Good morning, ladies and gentlemen. My name is Maria, and I will be your conference Operator today. At this time, I would like to welcome everyone to Coty’s First Quarter Fiscal 2021 Results Conference Call. As a reminder, this conference call is being recorded today, November 6, 2020. On today’s call are Sue Nabi, Chief Executive Officer; and Pierre-André Terisse, Chief Operating and Chief Financial Officer. I would like to remind you that many of the comments today may contain forward-looking statements. Please refer to Coty’s earnings release and the reports filed with the SEC where the company lists factors that could cause actual results to differ materially In addition, except where noted, the discussion of Coty’s financial results and Coty’s expectations reflects certain adjustments as specified in the non-GAAP financial measures section of the Company’s release. I will now turn the call over to Mr. Nabi.

Ladies and gentlemen, good morning. Back in August, I spoke to you on Coty’s fourth quarter earnings call and shared with you that I had considered Coty to be a jewel in the rough, and I continue more than ever to believe in this. After several months of leading as CEO, I can confirm that Coty is transforming and emerging from the COVID-19 crisis much stronger and more nimble and also better prepared to face any future market disruptions. Our Q1 results are a clear testament to this. Across all metrics, both operational and financial, our results improved significantly from the low point of last quarter and came in at or ahead of our expectations. Month after month, we are seeing net revenues sequentially improving with solid orders in advance of the holiday season. Part of our improvement has been driven by an improving market backdrop. We have seen better sales trends across each of our regions and across both the Prestige and mass channels, which reaffirms the validity of our dual-channel model. And with retailers’ inventories now at normalized levels, we are also seeing much closer alignment between sell-in and sell-out. In fact, in some areas, sell-out trends are stronger than expected. At the same time, we have made significant progress in improving the performance of our P&L and our portfolio. On the financial side, I’m extremely pleased to see that the organization has continued to adapt to the new normal, executing on our financial and operational priorities, including profit and cash flow protection. Our stringent cost control enabled over 20% growth in our adjusted operating income, over 50% of the total company EPS and stable net debt. We remain committed to diligent cost control and delivering on our fiscal 2021 financial commitments, including being profitable on an adjusted…

Thank you very much, Pierre-André. So as I discussed on the last call, I strongly believe that Coty has a beautiful portfolio of brands, brands that are universal and deeply rooted. In this past quarter, we have begun to see this universality together with a strong commercial execution translate into exceptional innovation performance across a number of brands and regions. Early in the quarter, we launched the latest women’s fragrance under the Marc Jacobs brand called Perfect. The fragrance and campaign celebrate self-love, authenticity, self-expression with an inclusive cast of 42 individuals partly scouted through an open social media casting call. The ideas behind Perfect has never been more relevant than at this moment, and they have clearly resonated with Gen Z consumers all over the world. Marc Jacobs Perfect has quickly become the number one fragrance launch in both the U.S. and the U.K. The success and incrementality of this new pillar has propelled Marc Jacobs fragrances overall from the tenth rank to the fourth rank in the U.S. and from the number seven position to the fourth position in the U.K. Similarly, in September, we launched the latest extension under the Gucci Bloom Pillar called Profumo di Fiori. The campaign representation between the mystical world of female sensibility and the idea of nature. The social media-driven campaign, unique packaging, floral scent has attracted global consumers, especially in America and China. At the same time, we have also seen very strong success with the expansion of the Gucci makeup range. In Sephora, across North America, Gucci lipsticks reached the number one spot and Gucci bronzer the third spot. And we continue to build on a similar success in China with the upcoming launch of Gucci’s First Foundation custom designed for China. As a result, we have seen double-digit sell-out…

[Operator Instructions] Our first question comes from the line of Steph Wissink of Jefferies.

Good morning everyone and thank you for the comments. Our question today relates to cost of sales and marketing expense. If you, Sue, could just talk about your change in marketing approach. I think Pierre talked about it as a pretty significant change in the process that you are using to allocate marketing dollars. If you could just share a little bit more about that process change. And then on the cost of sales, how should we be thinking about the mix effects as you advance more into Prestige skin care and cosmetics? Should that be a net benefit to your overall gross profit margin?

Thank you, Steph. So to answer on your first question, we are meeting all together, as Pierre-André has been describing it, on almost a day basis to really think about what are the areas where we need to focus our working media investment. Clearly, the results we are having at the moment in the U.S., for example, on the luxury side of the business, show that when we concentrate and focus our investments on key bets, on products such as Clean Fresh makeup by COVERGIRL, Perfect by Marc Jacobs, which are the products that are currently resonating with the needs of customers, especially investing online, the results are there. So this is really a lesson, in a way, versus what the industry probably in general and Coty, in particular, has been doing in the past, which is maybe to invest on a very wide range of launches and bets. This is really something that we are going to continue to do and probably after, hopefully, this crisis is over, we will continue to put more money on bigger and fewer initiatives. And the second prt of your question was about. Pierre-André Terisse: Well the mix effect on the Prestige makeup and skin. Obviously in margin terms we expect that to be accretive.

Thank you. Pierre-André Terisse: Thank you.

Thank you.

Our next question comes from the line of Faiza Alwy of Deutsche Bank.

Yes, hi good morning. Su, I was hoping to talk a little bit about the COVERGIRL brand. I think you highlighted that as one where you would like to reignite growth in that brand and I was hoping to hear from you like how you are thinking about that, is it more incremental sort of smaller steps like the COVERGIRL Clean and Fresh or are you thinking about it more as you know a big splash or a relaunch like you did two years ago? And Sue, I wonder if you have looked at that last relaunch of COVERGIRL and from your perspective what do you think went wrong at that time, you know was it the advertising plan, was it the product quality , was it the operational self execution or something else and just how do you intend to approach that brand this time around?

Thank you. Faiza for your question. This brand is very dear to my heart again, if it again I have been looking at this brand in the past years as you can imagine a lot and admiring this brand to be very honest with you. Today COVERGIRL is the most loved brand in America, in the makeup area, still the most loved brand. This is a great asset to build on. The second thing is that it is not a surprise that clean fresh makeup is so successful, I don’t know but if people are aware of this that clean makeup have been invented by COVERGIRL in 1961, so we are talking about you know 60-years ago COVERGIRL invented the first medicated foundation using Nokzima in regions. And today this is exactly what we call the [skinnification] (Ph) of makeup. So COVERGIRL in a way was - 60-years ago of what we call the skinnification of makeup. So there is no other brand that can own this territories on COVERGIRL. That explains a lot to the success of clean fresh makeup which by the way we are expanding into consealers, into powders, into mascaras and also expanding in other brands of our portfolio very, very soon. So this is really something that for me is going to take back COVERGIRL to the position where it has been very few years ago. And the other great news that I can share with you is that this launches are attracting to COVERGIRL but also to our retailers in America much younger consumers. GenZ consumers of those who made the success of clean fresh and stabilize in a way overall clean makeup market share in America and COVERGIRL. The good news is that for the first time in five years the shred space…

When should we expect sort of new news on that. Again is it sort of incremental or should we - are you going to announce you know sort of big V launch in the next -.

Working hard on that, we are making a lot of progress since September on you know the new story and everything. So hopefully we will be able to tell the news internally, tell the news externally to our retailers of course and build with them the new COVERGIRL hopefully next year. Yes.

Alright. Great, thank you so much Sue.

Quickly as possible to be honest with you.

Thank you.

Thank you Faiza. Pierre-André Terisse: Thank you very much.

Our next question comes from the line of Robert Ottenstein of Evercore.

Great thank you very much and congratulations such an exciting start. Tow question one shorter term and maybe slightly longer term. So you know could you just give us a little bit more granularity on the holiday season, you said solid orders. How are things looking in terms of [11/11] (Ph) and your preorders there and any other sort of color you can give us in terms of Prestige versus Mass, is it still for the holiday season very much Prestige and how are you play into that. So that would be the shorter term question. And then the slightly longer term question or more strategic question, you know a lot of your main competitors are obviously adjusting their channel strategy in the U.S. moving away from department stores, own free standing stores and really becoming very dependent on e-commerce and obviously you are also pushing hard in e-commerce for all the obvious reasons. The question is are any of their moves in the brick-and-mortar area actually opening up opportunities for you. so those would be my to questions. Thank you. Pierre-André Terisse: Okay I will try to be use in sense of what we are seeing ahead of the holiday season. Actually talking about what you say about Prestige versus Mass. We see very good traction on the Prestige side and in particular in the U.S. and altogether in the makeup particular in the U.S. and that has been one of the - during - actually a pretty good performance on October and if you have a look at the product more specifically, Sue mentioned there Marc Jacobs is a clear one Gucci is another one, Makeup absolutely from Gucci is another one. So in Q1 you see that victory is still behind Mass, at the moment and ahead of the early season this is not really more the trend as we view. So again very encouraging signs in particular in America that is a bit less the case in Europe and now there is lot of brand coming in addition, but altogether its clear to me that we should expect the Q2 improving versus Q1. A lot depending on the effect of the lockdown but there would be improvements. So that is for the short question, I don’t know Sue if you want to add something.

No. That is all. Pierre-André Terisse: And on the channels, I mean the only thing I can say is that on e-commerce we are definitely changing scale, as we are changing scale twice we have been [indiscernible] which is twice the one we had a year ago, so you know we just change completely things. And two, we are adding resources with [indiscernible] coming and the development of the of the DTG platform which is very well, and very fast. So that is definitely going to be one of the key element of our strategy going forward in America, business only in America. Okay. Next question.

Our next question comes from the line of Olivia Tong of Bank of America.

Great. Thanks good morning. The first question for Sue. I’m curious on your view on your opportunity in cosmetics and Prestige fashion brands, Gucci, now Burberry. Because so far, it seems fairly measured I mean, great growth, but fairly measured so far, insofar, it is for lipstick, now foundation and, of course, realizing that the current backdrop is somewhat challenging with respect to the makeup category. I thought it was really refreshing to hear your perspective on COVERGIRL and your views on the brand direction. So I was wondering if you could do sort of a similar exercise in terms of the long-term potential for some of the Prestige cosmetics brand in your portfolio? Thank you.

Thank you, Olivia. Yes, I think that is a very important question. We see clearly that the sales of brands such as Gucci because you named this brand, that are really booming both in the U.S. but also in China. In France, we just started at Sephora. And the figures were very, very good, including lipsticks, which was a surprise. But again, there is a strong appeal towards products that are going to be, on one side, very well positioned versus what the consumers are looking for. And I think the success of Clean Fresh makeup but also, I didn’t mention it in my previous answer, the success of good.kind.pure from Sally Hansen, but also the success of many other things we have been doing in the fragrance arena with Calvin - CK Everyone, fragrance - Atacado-certified fragrance. All this shows us that there is no issue on the mid to long term with cosmetics. It is just a question of putting on the market the right offer that answers consumer needs. And consumers are all about "give me something that is good for my skin, give me something that will make me look good either on Zoom or if I still go to the office. Give me something that I will not feel guilty consuming because it is good for the planet and good for the society we are living on, et cetera." So this is clearly a direction, and it gives us a lot of clues about where to take all our brands, especially this one. On the Prestige side, there is huge, huge, huge potential of brands such as Gucci and Burberry in the makeup arena, assuming that these brands, and this is exactly what we are doing, are launching products that are, of course, clean, vegan, using ideally reusable packaging, et cetera. So I really don’t see any reason why this category would be challenged more than after this current crisis is with us. So makeup is going to be back, but not the same makeup.

Got it. That is helpful. And then you obviously outlined a lot of initiatives. So can you just talk a little bit about how you are going to prioritize all of these and what incremental investments you have to make to get there, whether the personnel system, et cetera? Because not like skin care, China, greater e-commerce and DTC, just kind of curious on the timing on when you think those will come to fruition. If I could just sneak one more in on the other side, you mentioned a small brand divestiture. What’s your view on the likelihood of potentially more exits? And are there brands that you maybe haven’t really pushed in recent years that as you do a further review, you think could be more interesting areas? Thanks.

Yes. Thank you for your question. Again, we are committed to reigniting our mass color cosmetics business, especially COVERGIRL. So we are going really to focus a lot on COVERGIRL, continue of course the fabulous story of Rimmel in U.K. and of all our other brands, Sally Hansen in the U.S., our makeup business in Brazil, too, but we are going to focus strongly on COVERGIRL because there is huge potential on the COVERGIRL for all the reasons I have been mentioning in the past. To come to your question about are there other assets that you are going to leverage, yes, I can give you one in the mass business that not a lot of people talk about to me, which is Adidas. Adidas is probably the brand that has the biggest potential in terms of taking care of your body, cleansing your body, taking care of your body, boosting your mood before you go into practice sports or whatever. So there is a huge potential there. We started to work on this. So this is typically the kind of answer I can give you on this area. In the area of the Prestige business, clearly, consolidating our number one luxury fragrances makers in the world and success such as Perfect are really adding to this and accelerating in the luxury makeup arena, especially in Asia and in China. And the brands we are going of course, to focus on when it comes to luxury maker are Gucci and Burberry. And last but not least, investing on DTC, this can benefit all of our brands, including Kylie Skin Care, also Kim Kardashian West Skin Care launching in fiscal 2022, but also benefiting from all the other brands that we think are digitally gifted. So in fact, the choice will be a mix of bets where we have a clear return on investment, but also brands that are advanced in terms of digital conversations or brands that are highly desirable. Pierre-André Terisse: And Olivia, Pierre-André, just to complement on the very technical point, what we said about Stetson is not a divestiture. It is just a license, which has not been renewed. We have, since this summer, decided to take a more realistic view concerning, the licenses and to focus on the one which we think have a big potential. So we may not be renewing all of them to be sure that we focus on the right one.

Thanks so much. I appreciate it.

Thank you Olivia. Pierre-André Terisse: Thanks.

Our next question comes from the line of Lauren Lieberman of Barclays.

Great. Thanks. Good morning everyone. Two questions. First was just about fixed costs reduction. I was just curious if you could - Sue mentioned or Pierre-André mentioned, headcount reductions and accelerating that. But I was curious about anything you could share on the bigger buckets of fixed cost reduction because Coty has been attempting to reduce costs for so many years, and this was a part of the prior plan. So curious a little bit more color there. And then closer in, I was just curious as to the decision to launch Gucci on Tmall in early 2021 rather than being there for 11/11 and moving more quickly. I understand, so you have been in the seat for only a few weeks, but we are still just curious on the time decision there. Pierre-André Terisse: Okay. I will take the fixed cost. Well, it is really a good plan between people costs. And indeed, 600 people have left the company since Q4. And non-people costs, and in non-people costs, I can tell you we have been reviewing everything, taking advantage of what we went through during COVID time, which, in a number of cases, means no spending anymore, and leveraging on that. One thing which I mentioned, which is not necessarily very noticeable because these were expenses not in the P&L, but the so-called normalized costs, has been precisely the fact that we have tightened a lot the rules to normalize, making it very exceptional. And that is really creating a mentality of we need to look at the cost, and we need to make sure that every euro, every dollar, in fact, which is spent is spent because it is necessary to the company. And I think the change of mentality, the change of speed as well in implementation…

Great. Thanks so much.

Thank you Lauren. Pierre-André Terisse: Thank you.

Our next question comes from the line of Wendy Nicholson of Citi.

Hi. Actually, it is a good lead into my question, which is just more about the China marketplace. You talked about China now being more balanced in terms of makeup and skin care, but it actually looks like there is been a surprising degree of growth in the fragrance market in China. So how focused are you on expanding some of your luxury fragrance brands or investing heavily behind them? And then second, just in terms of distribution in China, are you focused on brick-and-mortar department stores in addition to Sephora or are you really focusing on Tmall as a primary distribution channel? Thanks. Pierre-André Terisse: And I will let Sue elaborate on that after. But it is clearly - so a, fragrance is the base and is the base of the brand because when we talk about makeup, we talk about makeup for Gucci and for Burberry, which are as well fragrance brands. So it is not one or the other. It is together, and that is what makes it strong. So fragrance is definitely something we keep working on. And on top of these two brands, by the way, there are others like Chloe, for instance, or Tiffany, which are really doing well. And makeup is coming on top, but that is true that, on the Chinese market, the makeup partition is bigger than the fragrance partition and is lower or smaller than the skin care partition. So it is definitely an important one. In terms of channel distribution, clearly, the own store are an important part. They have been the base of our development in the case of the two brands I have mentioned. So brick-and-mortar is absolutely the base. We have been able to build a strong franchise there, although not very big, but a strong franchise there without the help of e-commerce. We were not in Tmall until last summer. We started with Burberry, and now we are doing that with Gucci. When you look at the rest of the competition, there has been a lot relying on e-commerce, while we have not. So in fact that gives us a solid foundation to now accelerate with e-commerce. But definitely, it has to be, again, a game of the two. It cannot be one or the other. If we are in China, it is also to be present in China physically.

I agree with what Pierre-André just said. To complement, I would say that the fact that take the example of Gucci and Burberry brands that are in flagship counters and on flagship counters, you can really expose your two categories, which are makeup and fragrances and, therefore, doing joint sales, selling the latest Gucci powder. Soon, the first foundation made, the custom-made for the Chinese market and the latest, Profumo di Fiori, which is doing very well in China. And I see it as a mix of, on one side, the huge opportunities on e-commerce, but also choosing flagship places where the brand can show the expression. And I don’t know if you went recently into a store. If you see the way our brands, Gucci and Burberry, to name the two ones in the makeup arena presented, they really stand out from the crowd. And this is something that is non-replaceable. So flagship distribution, where we can have people interacting with other people and at the same time being where people are shopping on a daily basis. I think the two of them are really complementary with this idea to keep these two hands of - the two hands in maneuvering in this Chinese market.

And 1 thing we have heard increasingly about the Chinese market is just an elevated level of promotional activity from both western brands but also Japanese brands and whatnot. So can you talk about what you are seeing and what you are expecting? And is China going to be a profitable business for you or maybe take some time to invest as you ramp up the revenue side?. Pierre-André Terisse: I mean we are not seeing that at all, maybe because we are in a specific place, but we are not seeing that at all. And yes, we expect this market to be profitable and, in fact, to be very profitable. So we don’t have any concern of that timing.

Thank you.

Thank you. Pierre-André Terisse: Thank you.

And ladies and gentlemen, we do have time for two more questions. Our next question will come from the line of Andrea Teixeira of JPMorgan.

Thank you and good morning everyone. So I was hoping if you can talk about the shipping and consumption trends in October. And not to take away from the impressive sequential progress, how much for your continued operation like-for-like in the first quarter benefit from the replenishing of inventory, which I think is something that the industry has talked about? And the second part is, just a clarification from your presentation. Pierre-André, you mentioned the cost recovery from the KKR agreement of about $12 million in the first quarter. Is that recurring in this approximately the same amount going forward? That is just for modeling purpose. Pierre-André Terisse: Yes, sure. Well, I will start with the second one. So this is going to take place as soon as we close, so in a few weeks. We have to keep in place certain costs to make the separation with Wella occur over a period of time of one year in terms of actual logistics and logistic terms and operational terms. These costs represent about $12 million, we are going to reimburse them to Wella for as long as the agreement is needed, which is likely to be between 12-months and 18-months, okay? I mean not likely. It will be between 12-months and 18-months for the most of it. Once this is finished, we will stop re-invoicing, but we will also depend all the costs, which were necessary for that reason, okay? The cost being today present in Coty because they were in Coty, and now we have dedicated them to the Wella agreement, they will be unnecessary after the end of the TSA. On the first one, you are right. In fact, it is when you look at the like-for-like trends in July, August, September, you see clearly that July was helped by some temporary effect, which can be either because there is been some movements from June to July or because the base in July a year-ago was very weak or because, indeed, there is some deloading and we see that, by the way, both in remainco and direct co. Now since then, we had the benefit of seeing August, September and October. And October, for instance, is completely clean of that kind of element, clean of the element of restocking, which I could not quantify, but they both are one of the reasons why the performance in Q1 is better than in the previous quarter, but they are not the trend. The trend is there, and October definitely shows that. I hope I answered your question. I hope that answers your question.

Our last question comes from the line of Joe Lachky of Wells Fargo Securities.

Hi, thanks. I just wanted to hit Asia Pacific and China, specifically, from a little bit of a different angle than what you guys had discussed before. Obviously, the performance in that business is weaker than a channel, there is been commentary from others that domestic duty-free market is on fire, and there is been positive impacts from more rapid reopening of travel corridors within Asia. So maybe if you could unpack the travel retail channel a little bit. And then you mentioned a number of initiatives you are doing in China. But obviously, you are lagging with your exposure to the skin care category. So I’m curious why it will take longer term to improve your presence in that category. I mean, will it be new brands, additional acquisitions, launching Kylie kind of if you could explain more of a long-term perspective on skin care in China? Pierre-André Terisse: Yes. I mean, simply, you said that, the travel retail in Asia we have is international, and there travel retail business is deeply impacted. We don’t have a sizable, by any mean, sizable business in domestic travel retail. And therefore, we don’t benefit from that. And obviously, we don’t have, for travel retail purposes, an offer in skin care, and we don’t benefit for that either. So you are right that some of our competitors have shown numbers on travel retail in Asia which are definitely far away from ours, but we just don’t have the same portfolio. Sorry.

To complement what Pierre-André is saying, I would say that this is precisely the region why we are accelerating strongly, strongly on first makeup again and face makeup, which today is a part of skin care, in other words, with the launch of Gucci First Foundation custom-made for the Chinese customers, soon the same thing with Burberry. So this is one way for us to expose our brands wider than with fragrances. And again, fragrances are doing very well today. As you said, as somebody else said it previously, in Sanya Ireland, our sales are triple-digit growth. And we are opening new stores, by the way, very, very soon. And second, we are working like crazy to build a skin care portfolio. And the great news is that, in terms of skin care capabilities, expertise, patents and IPs, Coty owns, I think, a portfolio of technologies that is unique today on the market with a lot of know-how coming from the Lancaster brand that is, by the way, number one in sun protection at Sephora in China around light and environmental aging protection. We are going to build into this area. Second, around the vectorization of dermatological-grade actives. Again, Lancaster is the inventor of putting retinol the right way on the face. Every brand of skin care knows that retinol is the most coveted ingredient for now and for the future. We have also patents in regenerative medicine, inspired repair technologies in the longer area, obviously, from the makeup side, And we are going to add in new expertise. We will have probably four or five skin care expertise so that we can build a portfolio of brands going from the least expensive to the most super-premium brand, to really own all these areas since we know that skin care…

Thank you, everyone. Thank you. Have a nice day.

Thank you. Ladies and gentlemen, this does conclude today’s conference call. You may now disconnect.