Sydney Wagner

Sydney Wagner inquired about the expectations for category growth underpinning the long-term net sales growth range, specifically asking about trends and innovations expected to drive these categories. She also requested an update on the promotional environment observed during the quarter and expectations for 2026.

Answer

Denise Paulonis, President and CEO, stated that color will remain at the core of both businesses with anticipated continued growth. For Sally, care and nails are expected to gain traction, especially with the Sally Ignited store design. For BSG, the innovation flywheel, particularly in care, is strong. Paulonis highlighted further category expansion as an exciting part of the long-range plan, with BSG testing skin and spa to attract estheticians, and Sally exploring cosmetics, fragrance, and men's grooming. Regarding promotions, Paulonis noted that Q4 levels were generally similar year-over-year, with Sally running more promos for shorter durations and BSG running slightly heavier promos, partly due to holiday season preparations with brand partners. She mentioned a tactical shift for Sally's Q1 holiday messaging to an emotional appeal, 'Save While You Skip the Salon,' moving away from traditional bulk promotions.

Sydney Wagner asked about the expectations for category growth underpinning the long-term net sales growth range, including specific trends and innovations. She also sought an update on the promotional environment observed in the fourth quarter and expectations for 2026.

Answer

Denise Paulonis, President and CEO, stated that color will remain at the core of both businesses with continued growth. For Sally, care and nails are expected to gain traction, especially with the Sally Ignited store design. For BSG, the innovation flywheel, particularly in care, is strong. She highlighted further category expansion opportunities, including BSG testing skin and spa to attract estheticians, and Sally exploring cosmetics, fragrance, and men's grooming. Regarding promotions, Paulonis noted Q4 levels were similar year-over-year, with Sally running more frequent but shorter promos, and BSG having heavier promotions due to brand partnerships for the holiday season. For Q1 holiday, Sally is shifting to an emotional appeal with the 'Save While You Skip the Salon' message.

Sydney Wagner, on for Ashley Helgans, requested more detail on the concept of 'innovation fatigue' in color cosmetics and asked if this trend is also seen in prestige. She also inquired about how promotional activity varies by channel and trended during the quarter.

Answer

CEO Sue Nabi explained that 'innovation fatigue' in color cosmetics stems from an overwhelming number of launches and complex routines, which has confused consumers, particularly those over 30. She contrasted this with the fragrance category, which remains simple to navigate and is experiencing a 'hug in a bottle' trend. CFO Laurent Mercier noted that promotions began in Consumer Beauty about a year ago due to category slowdown and later appeared in Prestige Fragrance in Q3/Q4, driven by peers and retailers managing inventory.

Sydney Wagner, on behalf of Ashley Helgans, asked for more detail on "innovation fatigue" in mass color cosmetics and whether this was also occurring in prestige. She also inquired how promotional activity varies by channel and trended through the quarter.

Answer

CEO Sue Nabi explained that "innovation fatigue" in mass color cosmetics stems from an overwhelming number of launches that confused consumers, a phenomenon not seen in the simpler fragrance category. CFO Laurent Mercier noted that promotions began in Consumer Beauty a year ago but more recently appeared in prestige (Q3/Q4), driven by peers and retailers. He reiterated that Coty is avoiding promotional traps by focusing on innovation and media support.

Sydney Wagner asked for more color on the variability of performance between different provider channels and types.

Answer

CEO Marla Beck reported strong growth in the non-medical channel, especially among single-room estheticians and day spas, which she credited to the 'good, better, best' strategy making devices more accessible. She also noted that the medical and med spa channels remain strong, with high adoption of new clinically-backed boosters like Hydrophilic.

Sydney Wagner of Jefferies, on for Ashley Helgans, asked about the company's long-term target for the mix of consumables as a percentage of sales and inquired about any notable differences in consumable trends or attach rates by region.

Answer

Executive Michael Monahan responded that the company does not have a specific target mix, as they anticipate a return to growth for capital equipment sales in the future. He noted that the most significant pressure on consumable sales is expected in the APAC region, particularly China, due to the ongoing tariff situation, which has been factored into the company's forecast.

Sydney Wagner from Jefferies, on for Ashley Helgans, inquired about stylist sentiment and the overall health of the salon channel, and asked how the trend towards lower-maintenance hair color affects Olaplex's business.

Answer

CEO Amanda Baldwin acknowledged that post-COVID shifts, including less frequent hair coloring, do impact salon visit frequency. She explained that this is precisely why Olaplex is innovating with new services like the Pro Scalp treatment, aiming to provide stylists with additional revenue streams and new reasons for clients to visit the salon. She expressed confidence in the company's ability to adapt to these shifting dynamics.

Sydney Wagner, on behalf of Ashley Helgans, asked about the key performance indicators (KPIs) for recent marketing initiatives and how the impact of these efforts might differ between U.S. and international markets, as well as between the professional and retail channels.

Answer

CEO Amanda Baldwin described the marketing evolution, culminating in the 'Design to Defy' campaign launched in April. She noted that while it's a long-term investment, early KPIs are encouraging, including nearly 1 billion press impressions and increased Google search volume. She explained that international marketing efforts are being rolled out in a phased approach as the company realigns its global markets and partnerships.

Sydney Wagner, on for Ashley Helges at Jefferies, asked about the gap between unit and dollar sales in scanner data, the current promotional environment, and expectations for Q2 innovation compared to the prior year.

Answer

Senior VP & CFO Mandy Fields clarified that net sales growth in Q1 was primarily driven by volume, consistent with scanner data trends. She stated that the promotional environment has not seen a significant acceleration. Regarding innovation, she expressed that the company is very pleased with its fall launches, such as the melting lip balms and the new skin tint with SPF 50, which are resonating well with consumers.

Sydney Wagner of Jefferies inquired about promotional levels, the progression of retailer destocking in Q2 versus Q1, and the current state of end-user demand.

Answer

CFO Michel Atwood explained that while end-user demand remains healthy (market up 5% in Q2), a broader market slowdown has made retailers and distributors more prudent with inventory, creating a disconnect between sell-in and sell-out. He noted Inter Parfums gained market share and competitors are facing similar trends. Chairman and CEO Jean Madar added that the company is prepared for a potential surge in late-season orders and stated that promotional levels have not changed significantly.

Sydney Wagner, on for Ashley Helgems, inquired about promotional levels, the extent of retailer destocking in Q2 compared to Q1, and the underlying trends in end-consumer demand.

Answer

CFO Michel Atwood explained that while end-user demand remains healthy, with the market up 5% in Q2, a slowdown in sell-in versus sell-out is an industry-wide trend as retailers and distributors act more prudently. Chairman & CEO Jean Madar added that this gap is a typical response to a lack of visibility and the company is preparing for a potential surge in late-season orders. Madar also noted that promotional activities have not changed significantly.

Sydney Wagner from Jefferies asked for more details regarding the perceived slowdown in Obagi's physician channel, questioning if it stemmed from fewer patient visits or smaller basket sizes.

Answer

Executive Michel Brousset clarified that the company does not believe there is a slowdown in the physician channel itself. He attributed Obagi's moderated growth rate to lapping a period of exceptionally high growth in its Amazon business from the prior year, which was boosted by a one-time distributor model conversion. Brousset affirmed that the physician channel remains robust and is expected to be a source of growth for the year.

Sydney Wagner, on for Ashley Helgans, questioned the company's expectations for holiday promotional levels and inquired about any observed caution from retailers regarding inventory.

Answer

Executive Michel Brousset stated that holiday plans are consistent with prior years and that Waldencast's brands are not heavily promotional. He acknowledged seeing some retailer caution around inventory management, particularly outside of North America, with some sell-in corrections occurring, but noted it was difficult to predict if this trend would persist into Q1.

Sydney Wagner of Jefferies inquired about the ongoing economic challenges in South Korea and China, asking for details on how these trends progressed in Q4 and the outlook for 2025.

Answer

Ryan Napierski (executive) confirmed that hesitant consumer spending, rising savings rates, and the growth of local discount brands continue to be significant headwinds. He stated that the company's 2025 forecast assumes these pressures will persist, and Nu Skin is proactively adapting its product pricing and strategy to support consumers in these economically challenged markets.

Sydney Wagner, on for Ashley Helgans, asked about the company's philosophy towards 'scent dupes' versus proprietary scents, particularly in the context of the 'everyday luxuries' line.

Answer

CEO Gina Boswell clarified that the company's goal is to provide customers with great, on-trend fragrances at approachable prices. She emphasized that the scents in lines like 'everyday luxuries' are unique fragrances developed in partnership with their high-quality fragrance houses, not direct copies. The positive sales lift in the Fine Fragrance Mist category demonstrates that this strategy is resonating with customers, especially younger ones.