[Operator Instructions] Our first question comes from Steve Powers with Deutsche Bank.

Great. I guess if we could start on profitability, just a little bit more detail, if you could, on what has improved since May that's allowed you to upgrade the fiscal '27 margin outlook. And within that, if I could, in the quarter, we're seeing growth appear increasingly diversified, but profitability still seems very concentrated. So as we think about the year ahead, the time line for Makeup, Fragrance, Hair Care and maybe the Americas to contribute more meaningfully to that profitability improvement?

Thank you, Steve. So essentially, we had a strong '26 beat. We had a strong '26 beat, so we wanted to flow that to the next year. In addition, as we have completed our PRGP work, we see further opportunities for SG&A optimization, which we are flowing through, and that has been a consistent message on nonconsumer-facing investment optimization all through the year and that is included in the improved outlook. What is also included in the improved outlook is continued investments to fuel growth because that is ultimately the way to continue driving better leverage, better value creation. And then, of course, we are also looking at executing the savings we have on PRGP ramp up through the year. So frankly, this then goes to the full run rate will even be reflected in '28. So we'll exit with a stronger '27 with most of the savings coming through, but the full run rate will come through on '28 as well. Now related to your point on the diversity or the concentration of a profit, agree, we have strong profitability on Skin Care. We have strong profitability in Asia. And it is -- and we are improving profitability in all our segments. However, you are right that we have opportunity to further improve profitability on categories like Makeup, Hair Care and Fragrance as well and which is a clear part of our plan to improve profitability as we go towards further from the 13.5%, which is the top end we have given. So over the next coming years, you should continue to see clear sequential improvement in all segments, both geographic and category.

Your next question comes from Lauren Lieberman with Barclays.

Great. I thought there was very big news today in the earlier August reporting, so thank you for that. I wanted to acknowledge that. And also all of the great transparency throughout the presentation was really helpful. My question is the risk of being a bit nitpicky is organic sales guide for '27 of 3% to 5% growth versus the comment that expectation to accelerate organic sales growth because obviously, at the low end, that would not be an acceleration. So just wanted to understand that low end. And then more specifically, it does feel like there's a degree of organic sales growth that is still very tied to timing and dynamics around travel retail shipments. So it feels that areas of the business, particularly Hainan retail has really stabilized and I guess that inventory levels there have as well, given the visibility you seem to have into first half shipments. But just some commentary on, I guess, overall sort of stability in inventory levels on particularly Asia TR and the degree to which that influences the organic sales outlook.

Yes. Thanks, Lauren, and thank you for your comment. Really appreciate it. Very proud of what the team has achieved throughout like fiscal '26. When it looks at the -- talk about the outlook, obviously, as the Beauty Reimagined strategy lays it out very clearly, we want a much more diversified growth across geography, across categories, across channel going forward. So you're going to see us continuing to build on the strengths, obviously, of China and the Asia Pacific, including travel retail geographies. But we're also clearly laying out an acceleration on the West, especially with North America, where we are laser-focused on pushing like retail. And you saw obviously, in the quarter 4, some very strong results in the mid-single-digit growth. So obviously, this is really balanced in the way we do it. And to complement like what Akhil was saying, we are obviously going to continue to accelerate like Skin Care and Fragrances. Fragrances, like I said in my prepared remarks, we expect Fragrance to continue to be outstanding performance in fiscal like '27, but obviously, with a clear intent to accelerate the performance on Makeup. And the performance of Makeup will be broad-based from a geography standpoint, but with a clear focus also on the West, especially in North America again. So I think you have to see the outlook for us. We're always looking at the 3% to 5%. But as we, in fiscal '26, delivered the top end of the guidance, our goal is to just like look at acceleration over fiscal '26. If you look at the midpoint, there will be 100 basis point improvement. If you look at the top end of the guidance, will be 200 basis point improvement that mainly will obviously come like from the West. So that's where I would like look at our overall guidance from a sales standpoint for fiscal '27. Then your second part of your question, when you took -- talk about like TR shipment, I want to be very clear, and I reiterate what I've said like many, many times, we are shipping to demand. So our inventory is in a very good place in travel retail. Now I'm very happy to report another good news in travel retail for the first time in 3 years. For the month of June and the month of July, we are back into positive territory for travel retail global, led by Hainan that is in double-digit growth in the fourth quarter. That was also there in Q3, but we are seeing great momentum in Korea, in Hong Kong, in Southeast Asia in travel retail. And obviously, like travel retail West, the America is strong and it's helping to offset some of the headwind that we are getting to the Middle East. So the retail is strong in travel retail, and we are managing inventory to the demand. And as I said also many times, travel retail represents about 15% of our business, and we intend to just keep it in line with industry standards. I hope it answers your question, Lauren.

Our next question comes from Chris Carey with Wells Fargo Securities.

Great. I wanted to follow up on this from a bit of a different angle. But just number one, you talked about faster organic sales growth in the front half of the year. Can you just dimensionalize that? Would you be above your guidance range in the front half or more at the higher end? And then secondly, just on this travel retail comment, I mean, I think the question is well taken in that travel retail shipment is -- are these 2 words that we've come accustomed to, representing volatility over recent years. And clearly, you just said that you're shipping in line with consumption. But can you just give us a sense of how you've evolved the management of the broader Asia ecosystem when you go to market and how you're thinking about managing the Mainland China business versus the travel retail business in Asia such that you can deliver more consistent growth in both areas over the course of the year?

Well, thanks, Chris. So let me just take on this question. When it looks at the outlook for fiscal '27, and we said it in our prepared remarks, we have a stronger pipeline of innovation in the first half versus the second half. And it was by design, obviously, because when we laid out Beauty Reimagined, we said we were going to just accelerate our innovation. And obviously, like Skin Care alongside every other category was a key focus, like, for us for acceleration. So you're seeing a lot more coming in the first half, which led to believe that, obviously, we will be higher in terms of growth in the first half than we would be in the second half, okay? And that will help to guide somehow the construction of how we are looking at the year between first half and second half and deliver the 3% to 5%, like, guidance. So hopefully, that just gives you a little bit flavor on how to look at it. When it comes to the TR visibility, we have a very clear system in place today. Like you said, on the management, first of all, we had a complete transformation of the leadership team in travel retail, with a new leader in travel retail managing, like, from different places around the world. And we have like 2 key regions, one for the East and one for the West. The West being managed out of like London for us and the East managed by -- from like Singapore, and we have like new talent. Like I said in my prepared remarks, also we've really accelerated experiential retail in travel retail. So you are going to see us doing a lot more activities in the East and in the West. We've accelerated the deployment of our brand in the West, especially led by the Fragrances. You're seeing a lot more visibility on Jo Malone, on TOM FORD, on KILIAN, on Le Labo, on many, many airports in the Americas and EMEA. And when it comes to the management of the East, we have some system in place that allows a clear coordination of activities between Mainland China and travel retail China. And that is done in conjunction between Joy Fan, who is the leader of China; and Matthew Growdon, who is the leader of APAC and travel retail, where they meet regularly to coordinate launches, activities, how do we go at 11/11 versus 6/18 between the travel retail and in the local market. So it's a very sophisticated model that allows us to really making sure that we're managing the total China ecosystem and we are looking at it from Mainland to travel retail, alongside also with the Chinese travelers around the world in a very coordinated model that allows us to delight the Chinese consumer wherever they are. And as you say, to continue to ship to the demand wherever it is.

Our next question comes from Filippo Falorni with Citi.

I wanted to ask about the Mainland China business. Clearly, the category has improved and you called out the significant improving market share as well. In terms of brand rankings around the 6/18, 11/11 and you mentioned even the #1 share position in Prestige Beauty. So I was just wanted to get your perspective of what has changed in the market, both at the category level and at your execution that has really transformed this business and put in a consistent top line growth. And what allowed you to kind of like consistently gain market share in the market, both in terms of like innovation changes, marketing, social media presence, what has been the big change that has allowed this very impressive turnaround in China?

Thank you, Filippo. Fantastic question on China. And the first thing I would say is like I'm really proud of the work that the team in China is doing across all the brands. But the most important thing is understanding the fundamental of the market. And the market is very, very strong. It's in high single-digit growth on the Prestige Beauty. So we're seeing like China growing again. And as, thank you for pointing it out, we've had some fantastic results, we've been gaining market share in every single quarter in every single category. So now we are on to sixth consecutive quarter of market share gain in China. And in the last quarter, what is very impressive, we have 11 brands in retail sales growth, of which 6 are in double-digit growth. And that's very important for you to just note because as we committed a diversified growth around the world, we also committed to a more diversified growth within the region and within the channel where we operate. So today, we have obviously continued to have very strong performance on like La Mer, but we have a very diversified growth across now 6 brands in double-digit growth and we have like brand Le Labo that are like growing in excess of 50% like during the year, so which is like fantastic. The other thing to answer your question of why we are winning in the market is like remarkable, despite the remarkable execution from the team. We're also accelerating innovation in China for China. Now 30% of our innovation around the world is coming from China for the China market, thanks to the ramp-up of all the activities we have from our R&D center in Shanghai. So this is also allowing us to be even more tailored to the need of the Chinese consumer in Skin Care or in Makeup. And then I would say we have -- the last thing I would say is in China, we've always been first movers to new channels. So like today, obviously, we started years ago with the department stores that continues to be strong. We accelerated our freestanding stores that allows us to like accelerate our experience. But obviously, in online, which is now over 50% of the business in China, we are like having great success with Douyin. We have now 11 brands in China on the Douyin platform, and we are performing extremely well there. So overall, the market is strong. Our business is even stronger than the market. And the last thing that I would say in China, we are now less promotional. We've really pushed the valorization in the market that have really allowed us to just like recruit new consumers and allowed us to -- thanks to the valorization to continue to sustain strong investment in the market to just like capture the Chinese demand.

Our next question comes from Peter Grom with UBS.

I was hoping to get some perspective on '26 and just kind of taking a step back and just looking at things -- where things came in relative to your expectations and kind of just the drivers of the upside, right? Organic sales came at the high end, operating margin well ahead of the midpoint if we go back to where guidance was a year ago. And I'm curious if you've embedded similar levels of flexibility as it pertains to kind of '27 guidance, particularly as it would seem you're exiting the year with some really nice momentum on the top line and the majority of the benefits related to PRGP are still to be realized.

Thank you, Peter. Yes, so I'll start and Stephane can add here. Essentially, look, it has been what Stephane just said, it has been outstanding execution against our priorities overall on all of the pillars. So of course, we started the year with a guide of 9.4%, 9.9% on margin, and we significantly beat that through the year. That is really the outstanding execution of PRGP, first of all. Secondly, the continued progress we made on reducing, therefore, the nonconsumer-facing. Thirdly, which allowed us to fuel the business, which is seeing as the much more diversified growth in quarter 4. So we are pleased with the fact that North America has come back to positive results this quarter on net sales as well as our retail has been building. So those have been positive surprises from a cost and top line perspective. And at the same time, China business, consistent share growth quarter-over-quarter in one of the most competitive market and that too by a significant distance, as we just said, that has been a positive. And then travel retail returning to positive retails as we are exiting the year. So these are all positive surprises. And also on gross margin, we delivered 150 basis points. When we entered the year, the environment was quite uncertain with the tariffs, et cetera, being announced, but we really executed very well against that and mitigated a significant part. And so our beat on gross margin as well has been very strong. As we look to '27, of course, the outlook is 3% to 5% on sales growth, but it's a much more diversified growth, as Stephane just said. North America should accelerate, Makeup should accelerate. While East will lead growth, West will accelerate from its prior trends. We will keep building savings through the year, ramping as we execute, which should also give momentum into '28. And then what -- of course, when we give guidance, we consider various things which are controllable. So what we are demonstrating is execution against controllables is very, very strong, and we typically exceed that. Of course, what we are also keeping in mind is the macro environment, which we don't control, so we keep enough scenario planning to get to our goals into multiple different paths. So that's generally been our posture. And I'll pass it over to Stephane to add.

Yes. No. I think, Peter, I'd just like to add to what Akhil said, I think what you have to take into consideration is the way we enter fiscal '26 and the way we enter fiscal '27. We're a very different company. The business is really clearly transformed. We are really operating at a very different speed than we've ever done before. And we are back growing. And that's the most important thing because the streamlining of the cost has given us a lot greater flexibility to manage sales volatility. So to your question, are we building scenario planning for sales volatility? Absolutely, as we did it in fiscal '26. And we are also realizing a lot more sales leverage. And I think when we started the year from 0% to 3% and we are finishing at the top end of the guidance, that is giving us a lot of leverage. And next year to 3% to 5%, let's say, we just delivered the midpoint or the high point of like the guidance. This is going to give us a lot more sales leverage. And that allows us like continue to accelerate. So the model and the discipline that we've built in fiscal '26 is now fully in place clearly on a very different company on how we are operating for fiscal '27 and is going to allow us to replicate and accelerate, frankly, what we've done in '26 -- in '27.

Our next question comes from Cristian Rios with Bernstein.

Congratulations on a fantastic quarter. I was hoping, can you break down the 5% organic sales growth in North America in the quarter into how much of that was sell-through or consumption? And I think there was mention of timing of shipments. Can you talk a bit more about what that was, the magnitude of the impact and how it connects to previous or next quarter growth? Or any other puts and takes that you think we should understand? And as we think about next year, what are you most excited about in terms of channels or retailers or maybe even brands in North America?

Yes. So thank you, Cristian. I think North America for us is a key focus. It's been a key '26. And you see there was one slide in our prepared remarks that shows the sequential improvement quarter-over-quarter on our performance finishing on a high note in Q4. Now obviously, from a timing of shipment, no, we are like -- this is retail driven. Now obviously, there will -- there's a change on activities like Prime Day from Amazon was in July the prior year. It's in June in fiscal '26. So there's obviously -- the market has been like growing faster in the last quarter, especially due to the June activity. But the good news is that as we've been able to accelerate as the market is accelerating at the midpoint. And the one thing that I would say is the most important thing for us and the most important indicator in '26 was to make sure that we could resume with volume share gain because it is an acquisition game. We needed to just make sure that we reignite the recruitment wheel. It's exactly what we've done. And alongside, we are seeing brands like The Ordinary continuing to having outstanding performance. M·A·C, thanks to our deployment in new channel like Sephora, not only we've been able to regain the #1 ranking in Q4, but we've been able to gain market share also in Q4, which is quite outstanding and a very quick turnaround that we will continue to accelerate in fiscal '27. But I could go on, Bobbi Brown is also in market share gain in Makeup. We've had exceptional performance on brands like Le Labo that are not in the track data because it's mostly a direct-to-consumer brand, but also like TOM FORD, Prestige Fragrances that is doing very strong. Let alone online where we know and we have clear data showing that we are gaining market share. So that is actually showing the outstanding execution that our team are doing in North America, and I really believe that we are going to be able to just continue to do that. And actually, the early signal of the months of July that we are getting are extremely strong for The Estée Lauder Company (sic) [ Companies ], led by Clinique and M·A·C, thanks to great activities that we are doing on social commerce and also like, obviously, the continuous deployment of M·A·C into more growth distribution. So I feel very confident. And frankly, there's nobody more impatient than me to just drive the growth in North America, and the entire team is really focused in '27 to take on the great momentum that we have had in Q4. So as far as what we are excited in North America, in China, we're excited about all the channels. We are exciting (sic) [ excited ] where the consumer is, and our objective is to delight the consumer wherever we can create the experience that it is online, that it's in specialty multi, that it's in our own direct-to-consumer as well as in department store where we can create right experience. So I think there is great momentum. We have great innovation behind our brands. We are excited. I mentioned it, a new exciting launch between -- behind the Lauder brand in Fragrances called Glimmer that we are signing -- shipping as we speak. We have great, exciting new launches on Clinique, Skin Care with a new smart cream serum tapping into like PDRN. So we have a slate of innovation that is really going to allow us to just like maintain, if not to accelerate our growth in North America in fiscal '27.

Our next question comes from Rupesh Parikh with Oppenheimer.

So just going back to your commentary that expectations for a return back to growth in the Makeup category. Just curious the bigger opportunities you see and then just confidence in being able to get back to growth in Makeup.

Yes. We are -- we have some of the leading brands in Makeup starting with M·A·C. So we are clearly planning to accelerate that business. On Makeup, of course, we play with Clinique, which is the #1 brand in Makeup in the U.S. We have M·A·C. We are also addressing the challenges we have had on some of the other brands in the past. So what we are exiting is a stronger performance on Makeup. And Makeup being our #2 category, we continue to believe that it will not only improve on sales trends, it will also improve as was -- question was asked earlier on profitability with all of the work we are doing. And that would be a critical part of continuing to build a broader, more diversified sales growth and also profitability in this segment.

Yes. And I think just one addition to what Akhil said, Rupesh, is, obviously, we are also and making sure that we are deploying our Makeup brand in the fast-growing channel where the Makeup consumers are shopping, mainly specialty multi as well as like social commerce. One of the reasons of the strong acceleration that we are seeing in M·A·C is the entire ecosystem that we've created from social commerce to specialty multi, department store and freestanding stores that are now all working in conjunction just to really activate the recruitment wheel and the retention wheel across the brand. So I think what was missing as part of our arsenal was to be everywhere where the consumer is from a recruitment and from the retention. Now that we have the right platform from a distribution standpoint, and then we are adding an acceleration on innovation like this outstanding lip stain that M·A·C launched has been like a blockbuster in many markets around the world. We believe that now we have the right recipe for us to just like accelerate in Makeup. At the moment, frankly, where we see in many markets, the Makeup category also starting to just accelerate especially like in China, we're seeing like acceleration in the U.S., which has been, as you know, the category pretty flattish for quite some time like since the exit of COVID. So this is also for us the right moment to accelerate. And the last thing I would say in Makeup, we are continuing to also rationalize the distribution where we don't have the right profitability and the right productivity per door. And we've closed a significant amount of freestanding stores in M·A·C around the world as we are pivoting to more growth and profitable channels.

Today's final question comes from Olivia Tong with Raymond James.

Great. I wanted to talk about margins because it's an exciting time as margins continue to move in the right direction. So as you think about expanding from about 200 basis points this year, where do you see the biggest opportunity? It seems like there's more opportunity for efficiency gains as well as delayering the organization. And if so, where -- which areas do you see the most opportunity? And then I also wanted to ask about cash uses now that you've taken transformational M&A off the table. PRGP is now closed. So how do you think about the deployment of cash from here?

Thank you, Olivia. So look, we are pleased with the 320 basis points of margin we expanded this year, which was coming from 2 big drivers, gross margin and the progress on nonconsumer-facing, which includes, as you pointed out, employee cost reduction and all of the infrastructure rationalization we have done, including real estate and so on and so forth and the work we have done on procurement. As we look forward on the guide that we have given of 150 to 230 basis points margin expansion, as we mentioned, that gross margin would be a modest driver, but a large part of the driver here will come, as you pointed out, from all of the SG&A, which includes employee cost and the announcement we made of the total restructuring that continues through '27. So what we do see a large opportunity even after this year's guide, which is what I said earlier that as we complete our execution, we will be exiting the year with full benefits starting to hit in the later part of the year, which will then have the full annualized benefit in '28. So that flow-through in margin should continue to come in '28. Of course, at 13.5% margin, we still believe we have runway to go further driven by that. Consumer-facing, we have continued to invest. And as Stephane has talked about, all of the work we are doing on media, one, from a better placement and better procurement of media, there should be runway there as well. But of course, right now, our focus is to build our brands, drive growth, drive share, but that would be another leg to add down the road. So it started with gross margin, passes to SG&A, but we'll have the full 360 approach to continuing to build margin. So that's what we believe, and this should have at least a good flow-through even in '28. Now on cash uses, our stated mission has been to deleverage the company beyond any other points on M&A. So we are continuing to use cash to drive down our debt. We have debt coming due later in the year, which we will -- for all practical purposes, we would continue to pay down. Of course, we are making sure that we -- our CapEx is fully funded to drive consumer CapEx. Secondly, of course, other one is dividend. And then thirdly is deleverage. And at the same time, we will look for any other opportunities to drive a better return on our cash. But first priority right now is to continue to build a stronger balance sheet and we made solid progress this year with the cash performance.

Yes. The only one thing, Olivia, that I would add to Akhil is, obviously, look at it as with the streamlining of our cost and the efficiency that we are building across like the company, it allows us to realize a lot more sales leverage. So as we are accelerating growth, you will see the flow-through in profitability and our ability to continue to accelerate. And this is also why to reinforce the earlier question that was asked, why we felt comfortable to raise our preliminary view from a margin standpoint and even go beyond on the top end at 13.5%, which is 50 basis points higher than our preliminary view that we have in the last quarter. So sales leverage now is at our disposal to be able to continue to invest in the business to fuel growth, but at the same time to continue to just increase in a sustainable way our profitability over time.

Thank you. This concludes our allotted time for Q&A today. If you were unable to join for the entire webcast, a playback will be available at 1:00 p.m. Eastern Time today until October 30. Please visit the Investors section of the company's website to view a replay of the webcast. I would like to thank you all for joining and wish you a good day.