Thank you, and good morning, everyone. Thank you for joining us today.

Joining us on the call this morning will be Chairman and Chief Executive Officer Jean Madar and Chief Financial Officer Michel Atwood. As a reminder, this conference call may contain forward-looking statements, which involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from projected results.

These factors may be found in the company's filings with the Securities and Exchange Commission under the headings Forward-Looking Statements and Risk Factors. Forward-looking statements speak only as of the date on which they are made, and Interparfums undertakes no obligation to update the information discussed.

Interparfums' consolidated results include two business segments: European-based operations through Interparfums SA, the company's 72% owned French subsidiary, and United States-based operations. It is now my pleasure to turn the call over to Jean Madar.

Jean, please go ahead.

Thank you, Devin, and good morning, everyone, and thank you for joining us on today's call. 2025 was a record year for Interparfums, with sales rising to $1.49 billion, including fourth quarter sales of $386 million, representing our best ever fourth quarter performance.

We saw the industry, including ourselves, return to a more historically normalized level of growth. While new and ongoing challenges such as tariffs and exchange rate pressures have influenced the environment, we have been able to manage through them with disciplined operational execution.

Fragrance remains a resilient category and is widely considered an everyday essential luxury that delivers an irreplaceable experience of self-expression and daily indulgence. In 2025, we energized our portfolio through the launch of several blockbuster fragrances and new line extensions across our brands, including the introduction of Solferino, our first proprietary ultra-luxury offering, and strengthen our marketing efforts with impactful advertising and promotional support.

Our diverse portfolio of fragrances attracted consumers throughout the year, with impressive annual performances by several of our top brands, as well as brands newer to our portfolio, such as Lacoste and Roberto Cavalli. We generated growth in the majority of our markets, made meaningful progress to improve efficiencies and optimize our supply chain to mitigate cost pressure and support long-term growth, and continued to deepen our sales reach on increasingly meaningful platforms such as digital and travel.

We delivered a high level of client service, maintained a strong financial position, and continued to skillfully navigate lingering macroeconomic headwinds in certain key markets, mainly caused by the effect of tariffs and trade destocking, and, of course, geopolitical conflicts. Innovation will continue to define our success, including the rollout of brands recently signed or acquired, namely Longchamp, Off-White, and Goutal, as well as the 15-year extension of our GUESS license, and our strengthening partnership with Authentic Brands Group and their exciting brand portfolio.

We will touch on that shortly. I am very proud of our team for their hard work and dedication.

These record results and continuing operational progress reflect their shared commitment to our pursuit of excellence. Now on to discussion of our results and operating activities.

As we noted on last quarter's call, we expected that fourth quarter sales will be supported by new rollouts late in the third quarter and the robust holiday sales seasons, and that is exactly what happened. Consolidated 2025 fourth quarter sales rose 7% on a reported basis and 3% on an organic basis, driven by higher sales for both US and European-based operations.

Sales by our US operations increased 4% in the fourth quarter of 2025, driven by performance from our two largest US-based brands, GUESS and Donna Karan DKNY, and even greater growth from Cavalli and MCM. Excluding the phase out of Dunhill fragrance that was completed in August 2024, full-year '25 for US operations, sales declined 3%.

Fragrance sales of GUESS and Donna Karan returned to growth in the fourth quarter, with increases of 7% and 8%, respectively. GUESS continues to benefit from the ongoing success of the iconic and Seductive franchise, as well as the Q3 introduction of GUESS La Mia Bella Vita.

Donna Karan growth was mainly driven by the Cashmere Mist and DKNY Be Delicious franchises. For the full year, GUESS sales were flat, and the Donna Karan DKNY decline of 4% was mostly due to unfavorable growth comparisons related to the timing of 2024 product launches.

In just the second full year under our management, Cavalli fragrance sales rose 33% in both the fourth quarter and full year, a testament to our ability to elevate a brand's profile creatively and strategically. The exclusive May-August introduction of Roberto Cavalli Sweet Ferocious at Dubai Duty Free was highly successful and has helped drive significant brand market share growth in the region.

We have expanded the distribution of Sweet Ferocious globally through multiple retail channels, where it is enjoying ongoing success. Additional 2025 Roberto Cavalli rollouts included the Gold Collection extension, the Paradiso extension, the Paradiso Rosa, and the striking three-scents Marble sub-collection and the dual-gender Just Cavalli divine magic fragrance duo.

In 2026, we plan to keep this momentum going with additional extension that reflects and reinforces the brand's established allure. MCM fragrance sales rose 40% in the fourth quarter and 17% for the full year, driven by continued performance of the new six-scent MCM Collection launched in early 2025.

In 2026, we expect to debut new extension to expand the brand. We are excited to be at Milan Design Week this April, where we will have an MCM-centric display highlighting the newest fragrance that will launch in early 2026.

Despite a challenging year where the brand declined 9% and despite the launch of Fiamma, fragrance sales of Ferragamo held steady in the fourth quarter, supported by the third quarter launch of Sublime Leather. We remain confident in the brand's potential heading into 2026, where we plan to roll out new extensions across pillars.

Sales from our European-based operations increased by 9% in the fourth quarter, driven equally by a 4% rise in organic growth and a 4% positive effect of foreign exchange. COACH, Lacoste, and Montblanc led the way in the fourth quarter.

For the year, sales increased 7% on a reported basis and 4% organically. While channel performance was mixed among regions, sell-through has been strong thus far in 2026.

Jimmy Choo, our largest brand, continued its momentum and delivered another year of sales growth. The success of the Jimmy Choo I Want Choo women's franchise has continued to strengthen since its launch in 2021, particularly in the United States.

The launch of I Want Choo With Love combined with a strong performance of the Jimmy Choo Man franchise helped drive 6% growth of Jimmy Choo fragrance in 2025. We have two new extensions in the work for 2026, and we'll be using the year to prepare for a new women's franchise in 2027.

COACH fragrance sales increased 5% in the fourth quarter and 15% for the full year, reflecting strength across essentially all of the men's and women's line, reinforcing its timeless, multigenerational appeal as a mainstay of casual elegance. We benefited from the launches of COACH For Men and COACH Gold in the first half of the year.

We have had a wonderful relationship with the COACH brand since 2016, and we are incredibly happy to extend our agreement for an additional five years through 2031. We expect to introduce new extensions for the men's and women's line in '26.

Similar to Jimmy Choo, we will be using the year to prepare a new women's franchise in 2027. In much of the same way that we rejuvenated Roberto Cavalli, our success with the Lacoste brand was certainly a positive highlight in 2025.

In just the second full year under our management, Lacoste fragrance sales grew 23% in the fourth quarter, leading to 28% increase in the full year, reaching $108 million, exceeding our initial expectation of $100 million. The Lacoste license took effect in January '24, and we immediately go to work crafting and implementing strategy and then curating and introducing a collection of fragrances for men and women that key into the timeless elegance of the brand.

In 2025, we enriched the Original line with a new men's fragrance called Original Parfum and the line's first women fragrance, Original Femme. We also introduced a new L.12.12 dual-gender duo, Silver Rose and Silver Grey.

In 2026, we will further expand the Lacoste fragrance lines with additional extension, leveraging the solid foundation we have built in our first two years overseeing the brand. Montblanc sales rose 22% in the fourth quarter, reflecting the success of Montblanc Explorer Extreme in the second half of 2025 and the strength of the original Montblanc Legend line.

This strong fourth quarter performance, in combination with favorable foreign exchange, helped to offset the sales softness we experienced in the first part of 2025, resulting in full-year 2025 sales that were broadly in line with '24. We plan to launch two new little extension in '26 and are preparing for a big launch of a new men's franchise in 2027.

The men's fragrance market remains underdeveloped in general, presenting a substantial opportunity for us to continue offering meaningful innovation and expand our reach across our entire portfolio for years to come. We remain optimistic about the future potential of Solferino, our first ultra-luxury direct-to-consumer offering that includes a collection of 10 unique, premium scents designed to cater to the growing niche high-end luxury market.

Our flagship store in Paris and dedicated e-commerce platform are attracting encouraging levels of consumer traffic. Solferino reached 40 doors worldwide by the end of 2025, and we are on track to expand this artisanal fragrance house to an additional 50 doors in the first half of 2026, with a long-term goal of up to 500 doors by the end of 2030.

We are excited that Solferino has entered the US, with a launch on Bloomingdale's online store and in seven store locations, with additional store rollout to come this fall. We have always taken a strategic approach to portfolio expansion, adding brands that strengthen our global reach and long-term growth profile.

This year, we advanced that strategy with new partnership that further enhance our competitive position. In January, we announced separate, exclusive, long-term worldwide fragrance license agreements with David Beckham and Nautica, along with a 15-year extension of our license agreement with GUESS that maintains the relationship through 2048.

These distinctive brands reflect our approach to an increasingly global and diverse fragrance market, identify iconic category leaders, and apply our proven operational expertise to build sustainable franchise. Our opportunity pipeline is expanding, as our ability to elevate, and in some cases revive, brands is becoming increasingly recognized in the market.

I want to thank Authentic Brands Group, ABG, the company who co-owns and manage both the David Beckham and Nautica brands. We look forward to a continuing mutually beneficial relationship.

While brick-and-mortar remains competitive, e-commerce is running strong, and we are benefiting from our expanded presence at Amazon and early foray into TikTok Shop, among others. These platforms significantly enhance our global visibility, deliver rich consumer insights, and enable us to introduce smaller-sized products that serves as an affordable entry point into prestige and luxury, supporting both recruitment and premiumization efforts.

Amazon remains one of our largest and fastest-growing channel, generating rising consumer engagement and premiumization. We are very encouraged by our early success on TikTok Shop, most notably select products within our Donna Karan DKNY brands.

We are continuing to explore ways to leverage the increasingly significant sales potential of this platform, which has firmly established itself as a top 10 beauty retailer in the US as well as the fastest growing. The travel retail market continued to perform well, with sales growing by 6% in 2025 and representing today approximately 7% of our total net sales, consistent with prior years.

Brands including Cavalli, Lacoste, and COACH performed well throughout the year. Our strong appeal among traveling consumers, illustrated by the success of Cavalli Sweet Ferocious in Dubai, is helping us secure additional sales space and broaden our SKU footprint across duty-free locations.

We anticipate steady growth in our travel retail business going forward. With respect to operational improvements, we've made some good progress against our stated goals in the areas of tariff mitigation, inventory management, and operating efficiencies.

For example, our transition to 100% third-party providers for packing, shipping, warehousing, and order fulfillment should be completed by the end of March of this year. We are also making progress in shifting our manufacturing closer to the point of sales, with a focus on changes that provide a measurable impact.

For example, as of December 31st, 2025, we moved production for three GUESS lines Italy and have since diverted all component shipment from China to Europe instead of the US. This one change, which represented approximately 15% of our US manufacturing, produced tariff savings of $3.5 million.

Retailers maintained a cautious stance on inventory levels throughout 2025, carefully managing their positions amid a dynamic demand environment. However, we began to see meaningful relief in Q4 2025, as ordering patterns stabilized and inventories declined.

Encouragingly, that momentum has carried into 2026, with healthy ordering patterns since the beginning of the year. The tariff situation has become increasingly dynamic, given last week's Supreme Court ruling and the aftermath.

While it is too early, way too early, to determine the long-term future of tariff, we continue to focus on controlling what we can control in our own operations and have seen encouraging results. At present, we estimate that tariff cost will remain a headwind in 2026.

We will continue to implement strategies and cost savings to blunt this anticipated impact. These actions will be enhanced by the select pricing actions we took during the second half of 2025 that averaged approximately 2% across our brands, primarily focused on prestige and luxury and the US market.

Our pricing adjustments remained more modest than the prestige fragrance industry average as of late 2025. We do not plan to implement any further pricing actions beyond what we initiated last year, unless a significant change in the market occurs.

Our creative innovation, the continued resilience of the fragrance market, and the breath of our brand portfolio position us to deliver long-term growth. We expect a continuing period of transition in 2026, leading to a more stable market conditions as we prepare for what we expect will be a more favorable operating environment in 2027 and beyond.

As such, we have maintained a quite conservative posture with respect to our guidance, but we will revisit it as the year evolves. Over our 30-plus-year history, we have earned a global reputation for excellence, and where there is opportunity, we will be there to capitalize on it.

I'm also pleased to share that I will be speaking at the Women's Wear Daily CEO Summit in Palm Beach this May, representing our company on an exciting industry stage. With that, I will now turn it over to Michel, Michel Atwood, for a review of our financial results.

Michel?

Thank you, Jean, and good morning, everyone. I will begin by discussing the consolidated results before breaking them down into our two operating segments: European and United States-based operations.

As reported, we delivered net sales growth of 7% to $386 million during the fourth quarter, leading to a record $1.49 billion in sales for the full year in 2025. Foreign exchange movements positively impacted our top line, contributing 3% to growth in the fourth quarter and 2% for the full year.

However, as outlined in recent quarters, the stronger euro has also driven higher costs across the rest of our P&L as well as on our balance sheet. Organic sales, excluding FX and the completed phase-out of Dunhill and initial Solferino sales in late 2025, rose 3% in the fourth quarter and 2% for the full year, respectively.

Gross margin contracted 20 basis points to 63.6% in 2025, and this was primarily driven by the higher cost due to tariffs. Tariffs resulted in about $12.8 million in higher costs in 2025, or 0.9% of sales.

We have been able to partially mitigate these impacts through through favorable segment and brand mix, which each contributed to 20 basis points of margin expansion, as well as pricing, leaving us with a gross margin erosion of only 0.3%, considering the situation and the tariffs. We expect tariffs will continue to represent a significant headwind in 2026 as we annualize these tariffs for the full year.

We continue to actively work on cost-saving programs and tariff mitigation strategies to help limit these impacts. We estimate that these programs, in combination with the full-year impacts of the price increases we took in August 2025, will enable us to maintain our gross margins flat in 2026.

Moving to SG&A, SG&A expenses as a percentage of net sales were relatively flat in the fourth quarter at 54.3% compared to 53.4% in the prior year period. For the full year, SG&A increased 80 basis points to 45.5% of net sales from 44.7% last year, and this was driven by higher A&P spending as well as an unfavorable segment mix.

A&P investments rose 10% and 5% for the fourth quarter and full-year periods, as we continue to invest ahead of our growth in line with our expected sell-out trends. Royalty expenses, which are included in SG&A, averaged approximately 8% in 2025, in line with our five-year run rate.

Overall, consolidated operating income and margin declined for both the quarter and the full year as compared to the prior-year periods, due primarily to the combination of lower gross margin and higher A&P. Fourth quarter operating income was $28 million for the quarter, resulting in an operating margin of 7.1% as compared to $36 million and 10% operating margin in the prior-year period.

Full-year operating income declined by 2% to $270 million, resulting in an operating margin of 18.2% or 80 basis points decline from the prior year, for the reasons, laid out before, just above. Below the operating line, we reported a gain of $1 million in other income and expense compared to a loss of $6.4 million in 2024.

The year-over-year change primarily reflects the following factors. First, we realized a one-time gain of $7.6 million related to a debt extinguishment during the fourth quarter.

The second factor was a $1.2 million increase in interest in in interest income to $5.8 million during 2025 compared to $4.6 million in 2024, as our cash position improved. Third was a reduction in interest expenses on borrowings of $0.7 million.

These gains were partially offset by a loss on foreign currency of $3.7 million compared to a gain of $500,000 in 2024. The significant swings in the euro-dollar exchange rate throughout the year helped our top line, but have led to larger than usual FX losses throughout our P&L.

Our consolidated effective tax rate for the year was 23.3%, down 90 basis points from 24.2% in 2024, as we benefited from a one-time favorable net tax gain of $2 million in '25, following a positive outcome from prior-year tax assessments. These factors, combined with our disciplined execution and cost management, enabled us to deliver net income growth despite the challenging operating environment.

Fourth quarter net income was $28 million or 88 cents per diluted share, a 16% increase from prior-year period. For the year, net income reached a record $168 million, with a diluted EPS reaching $5.24, also a 2% increase compared to 2024.

Now moving to our other moving to our two business segments, I'll start with European-based operations. We delivered solid net sales growth in both the fourth quarter and full year of 2025.

Fourth quarter sales increased 9%, driven by 4% organic growth and 4% favorable FX impact. For the full year, reported sales rose 7%, including a 4% organic growth and 2% favorable FX impact.

Gross margin for the full year was 66.1% as compared to 67% in 2024. The bulk of the 90 basis points erosion in gross margin was driven by tariffs, which represented $8.6 million in 2025.

While SG&A expenses increased 7% to $474 million, SG&A as a percentage of net sales remained relatively flat at 46.7% compared to 46.3% in 2024. The increase in SG&A was primarily driven by a 9% rise in AP expenses that totaled $219 million for the year, representing 22% of net sales compared to 21% last year.

Overall, net income attributable to European operations rose 2% to $144 million, but as a percentage of sales, declined 60 basis points to 14.2%. Now turning to our United States-based operations, in the fourth quarter, we achieved a 4% net sales growth on a reported basis and 2% organic growth, aided by a 2% favorable FX impact.

Excluding the phase-out of Dunhill fragrances that was completed in August 2024, full-year '25 operating sales declined 3%. Gross margin expanded by 40 basis points to 58.3% for the full year, driven by favorable brand mix, driven by the 2024 Dunhill discontinuation, channel mix, and pricing actions, which more than offset the negative 0.9% impact of tariffs.

SG&A expenses decreased 2% for the full year. However, SG&A as a percentage of net sales rose to 42% from 40.5%, and this was largely driven by our lower net sales with the discontinuation of Dunhill.

Additionally, in 2025, we kept our A&P investments steady at 16% of net sales compared to 2024 and made the choice not to reduce other areas of SG&A in light of new licenses which will be joining our portfolio in future years. Overall, the full-year net income attributable to US-based operations was essentially flat at $69 million, representing a 14.3% of net sales compared to 13.3% in '24, improving margins.

At December 2024, our balance sheet remained strong, with $295 million in cash, cash equivalents, and short-term investments, and working capital of close to $700 million. Accounts receivable was up 17% compared to 2024 on a reported basis.

However, the balance is reasonable and based on 2025 record sales levels and higher FX impacts of the euro-dollar. While days sales outstanding was 73 days, up from 66 days in 2024, driven by changes in channel mix and FX, we are still seeing strong collection activity and do not anticipate any issues with collections of accounts receivable.

Despite FX headwinds, inventory levels were down 6% at year end compared to 2024, and inventory days on hand decreased to 244 days compared to 259 days in 2024, marking our lowest levels since 2022. These decreases are a direct result of our effort to manage down inventory levels.

We have also preserved a favorable inventory profile, with a higher mix of finished goods relative to components. These improvements position us well to continue to drive further inventory efficiencies, and we will continue to optimize our inventory levels going forward.

By effectively managing our working capital in line with sales, full-year operating cash flow increased to $215 million, up $27 million from prior-year period, and representing 103% net income compared to $188 million or 92% of net net income in 2024. We also took advantage of a stronger cash position and the lower stock price levels in the back half of '25 to continue to share our share repurchase program.

In 2025, we purchased $14 million in shares and will continue to evaluate additional share repurchases if the stock price remains below what we believe is the intrinsic value. In the same vein, we are pleased to be able to maintain our annual dividend of $3.20 per share.

Now moving to guidance, as shared in our earnings release published yesterday evening, we are maintaining the outlook we provided in November. We expect sales to remain steady at approximately $1.48 billion and diluted earnings per share of $4.85, a decline from 2025 that as referenced above included a one-time gain recognized in 2025, impacts from tariffs, and significant investments we are making to develop our newest brands and support our broader portfolio for 2027.

We continue to anticipate a return to significantly stronger growth in 2027, driven driven by enhanced innovation across all of our key brands, including the development and distribution of our newest brands. While we are seeing moderate moderating demand in certain international markets, our core fundamentals remain solid.

We continue to advance a strong innovation pipeline, supported by a long-standing relationship with global distributors and retailers. Combined with a stable and resilient consumer base, these trends reinforce our confidence in delivering consistent performance and long-term value.

Before we begin the Q&A section of the call, I want to note that we are anticipating filing our Form 10-K early next week. All audit and reporting procedures are continuing to progress.

With that, I'll open up for questions.

Hi, thanks for taking our question. In terms of revisiting your guidance later in the year, what are some specific metrics that you'll be looking for, or do you need to see, to give you confidence to update the guide?

Then just curious, is the category or your own pipeline or innovation uptake more of the swing factor in that? Then my other question, just on promotion, some peers have called out some pressure there.

Can you share a little bit more about what you've seen? Thank you.

Michel, you want to start?

Hi, Sydney. Look, we're just starting the year.

We had a really strong Q4, but we're waiting to see really what happens. The environment remains very, very volatile.

We are seeing a slowdown in market growth. The market growth in the fourth quarter for the markets that we're tracking was up 2%, and it's definitely starting to slow down.

For the year, we're at about 3%. Definitely a slowdown in the market.

The destocking situation was a lot better in the fourth quarter. We shipped better than expected, and we saw some restocking.

At the same time, we believe that structurally destocking will continue to be a factor, as retailers and distributors normalize their inventory levels. It's just a normal part of the cycle.

We're waiting to really see how all of that kind of plays out. In terms of our innovation pipeline, we have a very, very strong innovation pipeline for 2027.

For 2026, our strategy is really more of a flankering strategy. We're waiting to see also how that basically holds up and how that's basically being received in the market before we feel comfortable updating our guidance.

Thank you, Sydney, for your question. Regarding the guidance, as this company has always been conservative.

We spent a good amount of time re-evaluating the guidance, and we have decided to keep it, not to change it, because even though we had quite good January and February, and I think we are anticipating a strong first quarter, the visibility is not great. We are cautiously optimistic.

Instead of retouching the guidance many times, I prefer to wait a little bit more. It's not a sign that things are not going well.

It's just we continue in our approach of being prudent. This is regarding the guidance.

Michel, you want to answer on the promotion?

Yeah. As pretty much the whole industry in the US took pricing related to tariffs.

Those price increases largely went through, but we did see an uptick in promotions in the fourth quarter, a little bit more discounting than usual. I think this is normal.

In this category, as we don't typically do a lot of discounting. We typically offer the consumer value in the form of gift sets and GWPs.

I would say there was a little bit more of these friends and family discounts than we have seen normally in the fourth quarter.

Nothing out of the ordinary.

Nothing significant, but maybe a slight uptick, but nothing significant and nothing of any large magnitude.

Thank you.

Thank you.

Hello.

Good morning, Jean. Hello.

Thank you for taking my questions. I have two.

First on the portfolio, after signing of the two new brands that you recently announced, do you have any further capacity to secure additional licenses? In that context, would you prefer to add brands more in the mass end of the fragrance industry or build up the prestige presence further?

Then my second question is on the flanker pipeline that you have mentioned for this year. Can you please give us a sense of your expectations of which brands do you expect to gain market share in 2026?

Conversely, which parts of the portfolio are you relatively more cautious about at this stage in the year? Thank you.

Aron. Let me try on the first one.

Do we have a capacity to take more after the signing of this two new brands, which are David Beckham and Nautica? Before I answer the question, let's take two minutes to analyze what we think we can do with this two brands.

David Beckham is an icon. David Beckham has a huge name recognition.

We think that in this lifestyle world, we can do well. This is not the first transfer of license that we'll do from Coty.

We've done it with GUESS, we've done it with Lacoste, we've done it with Cavalli. All went well.

I think that these two new brands are a good addition to the portfolio. Let's not forget that the portfolio of Interparfums is very diversified.

We go from very high end Van Cleef, Graff, Boucheron to very lifestyle. We think that this addition and what it brings to us and what we can bring to them is a great fit.

This being said, do we still have capacity after this two brands? The answer is yes, absolutely.

We have the structure, we have the human structure and also the process and the desire to grow the portfolio. We can take more.

We are working on more, and without any guarantees that we'll be able to make an announcement, we are working on very important brands. For us, the evolution of the portfolio is a natural thing to do.

We will edit some smaller brands. We will add newer and more important brands.

We have the capacity, we have the distribution also. Let's not forget that we are present in 110 countries, 120 countries through either directly through our distributors, and there is an appetite for newness.

This is for the portfolio and the new brand. Michel, do you want to answer on the flankers?

Maybe just build a little bit on what you said. I think coming back to our design and our structure, the fact that we operate with two segments, gives us a lot more capacity to manage bigger brands to manage more brands.

We also have our hub in Italy, which is run by US operations. That gives us a third hub, and it gives us the opportunity also to put the right brands in the right places, where they'll have access to people that will have more affinity with the brand.

For example, we will be managing the David Beckham brand out of Italy, whereas we'll be managing the Nautica brand out of the US and, obviously, the Longchamp brand out of France. Again, that's part of this.

Now I think the other thing is we believe there are many brands out there that are underserved and that could benefit from our expertise, as Jean pointed out. We spend a lot of time looking for new opportunities, and we will continue to do so.

The timing, obviously, between the moment when we have conversations and we get brands can take time because, as licenses have an expiration date. If you look at what we've announced recently, even if we have announced the licenses, we don't get them immediately.

That's always a factor, and that continues to play in that fact.

Michel, you're breaking up.

Yeah. Can you hear me?

Yeah.

Yeah. Okay.

Then on the flankers, look, our flankers are really designed to hold share, not necessarily to build share, but they are necessary to drive healthy top and bottom line growth. When a line starts to basically get a little bit more worn out, that is when we go out and design basically new blockbusters.

We have a significant pipeline of new blockbusters in 2027 across all of our key brands, whether it's Jimmy Choo, COACH, Montblanc, Lacoste, GUESS. We have a significant amount on top of the new launches that will be coming.

Really, for next year, what we believe is we still have brands like GUESS, Lacoste, and Cavalli will outperform. Montblanc, Jimmy Choo, and COACH, I think, will be more moderate growth, but will continue to do well, what we believe, with our existing flanker strategy.

Jean?

Very clear. I agree.

We are really looking at 2027 as a very special year because the five biggest brands in the portfolio will have five very important launches for blockbuster. It's quite unusual for us.

It happens once every, I don't know, 10 years. We are gearing up for that.

We'll have a reasonable growth in 2026 with our strategy of flankers.

Very clear. Thank you.

Merci.

Hi, thanks for taking my questions. I guess maybe just to follow up on the gross margin.

I think you guys were originally expecting maybe a little bit less deleverage in the fourth quarter. Maybe if you could just talk about what happened there versus your expectations.

Then also looking to this year, how should we think about the cadence of the gross margin? Should we expect it to be, I guess, down in the first half as we still have the tariff impacts and then potentially up in the back to get to that flat for the year?

Thanks.

This is a perfect question for Michel. [laughter] Michel, go ahead.

Thank you, Jean. Hey, Susan.

Look, the gross margin in quarter four erosion looks pretty scary, I think, when you see the 300 bps. It's a combination of a lot of puts and calls that all basically went in the opposite direction, right?

Sometimes these things tend to neutralize themselves, but in this particular case, basically they were all unfavorable. Really, if you really look at what happened, first of all, you have the tariff impacts, which hit us fully.

There's always a ramp-up with the FIFO and as we buy inventory, it kind of makes its way through. It made its way fully and into the fourth quarter, and that basically represented about two points for the quarter.

The other thing that we talked about is foreign exchange. Foreign exchange helped us on the top line, but really hurt us significantly because a lot of the products that we sell are actually made in Europe.

With the cost base in euros while our sales were basically in USD. Just for perspective, the euro was at $1.07 last year, and it was at $1.16 this year.

That represented about 50% of our sales are denominated in dollars. That also had a significant impact.

The last piece is, it's a little technical, but it's channel mix. As some of our business is with direct-to-retailers with higher gross margin, but also higher A&P.

Some of our business is with distributors with lower gross margins and lower A&P. In the fourth quarter, we had significantly more of our business was through distributors rather than direct-to-retail.

It was about 68% mix of business versus 63%. It's a combination of all those factors, and it's true that it looks a little bit scary.

Overall, going back to next year, we feel that we have good mitigation strategy in place that will enable us to kind of get to roughly a flat gross margin. Yes, we should see some hurts in the first and second quarter, and we should see improvements in the third and fourth quarter as we lap our tariff impacts in the back half of the year, and our cost-saving and efficiency programs actually start to kick in.

Great. Thanks.

That's very helpful.

Thank you,

Hello, Hamed.

Hi, good afternoon, Jean. Just wanted to ask you, you've talked a lot about the top five today.

Is there anything in your other brands that could be a breakout situation for you to get into the top five, or you're not expecting that this year?

This year, breaking to top five, I don't think so. Michel?

No. Hi, Hamed.

Look, I think our largest brands are really our engines of growth. They're diverse, meaning in the various categories, price points, gender.

I think those are really where we're going to get the growth going forward. I think, effectively, the tail end of the portfolio will either be stable with brands like Lanvin and Rochas, or will probably continue to decline.

Then those will eventually bleed out and probably be opportunities for us to consider exits, as Jean talked about cleaning up our portfolio.

Today,

I don't think that the top five are brands that are anywhere above or around the $200 million. The second tier is really below that.

There is quite a difference between the first tier and the second tier.

Not a big driver in the end.

We will add with new license that we are taking. I think that Longchamp has a great potential.

We think that Nautica has a great potential. David Beckham also.

Let's not forget, for example we took Lacoste, we doubled the sales in less than three years. We took Cavalli, we increased the sales 50% in two years.

We know what to do with new brands. I think that there is a lot of potential for the new brand in the portfolio.

Got it. Michel, on the working capital end, there was a considerable amount of

deliver working capital improvements, but we've also done a lot of good work in terms of managing down those inventories. I think we're going to continue to see that, and we're going to continue to see strong operating cash flow productivity going forward.

Great. Thank you.

Thank you, Hamed.

Hi, yeah, thank you for the follow-up. I wanted to quickly ask on the trends that you're seeing across your key regions, by geography, so far in 2026.

Where are you seeing the strongest, whether it's your own demand for your own brands or for the category as a whole, so far in 2026? Conversely, in which geographies have you seen maybe a relatively slower start to the year than you expected?

Thank you.

I'm going to try, but Michel follow this very carefully. What I see is the US is doing well in a very quick short words.

The US is doing well. Southern Europe is doing fine.

Northern Europe is more difficult. Eastern Europe is okay.

This is for the US and Europe. Asia, for us, China continues to be slow, nothing new.

Australia is showing some strong signs of growth. We traveled a lot in the first two months of the year to make sure that Christmas went well.

What I see is, in general, the level of inventory in stores or at distributors is not high, which is a good sign. Sell-through was good.

Nobody's holding too much. The level of reorders is quite strong.

We are not really worried. Michel, I'm sure you can add more to what I said.

We just build on that. Jean said LATAM, obviously, continues to do very, very well.

I think our brand portfolio is really resonating well with the consumers. Then in Asia, while we've had a little bit slower sales, we've fixed our distribution in India and Korea, and I think we'll expect to see some good bounce back in 2026 behind that intervention, on top of what effectively you just said for Australia.

Great. Thank you very much.

Thank you, Aron.

All right. Thank you again for joining our call today.

Before I end the call, I'd like to express my sincere appreciation once again to our teams for their tremendous effort throughout 2025. Our achievements are a direct reflection of our people, their dedication, creativity, and the unique contributions they bring every day, and particularly the agility that we've had to deal with this year with all of the moving pieces that we all are aware of.

If you have any additional questions, please contact Devin Sullivan from The Equity Group, our Investor Relations representative, and thank you, and have a great day.

Thank you.

Thank you.