets in less than 12 months and now we are back to more than 25% of our innovation coming to market is going to help a lot because we're seeing a lot more consumers looking for new innovation also in Europe. I would say generally speaking, stabilization of China, strongly in North America and some weaknesses in the rest of APAC and Europe. Through Beauty Reimagined we are laser focused and expanding distribution, adding new innovation and investing in bringing new consumers to the market. All of that gives us the confidence that by the end of fiscal 2026 we will have all four new geographical regions in a positive territory. The next question is from Peter Grom with UBS. Please go ahead. Thanks, operator. Good morning, everyone. Thank you for all the details. On fiscal 2026, just listening to you both and reading through your release, there's just a lot going on. Lot of moving pieces. When we just think about the fiscal 2026 guidance, can you just talk about the level of visibility or confidence? You have in the outlook at this point in time, and I guess specifically. Have you embedded some cushion if some of these assumptions were to move against you? Thanks. Hello, Peter. Overall, I would say that when we give this outlook, we of course take the best view possible and take a risk assessment on that. What we are seeing, which is positive, which is meaningful for us, is definitely China. The China market has grown and we have grown retail mid single digit. That's one of the largest beauty markets on the planet. That was not the case in the first half of the year. Two back-to-back quarters of mid single digit growth for us, growing share. That definitely gives us some confidence barring any geopolitical things that are not in our control. What is controllable is working. We are definitely winning in that market again, that's good. Secondly, on travel retail, with the work we have done on the inventory and the difficult choices we made in 2025, it gives us a base from where we can grow. Retail is still challenged in travel retail, but our shipment base did the hard work in 2025 to make those choices. On travel retail and on China, barring any exogenous factors, we have good visibility now. Thirdly, in North America, we are starting to build retail positive and we grew share in the backups, right? That gives us confidence that in North America we are getting more competitive again with all of the channel changes we have done. These are the three largest businesses. Other than that, we have a strong presence in emerging markets around the world and we are working to accelerate. That's one of the things Stéphane has made clear very early on, that that would be a priority. That is a growth opportunity for us where we are working to do. Of course, emerging markets come with their own volatility, but they are still a growth opportunity and we are well positioned there. When you look at our largest businesses from a sales standpoint, as I covered, we have good data points to support our outlook in a meaningful way. When I look at it from a profit standpoint, we have done the hard work on PRGP to know what our cost structure would be, what our COGS will be, what tariff would be, what mitigation we can do. When we look at the cost work line by line, we have done the work to give you the margin outlook we have given. Both from top line, margin, gross margin and cash, we believe the outlook we are giving you is the best based on the information we have today, with prudency, which you would always expect from us. I would say, Peter, just one quick thing. Obviously we've said it and you see it yourself. There's an enormous amount of volatility out there in any geographies around the world. We have ranges to give us room basically to deliver, like Akhil said, the outlook, and I think you should see that from this team that we've over delivered PRGP to our expectation. We will continue. We have 11 months to go into this fiscal year, and there's not a day in the week that we are not looking for new opportunities to cut costs where we need to do it, to refuel basically our brands everywhere around the world to activate retail. We have ranges. Obviously you would expect from any good managed business to have ranges not only to deliver the outlook but also for us to continue to do meaningful work. You saw the work that we're doing in gross margin throughout fiscal 2025. With the enormous amount of volume deleverage, we've been able to just improve gross margin by 230 basis points and even beat the guide that we gave for Q4 in fiscal 2025. Expect us to continue to act with the same determination to cut costs where we need to cut costs, to invest, to accelerate retail, and to deliver on our guide for the year. The next question is from Andrea Teixeira with JPMorgan. Please go ahead. Thank you. Just how much your PRGP gross savings and Stéphane, you really as you said you over, I mean the whole team has over delivered on this plan. How much are you including in guidance for this margin expansion that you gave out at the midpoint and out of the whole program, and how much new investment in client-facing initiatives are you embedding, you're making this year? How much it kind of slows down to the bottom line, just trying to reconcile your comments, and that's just a clarification question of the 500 basis points gap in retail against shipments. By my math, it probably grew about 2% in the Americas. I think that comment was the 500 basis points was in particular to the U.S., so my clarification questions are: one, can you comment on how much the exit rate was in the Americas, and b, how much would be embedding retail growth standpoint in the U.S. for the fiscal year, for the quarter to come? I'm just trying. I know you said it will be better than that 500 basis points gap, just thinking of the full fiscal year, and see how much you mentioned the potential for the price increases and upside to the gross margin outlook. I was just hoping to see if you can clarify if there is any price increases in the low single digit outlook for local currency growth or if that's an upside. Hi, I'll start with the PRGP. Overall, you know, when we first announced PRGP, we had said $1.1 billion - $1.4 billion. That was the first time. Stéphane and I expanded it. When we expanded it, we also said to you, hold us accountable to margin instead of giving you a dollar tracking of PRGP figures because the business was significantly deleveraging. That was definitely. Since that promise, our mission has been to grow margin, which we grew in gross margin. We are growing gross. We are growing overall margin in 2026. That's our forecast. Of course, we are committed to getting to strong double-digit margin. Within that, let me give you some more clarity. Out of the $1.1 billion- $1.4 billion we had originally intended, we had said we'll do more than 50% in 2025. What Stéphane referred to is that we significantly exceeded that more than 50% number in 2025. To your second question, how much you are embedding in 2026? 2025 and 2026 are both fiscal years with large amounts of PRGP savings that we are embedding. The way you could read that is really through a restructuring. We said that restructuring. We have spent closer to $700 million. Our total announced restructuring was $1.6 billion, $1.2 billion- $1.6 billion. There's still room for us to do the outsourcing project that we talked about and other opportunities that Stéphane has talked about in terms of streamlining the cost structure. Our forecast definitely takes into account a significant amount of PRGP saving. What is not counted here in 2026 is really the outsourcing work that will be in outer years and also procurement work, which we are working on, which should be another big lever. That is our mission overall. We said 5,800 - 7,000 employee headcount. We already communicated that we have done about 3,000 +. We of course will balance. We're not trying to reach a number, but we are definitely trying to reach a margin in a way that we can execute the business, fuel the brands, and then of course deliver the margin. That's overall on PRGP. And maybe on pricing. One thing I'll draw on pricing, obviously, as we always do, we have pricing power and we embed low single digit, like, you know, increasing pricing. I just want to make sure that we're very clear about our strategy this year on pricing. Potentially going forward we will continue to build on pricing power. That's why we're investing. We have very strong brand, but we are making sure also that we are bringing to market new innovation at the right price point. I made it very clear in my prepared remark that we are playing with the different price tier of prestige from the entry with The Ordinary and Clinique all the way to Re-Nutriv and Estée Lauder. Thinking about La Mer and Jo Malone, we have a lot of, like, you know, pricing power between our brands, but we are very careful of understanding where the growth is happening by price band. Meaning, like, you know, is the growth happening between $10 - $15, is it happening between $20 - $25 or beyond, and really tailoring our innovation to where the growth is. In addition, I want to make it also very clear, and we said it, we have taken some strategic price reduction on some of our product to reignite growth on some historical product. Not only have we reduced discount, but we've adjusted prices now on the total. Obviously, we're still pricing power and we're increasing price and that's the way that our guide is also built for fiscal 2026. Your last question you had was on North America, the 5% gap. Clearly, as quarter one, we expect this gap to be high, but for the full year we expect this gap to definitely compress from the 5% that you saw in the full fiscal 2025. Of course, we'll continue to give you visibility into this every quarter, so count on that. This concludes today's question and answer session. If you are unable to join for the entire webcast, a playback will be available at 1:00 P.M. Eastern Time today through September 3rd. Please visit the investor section of the company's website to review a replay of the webcast. That concludes today's Estée Lauder conference call. I would like to thank you all for your participation and wish you a good day.