科蒂 (COTY) 2027财年第一季度财报电话会: 核心高端品牌增长5%

核心要点

• 科蒂表示，2027财年第一季度业绩超出其内部预期，不过管理层强调，2027财年仍是一个过渡年，且业绩复苏不会是线性的。
• 排名前六的核心高端品牌在可比口径下增长5%。管理层估计，若剔除Marc Jacobs美妆的渠道铺货影响，增速将在3%左右。
• 毛利率下降120个基点。其中中东相关的运费和原材料成本拖累约50个基点，其余主要受不利的产品结构以及冗余和过时库存影响。
• 科蒂的大众美妆业务降幅收窄至3%，而2026财年上半年降幅为8%。第一季度CoverGirl净销售额下降2%，相较此前近8%的降幅同样有所收窄。
• 古驰（Gucci）协议总价值达4亿美元，其中包括已预先收取的2.5亿美元。科蒂表示，这笔款项旨在补偿减少一年的利润与现金流、库存以及相关的重组成本。
• 管理层预计排名前六的核心高端品牌在第二季度将再度实现增长，并有望在2026自然年年底前完成战略评估。

关键财务数据

业务与经营表现

在“Coty.Curated”战略下，科蒂正将投资聚焦于六大核心高端品牌和四大核心大众品牌。管理层表示，第一季度推出的四大主力新品——BOSS Bottled Beyond for Her、Kylie Mood Stones、Marc Jacobs美妆以及博柏利（Burberry）Amber Vanilla——的表现均超出预期目标。

Marc Jacobs美妆的新品发布是与丝芙兰（Sephora）联合开发的，采用了精简聚焦的SKU组合，依托达人、内容创作者和口碑推荐进行推广，而非广泛的大众营销。科蒂计划将这些原则推广至其他彩妆品牌。大部分新增的广告与消费者推广投入将投向口碑推荐和达人拓展。

CoverGirl业绩的改善得益于规模更小但更聚焦的创新产品组合、对Simply Ageless和Lash Blast持续的媒体宣传支持，以及包括Showstopper睫毛膏在内的新品。管理层还指出，春季新品的退货率有所下降，这表明终端动销和货架效率均实现提升。

按地域划分，在中国的拉动下，亚洲净销售额增长8%。美国的高端美妆业务重回增长，而欧洲仍是需要改善的主要区域。管理层提到，西班牙和意大利的市场增长较为强劲，但德国和法国的高端美妆市场表现较为疲软。科蒂正优先推动Hugo Boss在欧洲的增长，并已与HYROX达成合作以加强口碑与创作者互动。

科蒂还打算争取更长的授权合作期限。管理层表示，延长Marc Jacobs的授权安排提供了更高的投资确定性，并证实公司将寻求为博柏利（Burberry）和BOSS等核心授权品牌建立类似的长期合作关系。

管理层指引

管理层预计排名前六的核心高端品牌将在2027财年第二季度实现增长。不过，管理层将2027财年定性为过渡年，并提醒称复苏不会是线性的。

中东相关的运费和原材料成本压力预计将在该财年余下时间内持续存在。科蒂目前假定与石油相关的投入成本影响为3000万至4000万美元；若油价维持在每桶100美元以上，达到区间上限的可能性更大。

若宏观经济压力持续或加剧，公司计划优先采取生产力和固定成本控制措施，以期保持对核心品牌的投资力度。科蒂还在评估营销投资回报，并已在多个市场引入工具来衡量支出有效性。

战略评估仍计划在2026自然年年底前完成。管理层还正在敲定成本削减和重组计划，以应对古驰贡献利润流失的影响，预计在相关工作完成后将公布更多细节。

风险与关注重点

• 中东运费成本、原材料支出上升、不利的产品结构以及过剩库存带来的毛利率压力。
• 此前分散的创新产品线所导致的预测与库存挑战。
• 终止古驰授权导致可观的利润贡献流失，以及对冲性成本削减措施的落地执行。
• 德国和法国高端美妆市场环境较为疲软。
• 古驰业务过渡期时间节点的不确定性。
• 科蒂转向聚焦更少品牌、更大规模新品发布以及更集中的营销投入所带来的执行风险。

分析师电话会议问答要点

退出古驰授权：管理层表示，古驰在科蒂品牌组合中的占比处于低双位数水平，毛利率约为70%，广告及消费者推广支出约为29%，盈利能力与高端品牌组合整体表现一致。科蒂指出，利润贡献影响约占古驰净销售额的40%。这项总额4亿美元的协议包括预先收取的2.5亿美元，其架构旨在弥补减少一年的利润与现金流、库存及相关重组成本。

库存与预测：科蒂正在加强销售与运营规划、需求预测以及基于人工智能的预测工具。管理层预计未来18个月至两年内将减少新品发布频次、扩大单品推广规模，以提高预测准确性并减少冗余和过时库存，但表示清理库存仍需时日。

高端品牌增长：若剔除Marc Jacobs美妆的渠道铺货影响，排名前六的核心高端品牌仍将实现约3%的增长。科蒂认为新品将提供进一步的增长空间，包括尚未在美国或英国上市的BOSS Bottled Beyond for Her，以及即将推出的博柏利（Burberry）、BOSS和Etro产品。

AI搜索战略：科蒂正与Brandlight合作，以提高其在AI驱动搜索平台上的曝光度。初步推广集中在排名前五大市场的前六大品牌，优先注重按品牌和市场进行深耕，而非盲目全面铺开。

业绩电话会议完整实录

---

完整财报电话会议逐字稿

管理层陈述

Operator

Good morning, and good afternoon, everyone. My name is Tasha, and I'll be your conference operator today. At this time, I would like to welcome everyone to Coty's First Quarter Fiscal 2027 Question-and-Answer Conference Call.

As a reminder, this conference call is being recorded today, November 5, 2026, at 9:30 a.m. Eastern Time or 3:30 p.m. Central European Time. Please note that on November 4, at approximately 4:30 p.m. Eastern Time or 10:30 p.m. Central European Time, Coty issued a press release and prepared remarks webcast, which can be found on its Investor Relations website.

On today's call are Markus Strobel, Executive Chairman of the Board and Interim Chief Executive Officer; and Soraya Benchikh, Chief Financial Officer.

I would like to remind you that many of the comments today may contain forward-looking statements. Please refer to Coty's earnings release and the reports filed with the SEC, where the company lists factors that could cause actual results to differ materially from these forward-looking statements. In addition, except where noted, the discussion of Coty's financial results and Coty's expectations reflect certain adjustments as specified in the non-GAAP financial measures section of the company's release.

With that, we will now open the line for questions.

Operator

[Operator Instructions] We take our first question from Charles Scotti with Kepler.

分析师问答

Charles-Louis Scotti

I have 3 questions. The first one about the gross margin, which came in slightly below your guidance. This is the only KPI basically that was below. But could you explain what drove this slight miss? And you also provided the guidance for Q1, but not for Q2. Could you share what you have built into your budget for the next quarter and over the full year?

Secondly, thank you very much for providing all the details on the performance of your 6 core Prestige brands and 4 core consumer brands. Does this give us an indication of the portfolio you intend to retain as part of your strategic review? And given the absence of skin care brands from this list, should we interpret this as a potential intention to exit the skin care category at some point?

And lastly, on the impact of the Gucci license exit, I get the impression that there is a very wide range of estimates for the EBITDA impact next year. Even so, I assume that this impact will be relatively mechanical. Could you please help us quantify it more precisely? And I see the consensus on EBITDA [indiscernible] at $680 million next year. Does that seem reasonable to you considering the impact of the license exit?

Soraya Benchikh

I'll take the first part of the question. This is Soraya Benchikh. I'll take the first part of the question and then pass it over to Markus for the second part. Firstly, let me start with the gross margin and where we landed for the first quarter. Our gross margin declined, as you saw in our statement, by 120 basis points. About 50 basis points of this came from the headwinds from the Middle East freight and material costs, and the rest was basically down to unfavorable mix and excess and obsolescent stock.

We're very focused on the controllable drivers that impacted excess and obsolescence stock. And we're working through these through better planning basically to reduce this because we've had a scattered -- a more scattered approach to innovation with smaller innovations that weren't successful. So as we concentrate and you rightly highlighted in our statement that we've concentrated behind our 6 brands, we will shift to fewer and bigger launches, and that will also help us in terms of the planning and having less obsolescence stock.

So this should reduce -- a better S&OP, better demand planning and forecasting and fewer bigger launches will reduce our E&O as we work the inventory down. So these benefits will build over time, but we're very clear on what we can control in terms of the impact on the gross margin.

Markus Strobel

As for portfolio, first of all, we are very pleased with our top 6 brands growing 5% in the first quarter. Still more work to do because we need broader growth, we need faster growth, and we're working on that. But we are pleased with that. And we are also pleased with the progress we're making in our consumer business where decline was 8% in first half of fiscal '26 is now down to 3%, and we're catching up with market share. And on skin care, actually, we have very much improved profitability, and we are pretty happy with that, too.

Now what this means for your question, it is important for us that all of our business units do well, be it Prestige, be it consumer business, be it skin care, and we are on the way of doing that because it will also give us the strategic optionality of the future. So to answer your question directly, I would not draw conclusions from what happened in the first quarter to the future portfolio. That is far too early. We are in the middle of a strategic review. We will commit ourselves to complete it by the end of the calendar year, which is close, but we're still working on it.

And that was Gucci, right? Back to you, Soraya.

Soraya Benchikh

Okay. This is the strategic review or the Gucci? No, Gucci.

Markus Strobel

I mean to say the impact of the Gucci exit.

Soraya Benchikh

Sorry, can you remind me what the impact of the exit? Okay. We're at the moment in the middle of transitioning the Gucci business. I think we've -- the exact timing of it is still to be determined. But in the impact of the Gucci exit, we have reached the deal on Gucci. We are protecting the fiscal '28 cash flow. And in terms of the value, have we communicated the value?

Markus Strobel

Of the deal?

Soraya Benchikh

Yes.

Markus Strobel

Yes.

Soraya Benchikh

No, the value of the impact.

Markus Strobel

No, I can -- yes, we have -- I can step in here on the value of the impact. And we are addressing this at the moment as part of the overall savings package that we're also going to come out with before Christmas. But to give you an indication, and it's the same indication I gave last time, Gucci was a low double-digit part of our portfolio at a gross margin of about 70%, in line with the Prestige portfolio and an A&CP level of about 29% and a profitability in line with the Prestige portfolio.

You can think about that Gucci impact is about [ 40% ] of the contribution of the net sales. So it's a sizable impact that we will have to manage, but we have plans. We're finalizing the plans, and we will be back to you with those plans latest by January because we're going to complete this all by the end of this calendar year.

Soraya Benchikh

And just overall, the agreement basically that we reached with Gucci is to compensate 1 less year of profit and cash flow and inventory and also to fund the restructuring costs that will come out of it. So we've received $250 million upfront and the total value of the agreement is $400 million. I hope that answers the question.

Operator

We'll take our next question from Nik Modi with RBC Capital Markets.

Unknown Analyst

This is [ Clark Leon ] on for Nik Modi. In the prepared remarks, you called out a partnership with Brandlight that's designed to strengthen your visibility across AI-driven search. Can you give us a little bit more color on the measures of success of this partnership? And how you plan to optimize for different AI platforms given that each platform leverages unique combination of inputs to drive product recommendations?

Markus Strobel

Yes. Thanks, Clark. I mean, we are in the process of really modernizing our advertising quite drastically, both when it comes to advocacy, influencer, creator management, and when it comes to AI search. So the collaboration with Brandlight is a key pillar in the strategy. And I'm fully aware that the algorithms and the keywords and the content is different from platform to platform, but this is exactly why we are working with this company that gets us ahead of the game.

And we are concentrating -- this is very important. We want to get this 100% right. We want to make a big impact. That's why we concentrated it on the top 6 brands in the top 5 markets. This is something that we can -- so we'd rather go into depth market by market, brand by brand to get this right to have the right impact and to be in the top of AI searches versus going to broad in the beginning. So depth versus breadth. This is what we're doing with Brandlight.

Operator

We'll take our next question from Sydney Wagner with Jefferies.

Sydney Wagner

Congratulations on the Marc Jacobs license extension and just the success of that makeup launch. Curious to hear what differentiated the launch and which elements are maybe transferable across CoverGirl and the broader color portfolio? And then also just wondering with the contribution from the pipeline fill, would Prestige sell-in still have been aligned with sell-out if you excluded that benefit?

Markus Strobel

Thanks for the question, Sydney. So in terms of success factor, you mean for the makeup launch? Specifically that we can apply to CoverGirl?

Sydney Wagner

Yes, correct.

Markus Strobel

I think there's a couple of principles that make this launch very successful initially, and we're going to keep it up. One principle is that we have co-developed the whole proposition together with Sephora. So being in a kitchen with the retailers is really some strategy that we're going to use in the future on all of our makeup brands going forward because it kind of enables us much more to win with the consumers that frequent that retailer, okay?

So we're going to be much more focused on like which is Gen Z in the Sephora case. And you see the Marc Jacobs proposition really fits to it, thanks to that collaboration. Number two, we have actually a fairly tight SKU portfolio on Marc Jacobs, which enables you to manage your SKU productivity and shelf space productivity much, much better. So this is something we will also apply to other brands. And number three, we will -- we have based this whole brand launch on advocacy, influencers, creators, not on broad-based mass marketing. And I think these are important learnings that we will transfer to other brands because they are very effective in terms of sellout, in terms of success.

And you had a second question, right? Can you just remind me again? Oh, yes, the total Prestige sellout. I got it. Yes.

I -- if you take out -- on Prestige, you take out the Marc Jacobs Beauty pipeline because obviously, the shelves had to be filled in the first quarter. Our total Prestige business would still be up, like our top 6 would still be up, probably more in the neighborhood of 3% than 5%, but still growth.

Sydney Wagner

Okay. And if I can just squeeze one more in there. With the greater share of A&CP now concentrated behind the top 6 brands in Prestige and top 4 in Consumer, where the incremental investment be most visible? And which areas do you expect to have the biggest near-term impact there?

Markus Strobel

I think you will see the biggest impact in -- so we have allocated a lot of the incremental investment to improve our capabilities and our impact in advocacy. So this is all the working with influencers, creators that help us build our brands. And if you see, we have some good news to report. We have on Burberry, the share of influence we have in the category went up by 50 basis points. And in other brands, it also went up, up to 100 basis points. So we are getting much better in the influencer advocacy game, which drives the business today in fragrances and in makeup. So this is where the majority of the incremental investment will go.

Operator

We'll move next to Olivia Tong with Raymond James.

Olivia Tong Cheang

I wanted to ask you a couple of questions. First, if you wouldn't mind sort of expanding on what you see as the mile markers of success in this -- in what is clearly a transition year. I know the performance won't be linear. But Markus, can you help us understand how you gauge whether the plan is proceeding as expected? And Soraya, I'm interested in your thoughts on KPIs as well.

And then specifically for Soraya, we talked a lot about what you can deploy within this organization when we met. And I wanted to focus on forecasting accuracy, specifically on inventory. And how far through the inventory cleanup are you? Because excess and obsolescence is still a headwind even though sales drag was at the more favorable end of your guidance range. And just understanding what's going to change or has changed in forecasting and innovation planning to help that?

Markus Strobel

All right. So let me take the first part of the question. I think we are making good progress in our Coty.Curated strategy. You see this in the results of the first quarter. You see this in the concrete share of A&CP that we have increased behind the core brands. And I always talk about focus and sharper priorities, that's what we're doing. And an important element is also innovation. We have launched 4 bigger innovations in this quarter, BOSS Bottled Beyond for Her, the Mood Stones by Kylie, the Marc Jacobs Beauty and the Burberry Amber Vanilla. And all of these launches are tracking ahead of their objectives, which tells us that disciplined initiative management and fewer, bigger, better is starting to work for us.

So I've seen a lot of good green shoots here. We are not there, and we fully admit that because it takes time to make all these changes stick with the organization to embed them in the organization. But we're on our way. Would we like our progress to be faster? Yes, and we're fully working on it. And we will -- we can give you full guidance how this whole thing is going to look, come together once we complete our strategic review. And once we also complete our savings and the restructuring program to make up for the contribution of the loss of Gucci, okay? So stay tuned. This will come very soon.

Soraya Benchikh

Yes. For -- so thank you for the question. So the forecasting reliability and our inventory -- working through our inventory. I think forecasting reliability, basically, we are working to improve our core tools and processes. We are enhancing our S&OP. We've developed and deployed some AI tools to actually help us with the backbone of our forecast. But I think the crux of the matter has been with the level of scattered innovations that we've had in the past, and we're working through the inventory remnants of this, and this takes time. We are getting more and more granularity and have a lot more visibility than we possibly have had in the past. We had a little spike in inventory because of this, but I'm very confident as we work through it.

And as Markus just said, by us focusing on fewer brands, and having bigger and fewer bets when I look at the cycle plan that we have planned over the next 18 months to 2 years, then we should be able to better forecast our innovations and be able to also course correct with the new tools to ensure that we're not holding on to too much stock. So in short, we're working on it. We're working through the inventory that we currently have, and we will get there, but it will just take a little bit of time.

Olivia Tong Cheang

Got it. Just following up a quick one. If you could give any early thoughts on holiday either in the Western markets or 11/11 in the East?

Markus Strobel

Holiday is just starting. What I can say about holidays, especially in the U.S., is that retailers are starting earlier with their holiday activities, and we're obviously actively participating in these activities because last year, the main activities happened very late in the quarter. And people don't like to wait for that. You want to have more security on your sales and your shipment, also from a retailer perspective. So holiday is starting earlier and earlier. That's the trend that I'm observing this year.

Operator

We'll take our next question from Jonna Kim with TD Cowen.

Jungwon Kim

First one on CoverGirl, you've seen nice improvement there. How sustainable do you think that growth improvement is just going forward? And what are key strategies that you have to improve the performance? And then just the second one, overall in the U.S. Prestige returned to growth in the quarter. How much of that is innovation versus the underlying trends in the core portfolio? And what gives you confidence that you can sustain or accelerate growth from here?

Markus Strobel

Okay. On CoverGirl. CoverGirl is under a program we are calling Color the Future, which is also like part of Coty.Curated. And we are very pleased with CoverGirl almost now catching up with the market in terms of consumption. Net sales are down just 2% this quarter versus almost like 8% in the first half of fiscal '26. And we've seen a gradual improvement quarter-by-quarter. And we hope this will expect -- this will go on like this. What makes us very confident about this is that we have on CoverGirl, we have smaller innovation bundles, but more powerful innovation bundles, better innovation, more incremental innovation, innovation that needs to earn its place on the shelf and not just being thrown out there.

And we already see early success in Q1 because the innovation we launched in spring, we're having actually lower returns than we had the year before. So that means things have been selling out better. Things have been more productive on the shelf, number one. Number two, we are very disciplined to supporting with media our 2 biggest properties like Simply Ageless and Lash Blast to not deviate into smaller things. We're always on for our biggest properties that really drive the business and that are really liked by consumers.

And number three, we have very exciting innovations going in the market right now and innovation coming up. You may have seen the new Showstopper Mascara of CoverGirl, which is a very exciting innovation with a proprietary mascara brush technology and a very luxurious packaging. So sharper bundles, more consistent advertising over time and better innovation makes us confident that we can sustain this trajectory.

On Prestige, I mentioned before that we are pleased with the 5% growth of the top 6 brands and even without the major launch of Marc Jacobs Beauty, which was the main launch, it would still be up 3%. And we have the innovations that we brought out now that looks strong. And these are innovations that I believe have staying power, and we can support as we go on. So we haven't seen the best of the innovation yet, especially if you consider that on BOSS Bottled Beyond for Her, we have not launched it yet in the U.S. and in the U.K. That's going to happen in spring. So still a lot of mileage in that innovation.

And ever since we've put out BOSS Bottled for Her, we have share growth on Hugo Boss in Germany, which is the biggest market for Hugo Boss after a long time. So we see not only shipment and sales growth, but we see sellout and share growth behind these innovations. So we are confident we can keep that up, and we have a fairly good pipeline on Burberry, on Boss, and on new brand Etro that we're going to bring out in the beginning of 2027. So we're fairly confident that our innovation will keep driving our business.

Operator

We'll take our next question from Javier Escalante with Evercore ISI.

Javier Escalante Manzo

Congratulations on the extension of Marc Jacobs. And this is basically my question, Markus. I believe that you managed this business with Procter a long time ago, and it was a very different view of the industry itself and the business model with licenses. I would like to hear your view, your strategic view about this license model, how it's evolving? 40 years to me qualify as a perpetuity.

We see -- we saw something similar with Kering Beauté. Is this where the business is going? Like to unlock co-investment, you need these very long licenses to derisk situations like Gucci happening. Will you seek similar long-term partnerships with core brands like Burberry and BOSS? And I have a follow-up. But this is -- if you can keep it very kind of like strategic, what's happening? This is 40 years is a long time. Tell us what's happening.

Markus Strobel

I think what's happening in the industry is the industry has become -- fragrances has been a growing category for the last couple of years, and it's still growing very nicely. It was just like 5% up globally in the first quarter. So there is a lot of activity. There's a lot of competition, and we launch things, we need investment and we need security that this investment is going to pay off and that we can continue to reinvest to drive these brands. So the longer the license contract, the better it is.

It's not only for us from an investment point of view, but often also better for the licensee because there's a royalty stream that they can bank on in the future. And interestingly enough, a lot of our contracts today are already brands that we either own or we are on almost perpetual licenses. So we feel good about the longevity of our fragrance, and we will be striving with all of our licenses and also new licenses to extend licenses as long as possible and as early as possible so that we all have security to invest.

Javier Escalante Manzo

So Markus, I take your response. I mean, you can agree or not, that, yes, you would be -- your inclination would be to go back to Burberry and to go back to BOSS and say, "We would love to continue the partnership. We are increasing our investment behind it, but we also need longer durations to derisk that investment and make this a true partnership for a long term." Is that a good characterization of what you just said?

Markus Strobel

That sums it up pretty well.

Javier Escalante Manzo

Okay. And then -- so basically, could you tell us what happened to -- because there were a lot of licenses prior. How many licenses are in Prestige? And in your curated approach, would you think that the idea would be to approach these licensees and unwind so that you have a more curated, but at the same time, a more sustainable, say, equity story proposition for minority shareholders?

Markus Strobel

I think when you look at the licensed fragrance portfolio, duration is one question. The other question is also like you want to have a portfolio that goes for the right target groups, if it's Gen Z, Gen X, probably a stronger region in North America. Some brands might be stronger in China, in Asia, in Europe. So you need to have a pretty good balance. What we're also striving for in the -- when we drive brands in the more uber-prestige market, uber-prestige, high prestige, super high prestige, no matter how you want to call it, is a growing part of the business.

We are just increasing our investment behind Atelier des Fleurs of Chloé, which is very successful in this investment -- in this area. We will be launching Etro in spring in the super premium segment. And we're just coming out with the Burberry Prorsum Collection also in the super premium segment. And the marketing in the super premium segment is slightly different than from the non-super premium segment because you've got to be strong in-store. So all of these brands have in terms of curation, have different KPIs that we need to respect. And we think we have a fairly balanced portfolio with world-class licensees and licensors.

Operator

We'll take our next question from Anna Lizzul from Bank of America.

Anna Lizzul

I was wondering if we could discuss more the outlook within the different geographies. There's certainly some encouraging results here from the Americas with improvements in innovation. But it looks like in Europe, a bit of a different dynamic given the softer market consumption there. I was wondering if you could touch on the broader political environment and the impact to sales? And also, how should we be thinking about the cost outlook, just given the pressures you're seeing from freight in the Middle East and what your level of confidence is on delivering on cost management to mitigate this in the near term?

Markus Strobel

Okay. Let me just go on what I see in terms of market development and our development in these markets, and then Soraya can add some color when it comes to costs out of the Middle East and how we're dealing with that. Again, yes, we are pleased with our progress in the U.S. It's the biggest fragrance market. So it's important for us to win. So not there where we need to be, but the progress and we will behind Coty.Curated make this stronger as we move along. We're also very pleased with our development in Asia. We have -- China had a particularly strong quarter in Q1. So our total Asia business is up 8% in net sales.

Europe is the area that we need to focus on fixing. We have good market growth in Spain, Italy. And we have a fairly soft market growth in Prestige in Germany and France. So the market growth in Europe is on average lower than in the other geographies, but it's a big part of our business. So we are very aware of that. We are making progress on Hugo Boss, which is our biggest brand in Europe. I just mentioned the BOSS Bottled for Her launch, which comes fully incremental because obviously, it's a female launch and BOSS is mostly a male brand. And this is our #1 target is to make Hugo Boss grow again in Europe. And I think we're in a good way. We just signed a partnership.

You may have seen that with HYROX in a lot of geographies. We're working together with HYROX in big events, which is going to increase our advocacy, our influencer and creator standing. So we are pleased with that. And then we also curate our portfolio in Europe. Hugo Boss important, Burberry important and the other brands, the regional brands that are important in countries like Germany, we're not neglecting. So we are not there where we need to be in Europe, but we're on the way.

Soraya Benchikh

Okay. When it comes to the outlook and looking at cost pressures, we really -- the Middle East headwinds that I outlined in describing the margin, we expect them to persist for the rest of the year. Currently, what we've built into our forecasting is particularly on oil that has impact our input costs, $30 million to $40 million impact. And we think that now if the barrel price stays above $100, we're going to be in the upper range of this. But generally, with the macro pressures, if they do continue at this level or intensify, we're looking to pull productivity and fixed cost levers first to preserve the room to invest behind the brand.

Productivity is happening on all lines of the P&L, not just on fixed costs. We're also looking at the ROI threshold on our marketing investments. We've rolled out tools to several markets to measure the effectiveness of our spend. So yes, this is a transition year. There's lots of moving parts, but we are going to work productivity really hard to preserve the investment behind our brands because our priority is still to achieve the quality growth that we're pursuing on the top line. I hope that answers it.

Operator

At this time, this concludes -- oh, I'm sorry, go ahead.

Markus Strobel

No, there's no more questions, let me just conclude the call, right?

Operator

Yes.

Markus Strobel

Or do we have more questions?

Operator

We have no more questions at this time.

Markus Strobel

Okay. Okay. Let me just conclude it then. So to summarize it all, Q1 came ahead of our expectations, but it's obviously not where we want to be. We want to be better. Fiscal '27 is a transition year for us. And as we mentioned a couple of times, the recovery will not be linear. Still, we have very encouraging early signs. Our top 6 core Prestige brands grew 5% like-for-like, and we expect growth on our top 6 core Prestige brands in Q2 as well.

We will keep investing behind our core brands, turning stronger performance into cash, and we also reduce debt. And we remain on track to complete the strategic review by the end of calendar 2026. We know that your confidence is earned through consistent delivery, and we will be transparent and accountable along the way. So thanks for joining us today.

Operator

This concludes today's meeting. We appreciate your time and participation. You may now disconnect. Thank you.