Sydney Wagner • Jefferies

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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.

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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.

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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.

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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.

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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.

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Ryan Napierski, an executive, explained that persistent economic headwinds, including lower consumer spending and higher savings rates, are expected to continue throughout 2025 in both markets. He noted that while the company has factored this into its forecast, it is proactively adjusting its product pricing strategy and emphasizing its gig-based earning opportunities to adapt to the challenging consumer environment.

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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.

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