Greetings. Welcome to Interparfums' third quarter 2026 conference call and webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. And please note that this conference is being recorded.

I will now turn the conference over to Devin Sullivan, Managing Director at the Equity Group.

Thank you. You may begin. Thank you, John.

And thank you all for joining us today. Joining us on today's call 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 74% 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. Our first quarter and year-to-date results demonstrate the resilience of our global portfolio. and the appeal of our brands and the strength of our team's execution. Growth in North America, in Asia Pacific and Central and South America helped offset challenging conditions elsewhere, while our operational and financial initiatives, brand innovation and targeted investments continued to drive meaningful progress. Our strong balance sheet, disciplined cost and working capital management, and flexible operating structure enable us to navigate these near-term pressures while continuing to invest in our brand and innovation pipeline and deliver value to our shareholders. We are positioned for a strong finish to 2026, and we remain confident as we prepare for major launches across our portfolio in 2027 and also 2028. Now to an overview of our performance. Third quarter sales were stable at 430 million, resulting in 1% growth for the first nine months of 2026. Growth from our European-based operations offset a decline from United States-based operations, following exceptionally strong growth in the second quarter for the U.S. operations. The decline largely reflected delayed gift set shipments, with the associated cells expected to be recognized in the current fourth quarter. Both segments generated positive sales growth through the first nine months of the year. Consolidated sales growth for the first nine months of 2026 reflected strong brand execution and solid performance in select regions partially offset by macro and regional headwinds. North America rose 4%, driven by continued market growth and the launch of several extensions this year, particularly for coach, as well as successful marketing and advertising investments. Asia-Pacific sales increased by 12%, driven by brand initiatives with Coach and Jimmy Choo and expansion of Ferragamo and Guess. Also, our Korean affiliate is performing well after several years of sluggish sales and we continue to capitalize on this large regional market. Central and South America regional sales rose 12% due to the success of women's and men's coach franchises again, and the strength of the Mont Blanc Legend line, as well as robust growth from Jimmy Choo. Conversely, sales in Eastern Europe decreased 15%, driven by operational difficulties in certain countries, which disproportionately impacted Lanvin and Lacoste. The war in the Middle East continued to weigh significantly on our overall results, resulting in a 19% decline in our sales in the Middle East and Africa region. Year-to-date growth was broad-based, and several of our largest brands finished the first quarter with real strength. Coach rose by 15% year-to-date, including outstanding growth of 23% in the third quarter. The brand continues to benefit from its immense popularity in the United States, the strength of the established women's and men's line, and the success of the two new line extensions launched earlier this year. Montblanc fragrance sells return to growth. increasing 12% in the third quarter after flat second quarter sales and producing 8% growth for the first nine months of 2026, driven by the successors of Montblanc Legend Elixir and Montblanc Explorer Infinite launched in the first and third quarter, respectively. Jimmy Choo Fragrance sales rose 5% year-to-date with a brand's sustained performance driven by the continued success of I Want You and Jimmy Truman franchises, supported by several line extensions launched over the past 12 months, including I Want You Midnight, which launched in the third quarter. While Lacoste fragrance sales declined 9% year-to-date, reflecting a strong prior year comparison, and Softer Conditions in Eastern Europe, sales returned to growth in the third quarter up 4%. The increase was driven by original intents, the newest women's launch in the original franchise, setting up for a robust 2027 fueled by major launches. The largest US-based brand rose 7%, driven by the continuing success of the iconic franchise, which was enhanced by the launches of two new extensions earlier this year, as well as extensions launched for the Amore and Seductive franchises. While Donna Karan's DTNY fragrance sales declined 9% during the third quarter, following double-digit growth in the second quarter of 2026, driven by innovation phasing and chipset shipment delays, sales grew nonetheless 4% in the first nine months. Ferragamo fragrance sales declined 22% in the first quarter due to innovation phasing, but were only down 2% on a year-to-date basis. The brand was impacted by challenging market conditions in Europe, which is the core region for the brand. Finally, Roberto Cavalli grew 6% year to date, despite a very difficult microeconomic environment in the Middle East, Middle East being the brand's largest market, and exceptionally high prior year growth comparisons. The brand's growth this year has been driven by the enduring popularity of last year's Blockbuster Serpentine launch, as well as brand extensions released earlier in 2026, and the partnership with Chicco Milan. We have also made significant strides in developing and expanding our newest brands. Under our management, Annick Goutal is regaining momentum in the high end Niche Fragrance Market. This year, we have opened new points of sales and also we opened established boutiques and shopping shops in Paris and resumed international distribution earlier this year. In the third quarter, we relaunched the brand in the US, securing placement in eight Bloomingdale's stores and online. We have also relaunched the brand e-commerce website. We are actively preparing for the launch of brand new fragrances and bath products in 2027 for Annick Goutal. We are also preparing for the first launches of new fragrances for Longchamp and Off-White in 2027. We believe that Longchamp has the potential to become our next 100 million brand and Off-White represents Another step for us into the high-end category. As announced in September, we entered into an exclusive worldwide fragrance license agreement with PUMA, and we plan to introduce a new signature lifestyle fragrance for men and women in the second half of 2027, enhancing our positioning in the lifestyle fragrance market. Together, these additions strengthen our portfolio as the fragrance industry evolves. The category remains healthy and consumers wear fragrance as part of a daily self-expression and accessible luxury, not just for special occasions. Younger customers are entering prestige earlier, layering scents and building fragrance workloads. Much of that discovery happens online. TikTok sparks interest and e-commerce turns it into purchase. We are working with retail partners to win in these channels while protecting our brand positioning. These shifts are especially relevant in travel retail, which represented roughly 7% of our year-to-date net sales. Passenger volumes have recovered overall, but spending per traveler has not tripled to pre-pandemic levels, making conversion more important than traffic alone. Consumers are responding to differentiated assortments, smaller formats, exclusive and experiences that give them a reason to purchase in an airport. We are still underrepresented in the travel retail market, but our expanding portfolio is increasingly suited to this environment because it spans established prestige fragrances, accessible offerings, and higher-end brands, giving us flexibility to address different travelers and markets. While the operating environment remains challenging, we are managing through these pressures with discipline and continuing to succeed by investing behind our brands, supporting our retail partners, and adapting to changes in demand. Our performance in a year with fewer major launches demonstrates the underlying strength and balance of the portfolio. More importantly, the work underway today across product development, distribution, and marketing is laying the foundation for 2027, when several of our largest brands will introduce major new franchise, blockbusters, alongside launches from new brands. So with that, I will now turn it over to Michel Atwood, our CFO, 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 units, European operations and United States-based operations. Echoing John's comments, the benefits of our portfolio model were evident this quarter as growth from our European operations helped offset delayed shipments on gift sets in our U.S. operations. We maintained a strong financial position operated with efficiency and continued to invest in our future. Net sales were flat in the third quarter and were up 1% through the first nine months of 2026. Organic growth continued to be negatively impacted by the lingering headwinds associated with the war in the Middle East and producing headwinds of about 1% in the third quarter and 2% for the first nine months of the year. Our core business remains strong. Our seven largest brands, which represented 82% of our year-to-date sales, grew 6%. Our expanding direct-to-retail channel, which represented 42% of year-to-date sales, grew 8%. And lastly, our top 20 brand region combinations, which represent 82% of our sales, also grew 6%. Looking at profitability, gross margins expanded by 360 and 160 basis points to 67.1% and 66% in the third quarter and the first nine months of 2026, respectively. These increases were primarily driven by favorable segment, brand, and channel mix, as well as lower destruction costs, which reflect our continued focus on inventory and supply chain management. These gains were also partially offset by tariffs, which represented a net additional expense of $11.9 million for the first nine months of the year. Now, we also recognized $16.4 million of tariff refunds in our consolidated statements of income for the nine months ended September 26. This included $14.8 million that was recognized as a non-recurring reduction in cost of sales, A million dollars in SG&A and $600,000 in interest. There is still $1.4 million of unrealized tariff refunds that will mostly make their way into cost of sales in the current fourth quarter. We are not expecting any material additional refunds, and we expect that these savings will not be annualized in 2027. For the full year, we expect gross margins to improve by about 150 basis points with 110 of these improvements coming from the tariff refunds and the balance coming from favorable brand channel mix as well as cost efficiency programs helping to offset the overall higher tariffs. Moving to SG&A, higher SG&A expenses for 2026 resulted from unfavorable royalty brand mix impacts, higher brand marketing investments, Employee-related costs and logistics costs due to supply chain transition and higher costs of transportation. Our A&P spending for the first nine months increased 4% to $194 million or 17.4% of sales compared to 16.9% in the prior year period, reflecting our ongoing commitment to investing in our existing brands and upcoming launches. We are reinvesting tariff-free funds to protect our top-line growth and position the company for a successful 2027. As such, we continue to expect that on a full-year basis, A&P expenditures will approach our long-term target of approximately 21% of net sales. As a result of the factors previously discussed, operating margins were 27.4%, and 21.6% for the three- and nine-month period ending September 30th, respectively, as compared to 25.3% and 22% for the corresponding periods in 2025. Below the operating line, other income and expense netted to break even as compared to a loss of $7.7 million in the prior year period. The improvement was driven by lower total interest expense, higher interest and investment income, and reflecting a stronger RRI on our excess cash and we also had lower losses on marketable securities than in 2025 as well as a marginal gain on foreign exchange compared to a 4.6 million loss in 2025. Our consolidated effective tax rate for nine months ended September 30th was 24.6% compared to 23.5% in the prior year period which was helped by a $2 million one-time gain in the prior period. In the first nine months, net income rose to $142 million or $4.43 per diluted share compared to $140 million or $4.36 per diluted share in the prior year period. Now moving on to our two business segments, I'll start with European-based operations. Net sales in the third quarter increased 4%, reflecting organic growth of 3% and a 1% contribution from new brands, partially offset by a 1% foreign exchange headwind. This produced a 1% increase for the first nine months compared to last year, driven by 2% favorable foreign exchange. Gross margin for both the third quarter and first nine months expanded significantly. Gross margin rose by 480 basis points to 70.8% in the third quarter and 210 basis points to 68.7% for the first nine months. The increase for the first nine months was a result of the price increases, favorable brand and channel mix, lower year-over-year destruction costs of $6 million, as well as close to $10 million of IEPA tariff refunds. These were partially offset by tariffs. which represented an initial expense of $7 million. SG&A grew by 5% and 7% in the third quarter and the first nine months to $116 million and $345 million representing 37.8% and 43.7% of sales respectively. These increases reflected royalty costs outpacing sales due to unfavorable brand mix Higher employee costs to build out our Korean subsidiary and increased logistic costs from supply chain transitions and rising fuel prices. Nine-month marketing expenses also outpaced sales due to product launch timing. Overall, net income attributable to European-based operations rose to $75 million for the quarter, representing 24.6% of net sales compared to 21.6% during the prior year period. For the first nine months, net income attributable to European-based operations rose to $148 million, representing 18.7% of sales compared to 18.5% in the prior year period. Now turning to United States-based operations. For the United States-based operations, following an exceptionally strong second quarter, 2026 third quarter sales declined 7%, on a reported and organic basis, largely driven by supply chain disruptions that resulted in the delayed shipment of gift sets for select brands. These delays represented approximately $10 million in sales, which will now be recognized in the fourth quarter. Excluding this impact, sales would have been flat. Despite the decline, year-to-date sales grew 3%, driven by 2% organic growth and a favorable foreign exchange impact of 1%. Excluding the impact of the delayed gift set shipments, sales would have increased by 6% on a year-to-date basis. Gross margin expanded by 10 basis points from 58.2 to 58.1 in the third quarter and 50 basis points from 59.5 to 59% for the first nine months. Tariff-free friends represented $5 million, as well as lower-than-expected destructions helped offset unfavorable channel and product mix as well as higher ongoing tariff costs. SG&A was flat at $55 million in the third quarter, representing 42.9% of sales compared to 39.7% last year. This was driven by lower fixed cost absorption due to lower sales. For the first nine months, SG&A rose 4% to $151 million, or 44.8% compared to 44.4% last year. The increase was driven by unfavorable brand and mix and royalties on higher logistics costs due to supply chain transitions and rising fuel costs. Overall net income attributable to US-based operations was $15 million for the quarter, representing 12.2% of net sales compared to 15% during the prior year period. And then net income was stable at 39 million for the first nine months representing 11.7% of net sales as compared to 11.9% last year. Moving to cash, at September 30th, our balance sheet remained strong with $240 million in cash, cash equivalents and short-term investments and working capital in excess of $700 million. From a cash flow perspective, accounts receivables were up 20% from year-end. These balances are reasonable based on 2026 sales levels and Seasonality of the Business. Daily sales outstanding were up slightly to 90 days for the first nine months ended in September compared to 89 days in the prior year period. We could continue to see strong collection activity and do not anticipate any issues with collections or of accounts receivable. Our total inventories declined by 3% to 376 million compared to prior year period, translating into a reduction of 16 days of inventory on hand as we continue to drive inventory efficiencies and work to increase conversion of raw materials into finished goods. By effectively managing working capital relative to our sales growth, we have continued to improve our operating cash flow. Cash flow generated from operating activities reached $102 million for the first nine months or 56% of net income up from $68 million or 38% of net income in the prior year period. Operating cash flow also benefited from the receipt of $17.9 million of IEPA tariff refunds, including interest. We continue to expect strong free cash flow productivity for the balance of 2026. Next, I would like to update you on the status of our share repurchase program that was approved in July 2026. The board gave us authorization to purchase shares of IP, Inc., or our publicly traded affiliate, IPSA. During the third quarter of 2026, we invested approximately $50 million to acquire shares of IPSA, our Paris-based subsidiary listed on the Euronext Paris, and increased our ownership from 72.5% to 74.3%. We will continue to advance the program prudently and continue to keep our options open to either buy shares of IP Inc. or IPSA while maintaining our focus on business priorities, strategic investment, and Long Term Value. Now turning to our 2026 guidance and outlook. As outlined in our earnings release issued last evening, despite the weakening euro, we are moderately increasing our sales outlook in 2026 from 1.48 billion to approximately 1.49 billion and maintaining diluted EPS of $4.85. Our EPS outlook includes the full benefit of the 17.9 million in tariff refunds, which has supported additional A&P investment and offset higher than expected tariffs and logistic costs. We continue to expect improved growth in 2027 and 2028, driven by blockbuster launches planned in those years and the development and distribution of our newest brands. Additionally, as disclosed in yesterday's release, we will be issuing our formal full year 2027 guidance on Wednesday, November 18th, a couple of weeks, and we remain mindful of external pressures such as geopolitical risks, the weakening euro, which has moved in the opposite direction, and moderating consumer demands, and potentially inflationary effects from tariffs and supplier pricing. With the flexibility and operational discipline to respond to changing conditions and the strength of our innovation pipeline and global relationships, we are confident in our ability to navigate these headwinds. With that, operator, please open the line for questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you'd like to remove a question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. and the first question comes from the line of Sydney Wagner with Jefferies. Please proceed with your question.

Hi, thanks for taking our question. Can you just share any more color on the supply chain disruption behind the gift set delay and then just wondering if there's any risk of similar timing issues as we start to ramp into the large pipeline next year? And then also in next year, given the heavy launch calendar, how do you think about making sure each brand gets the focus and marketing support it needs so nothing gets shortchanged? And then how quickly are you able to recalibrate or shift marketing dollars or other investment spend toward whichever launches are performing best? Thanks.

Okay. Thank you, Sydney. So you have three questions. So we're going to share between Michel and myself. Regarding the disruption on the gift sets for this quarter, we assembled our gift sets in Turkey and the transit time has increased tremendously. In general, the transit time to move containers have increased a lot. Sometimes it has doubled. To move goods from the U.S. to Italy or from Europe to the U.S. takes much more. So we had a lot of gift sets to assemble and our supplier was behind by, I would say, a good 30 to 45 days. I just came back from Turkey yesterday to make sure that this cannot happen again and we have decided to advance by 60 days or even 90 days are the receipts of gift sets for 2027. So we'll start receiving gift sets for Mother's Day in January, actually December, December, January, and we'll start receiving gift sets for Christmas 27 in June. So in order to, so we're anticipating to solve this problem. Regarding the launches next year, Michel, you want to answer to that?

Yeah, of course. I mean, look, Sydney, every brand, you know, has a strength in a different market. Not every brand is strong. Like, if you take the example of Coach, Coach is very successful in the U.S. If you take the example of Lacoste, Lacoste is more successful in Europe. And so, essentially, as we launch these initiatives, The idea is to really make sure that they're successful everywhere where they're relevant. So it doesn't necessarily mean that they're necessarily competing with one another in some of the respective markets. But yes, definitely, this is part of as we build our budget for next year and we work towards our guidance for 2027. These are the kind of things we're looking at to make sure that we can manage the top line and the bottom line effectively and efficiently.

In terms of shifting the launches... I will add also, Michel, that from a marketing point of view, and even also from a sales point of view, we have some dedicated teams. Internationally, we have three sales forces. They are not all selling the same products, some brands. And from a marketing point of view, we have dedicated teams per brand. So we are not expecting any cannibalization or any conflict, even if we have a lot, a lot of launches next year. Now, you mentioned we will be able to recalibrate our expenses If some launches are more or less successful, definitely, this is a trademark of Interparfums. We absolutely review our spending on a quarterly basis, sometimes on a monthly basis. Michel, you can elaborate on that, please.

Yeah, typically what we do is, you know, there's three moments of truth. The first one is when we present the innovation to our distributor and our retail partners. We get a good sense of the level of engagement and we adjust our investments and prioritize our markets accordingly. The second phase is when we get the first orders and that also gives us a good idea. And then the third moment is when we start getting repurchases because the products are selling off. And usually those are really the three moments when we make decisions in terms of investments and we adjust accordingly.

Thank you, and the next question comes from the line of Adam Adamski with Goldman Sachs. Please proceed with your question.

Thank you, and hello, Jean and Michel. Thanks for taking my questions. Hello, I have two questions. Firstly, on the cost environment, could you please share what sort of input cost pressures do you expect to see during 2027, and I guess what level of pricing actions are you anticipating to take to mitigate these pressures. And my second question is on the broader demand environment. I guess as energy prices remain elevated, I wanted to check if you have seen any changes in consumer behavior across your biggest markets so far in the fourth quarter. Thank you.

I can try cost environment. Michel, you want to try to answer the first part?

Yeah, so look, clearly oil prices have had a significant impact on things that require oil for input. So transportation costs have definitely gone up, and also with the war in the Middle East, transportation routes have been extended, which also is triggering additional costs. We're also seeing higher costs on areas where energy is required, like related to glass manufacturing, for example. or for plastics. What we are actively looking to do at this point in time is to work through cost efficiencies. We have a long list of cost savings programs that we're working on to try to help mitigate some of these inflationary costs. And if needed, we will take pricing. But at this point in time, as you know, we don't really like to take pricing. And we only take it on specific brands and where it really makes sense and where we need to. Jean, I'll let you add anything.

Yes, we reviewed our cost of goods with our packaging team on a regular basis. We have found possibilities to to counterbalance some price increase from certain suppliers. So we are not expecting in 2027 some major cost increase. We are not also, like Michel said, we don't like pricing. We are not also looking to increase the prices in 2027. So that's for the first part of the question. Michel, do you want to start on the second part?

Yeah, the other one is really the demand. Look, demand continues to be, I think, consistent with what we've seen since the beginning of the year, which is the U.S. continues to perform very well. A couple of key markets in Europe are doing well, southern Europe in particular, where we're still seeing some challenges are in Germany and in France. Those markets are actually down. year over year. I would say it's quite balanced and Asia is actually performing very well, not only for us, but generally speaking, Asia has been one of the bright spots. We have addressed some of the challenges we had on distribution. We have a new distributor in India. We have also established our own affiliate in Korea and the business is actually doing quite well in China. It's picking up. So overall, I think we're feeling very, very good about Asia and Latin America as well. Obviously, our two challenging markets are Eastern Europe and the Middle East for the reasons we have been explaining for, I think, quite a bit of time, and we're not really seeing any improvements in those areas.

Yeah, in general, I would like to say that the environment is quite good for fragrances. Fragrance is really the faster-growing segment of beauty compared to skincare and makeup. So, of course, Interparfums being a pure player in fragrance, we should see this growth coming more in 2027 and 2028. Also, what we noticed is that even though some We mentioned in our remarks that at Travel Retail people are looking at smaller size or lower pricing, but I think that the space that is allocated to fragrance either by department store, Travel Retail operator, or even e-commerce is getting bigger. So this is an opportunity for us. We have the attention of everybody. So it is our goal to take advantage of this attention and interest in fragrance. There is also, in terms of economic uncertainty, people used to say that there is a lipstick effect, meaning that in a tough economic environment, women go and buy a lipstick to feel good. There is, I will say today, a new effect. It's a fragrance effect. People in difficult economic environment, people will go and buy fragrance to change their mood and to feel better. So we see that. We see that also from all the e-commerce business that we have. And let's not forget that e-commerce today represents something like 30% of our sales. And as you know, e-commerce people buy the fragrance without being able to smell it. So we are following these trends very carefully. And I think that on a worldwide basis, fragrance will continue to grow.

Thank you.

And the next question comes from the line of Jana Kim with TD Cowen. Please proceed with your question.

Thank you for taking my questions. First, hello, just the first one on how should we just think about the growth in the European and the U.S. businesses in the fourth quarter, given also the strength that we saw on the Europe side in the third quarter? and then second question, just any early holiday reads that you have and what are some of the key product and marketing changes that you're making this year versus last year? Thank you.

All right, I'll take maybe the, I'll take the first one maybe. Hey Jonah, how you doing? Look, European Ops, I think, you know, if you go through our guidance, you know, our guidance basically implies 3% decline for the fourth quarter. There is obviously about two points of FX headwinds. As you know, I think we've all seen the Euro has moved from, you know, being very, very strong to moving, you know, more weekly. So there's about two points of FX in that number. If you look at the two segments, you know, we would expect the U.S. ops segment to be stronger, if anything, because of the $10 million of gift sets that we've shifted from the third to the fourth quarter. So that's kind of, hopefully, gives you that perspective, and you can back the rest out. And then early read on holiday season, I'll let Jean maybe comment on that.

Yeah, early read on holiday season, the U.S. looks strong. It has been strong since the beginning of the year. Sell-through is good. We continue to sell in daily. We deliver daily. We are, of course, waiting for the last five weeks of the year where this is where we, at store level, we do a majority of the sales. But from what I see, from what I hear, we do not see any particular issue.

Thank you.

Thank you.

Thank you. And the next question comes from the line of Susan Anderson with Canaccord Genuity. Please proceed with your question.

Hi. Thanks for taking my question. I guess maybe just to add on or follow up to the holiday question, I'm just curious how inventory is in the channels and if there's still a discrepancy in sell-ins and sell-outs and then just how retailers are kind of ordering for holiday. Are you seeing them be more conservative at all or is it pretty similar to last year?

I don't see a lot of inventory at store level. As you know, everybody now is using AI and sales analysis to carry the right amount of inventory for every specific week. I don't see at all too much inventory, so we continue definitely to ship. November is going to be a very big month, and I think we continue to ship also December. We are not worried with high inventory at retailer's level or high inventory at distributor level. Certain distributors are quite prudent, so they're going to need to reorder now because their inventory is getting too low. And I think also because of the launches that we have next year, people will start the year with a very reasonable inventory in order to start buying into the new lines. So all this is, for me, quite positive.

Okay, great. And then maybe just one follow-up on the AMP spend. I think you said 21% for the year this year. I guess should we think about that as the new benchmark or is it just elevated this year because you have the tariff refunds and then also you're investing ahead of the big launches next year? I guess maybe just if you could give a little bit of color there. Thanks.

Yeah, Susan, I would expect the 21 to be the, you know, that's the norm. That's what we've been working towards. And I expect that that will be the case also for next year. It could actually even be a little bit higher. We're still working through the 2027. I think the priority really for us is continuing to grow at the top line and protect the business. We're seeing that very clearly on our core brands. If we didn't have some of these smaller brands or some of these regions dragging us down, we'd be posting much better and much stronger numbers. So I think we're feeling pretty good about the ROI of these A&P investments. And we expect that they will continue to be high going forward. Will they increase significantly? Probably not. But, you know, when we feel that there's room, we will continue to invest. The priority really remains growing the top line.

Okay, great. Great. Thank you so much, you guys. Good luck this holiday.

All right. Thanks, Susan. Thank you.

Thank you. And the next question comes from the line of Ahmed Khorasan with BWS Financial. Please proceed with your question.

Hello, Ahmed. Hi. Hey, Ahmed.

So first question was, just if you could, a little follow-up here. You were saying that you're not seeing much stocking activity from retailers and distributors. Do you think consumers are pre-buying for the holidays or are consumers just out there, they like what you're selling and they're naturally just buying it?

It's difficult to answer. We cannot analyze at this level. Honestly, Amanda, I would prefer, I mean, we are in contact with retailers while we contact with Amazon and TikTok that are great indicators for us. TikTok Shop is quite... are optimistic. They are looking at a very strong November sales. Amazon also. Are people buying in advance? I think they are doing the same as last year. I don't see too many changes in the habit. Michel, you have maybe a... Yeah, I mean, I agree, Jean.

I would say maybe that the one consumer behavior we're seeing more of is, you know, in the past, a lot of people were buying fragrances as a gift for somebody else. I think we're seeing a lot more people buying fragrances for themselves. And I think that has been a trend that is, you know, it's a gradual trend, but I think we're seeing more of that. And I think we're seeing as a result, we're seeing more buying opportunities. People are not just buying during holiday season necessarily. But other than that, I don't think we're seeing an earlier holiday season, if that's your question, Ahmed. A holiday seems to be happening pretty much on the same timeline as we usually see it, which is the run-up to Thanksgiving and really the last five, six weeks of the year.

Okay.

Very good. Thank you.

Thank you, Ahmed. Any other questions?

Yes, our final question comes from the line of Fraser Donlon with Barenburg. Please proceed with your question.

Hi, Jean and Michelle. Thank you for the presentation. Just two questions on my side. So, Coach has been super strong this year. Obviously, fashion is working well and fragrance on your side. Like, how do you see... the roadmap from here and almost the potential for that brand given the selling seems super strong on, let's say, not major launches this year. And then the second question was just about Abercrombie & Fitch and Hollister, which I think you said are dropping out of the portfolio in 2028. Could you just remind how much you think about the revenue impact from that? Thank you very much.

Yes, Coach definitely is a shining star. We are lucky because fashion is doing extraordinarily well. The name recognition is getting even bigger outside of the U.S. So I think that even if Coach is having some great numbers, the potential for growing Coach is very big. As we said before, Coach, Jimmy Choo, Montblanc, I guess our largest brands will be growing faster than the rest of the portfolio, which is good news. And Coach with the existing franchise, the new flankers and the new Blockbuster could definitely grow double-digit. So that's for coach. ANF Hollister, Michel, you want to answer on that?

Yeah, absolutely. Look, ANF and Hollister, we've had some pretty good visibility in terms of where this is going to land, and we have had a lot of time to plan for it. And part of our strategy to bring in new licenses like David Beckham, like Nautica, and like Puma are to effectively refresh the portfolio, bring in brands that we believe are larger, have more potential for growth. And so, yes, that's part of the portfolio swing that we're expecting to materialize over the next couple of years on the portfolio. This represents, I mean, look, ENF and Abercrombie together represent less than, you know, 4% of our, you know, it's like 2% to 3% of our sales. So it's not going to be uber material, but it will weigh down on our growth the year that this comes out.

Yeah, we still have 2027 and 2028. Exactly. By that time, maybe other brands will be signed and the newer brands, like Longchamp, like Off-White, like Puma will have been in the market for more than three years. So we are not too worried. And you know, when I look at the portfolio, I think that it's very important to edit this portfolio of brands. Of course, we want to keep the bigger one and that's why we will We will extend the license whenever we can. We did it recently with a guest, but we will definitely do it with all the others. But it's important to sometimes let go of the one that we think has less potential. We don't need to carry 24 licenses. We are doing right now what, Michel? 80% of the business with a 7 or 8 license?

Exactly. More than 80% with the top seven.

Perfect. Thank you. Thank you. Thank you very much.

Thank you. This now concludes our question and answer session. I would like to turn the floor back over to Michel Atwood for any closing comments.

All right. Well, thank you, John. Thanks, everyone, for joining our call today. With this being said, this is our final conference call of the year. So, Jean, I would like to extend our warmest wishes for a safe and joyful holiday season and a healthy and fulfilling year for our employees and everybody who's been able, our stakeholders and everybody who's on the line today. If any have additional questions, please contact David Sullivan or Conor Rodriguez from the Equity Group. These are our investor relations representatives. Thank you and have a great day.

Thank you. Thank you, everyone.

And thank you, ladies and gentlemen. That does conclude today's teleconference. You may disconnect your lines at this time.