Good day, everyone, and welcome to the Estée Lauder Companies' Fiscal 2018 Fourth Quarter and Full Year Conference Call. For opening remarks and introductions, I would like to turn the call over to the Senior Vice President of Investor Relations, Mr. Rainey Mancini. Please go ahead, sir.

Good morning. On today's call are Fabrizio Freda, President and Chief Executive Officer; Stephane de la Faverie, Global Brand President of Estée Lauder; and Tracey Travis, Executive Vice President and Chief Financial Officer. Since many of our remarks today contain forward-looking statements, let me refer you to our press release and our reports filed with the SEC, where you'll find factors that could cause actual results to differ materially from these forward-looking statements. To facilitate the discussion of our underlying business, the commentary on our financial results and expectations is before restructuring and other charges, the impacts of the recently enacted U.S. tax law, and other adjustments disclosed in our press release. You can find reconciliations between GAAP and non-GAAP figures in our press release and on the Investors section of our website. During the Q&A session, we ask that you please limit yourself to one question, so we can respond to all of you within the time scheduled for this call. And now I'll turn the call over to Fabrizio.

Thank you, Rainey, and good morning, everyone. Fiscal year 2018 was an outstanding year for our company. By focusing on strategic priorities and investing in our multiple engines of growth, we delivered double-digit sales and earnings per share gains in all four quarters. In constant currency full year sales rose 13% nearly twice the rate of global prestige beauty and diluted EPS increased 24%. This was the ninth consecutive year of records sales and one of our best performances in the last decade. Coming off an excellent fourth quarter, we expect our strong growth to continue in fiscal year 2019. Our success last year was broad based with higher sales in every region and every major product category which is consistent with our long term growth strategy. What made our performance particularly strong were our over achievements in Asia and in Skin Care globally. We strengthened our hero franchises with new products, expanded in fast growing brand building channels and invested in the areas that touch younger consumers. Our growth was all the more remarkable given the challenges we faced. Competition intensified from new brands and business models and those closures and weak traffic affected certain brick-and-mortar department stores in the U.S. and UK. On a macro level, Brexit and other tensions caused the greater political and economic volatility. Our results speak to the soundness of our strategy, the sustainability of our business, and the resilience of our organization. Sales climbed globally in virtually all our brands. La Mer reached an exciting milestone. Its net sales topped $1 billion for the first time. We have now four brands in our portfolio whose net sales have crossed the billion dollar threshold and each grew globally. Estée Lauder had a stellar year achieving record global sales and growing an outstanding 22% in constant currency, demonstrating its huge worldwide appeal. Estée Lauder generated strong growth in Skin Care and Makeup and across markets and consumer groups. Stephane will elaborate in a few minutes. Clinique's growth was driven by solid growth of Skin Care gains particularly moisturizers, its largest subcategory and its hero franchise Moisture Surge. Clinique had strong gains in many emerging markets and in Asia where its hero franchises grew more than 30%. Clinique continued to diversify its distribution and TMall became its largest door in Asia. We are upbeat about Clinique's outlook. Its Skin Care nutrition program this year will be especially strong and leverages strengths of growing consumer interest. M.A.C delivered global growth, which was supported by strategic investment in advertising to accelerate the brand in fast growing areas of Asia and travel retail. This winning strategy is similar to the approach we took with our Estée Lauder brand several years ago which is paying huge dividends for the brands now. M.A.C sales in China more than doubled and its first full year on TMall it was the top selling prestige makeup brand. Although M.A.C continued to struggle in North America, we actively began turning it around by expanding it further in specialty multi retail in the U.S. and Latin America strengthening its innovation program. We are optimistic about M.A.C's future expected to deliver stronger global growth in fiscal year 2019. Many of our small and midsized brands grew sharply and several are on track to become billion dollar brands within the next few years. We grew our recent acquisitions with successful new products and expanded distribution which attracted new consumers. We increased our focus on innovating in Skin Care, believing there will be a resurgence in the category. As consumer demand grew we were ready with products for different concerns and age groups and products with instant benefits which made the compelling visuals online. Our effort resulted in Skin Care being our fastest-growing category fueled by La Mer, Estée Lauder and Clinique, as well as Origins and GLAMGLOW. Maximum categories growth came from Asia Pacific and travel retail where we gained share. Many of our brands also grew in North America. La Mer creative digital content and authentic storytelling helped to build greater awareness which led to share gains in every region and China, importantly in markets where we can accurately measure more than half of La Mer consumers were new to the brand. Estée Lauder's strong sales boosted its global rankings to number one in prestige skin care and number two in total prestige beauty for calendar year 2017. Our makeup business remained healthy with Tom Ford and Estée Lauder leading the growth along with M•A•C in Asia. Our newness brands Too Faced and BECCA expanded internationally, mostly in specialty multi retailers and Too Faced opened its first freestanding store which is located in London. With improving retail trends and greater presence in direct to consumer channels Too Faced grew 22% in fourth quarter and with strong innovation it is well positioned to post strong results globally in the year ahead. Our luxury artisanal [ph] brands continue to drive our fragrance growth led by Jo Malone London and Tom Ford which introduced successful scents in open new doors. Jo Malone solidified its position in the UK, its home base where it gained share. Just last week Jo Malone launched on TMall and sales during the first few days have been very strong. Combined, our newest brands Le Labo, Frédéric Malle, and By Kilian contributed already approximately one quarter of the total category growth. We have a neater growth in Hair Care as we tapped into the natural wellness trend with its plant based product. Successful launches and hero franchises such as Invati played a key role. Our innovation was concentrated on fewer, bigger launches in the largest subcategories with a focus on supporting our best selling hero franchises. This strategy produced terrific results. Sales from our top 30 new skin care product and initiative rose more than 30% from the year before. We continue to expand in the fastest growing prestige channels, travel retail, online and specialty multi. In travel retail, in calendar 2017 we gained share across all categories, became the top ranked beauty company in Asia Pacific airports and reinforced our global leadership position in Skin Care makeup. Our successful travel retail strategy benefited from higher global passage and traffic. Chinese travelers are important shoppers in the channel and their increasing travel helped in its growth across our portfolio. Once again our online business strived, with our own brand side retailers, size and third party platform all growing that we have more than 430 million visits to our brand dot com sites this year and these sites have become more than just point of sales. They are also influential editorial [ph] platform and equity building vehicles. During the year we opened 200 new online doors globally and launched ecommerce inside new markets. We truly are a global enterprise and nearly three quarters of our markets generated gains. As sales outside North America had expanded our international business has become one of our best growth engines, now accounting for nearly 70% of our sales. Emerging markets around the world have been a significant growth vehicle. Sales in our emerging markets jumped 24% and accounted for 15% of our total business. We intend to continue to invest in many of these markets in fiscal year 2019 laying the ground for our continued growth as the purchasing power of the middle classes continue to increase. Our Asia-Pacific region generated the fasted growth led by an acceleration in China and the resurgence in Hong Kong. Our China business grew rapidly in every category, every channel and in virtually every brand. China net sales well exceeded $1 billion for the first time. The country's prestige beauty growth is benefiting from heightened interest from Gen Z a millennial consumer with considerable spending power and an appetite for high quality luxury products and we tapped into that opportunity. For example, more than 40% of Chinese consumers who were new to La Mer are in their 20s. We had mixed results in Europe, Middle East, and Africa with strengths across developed markets like Italy as well as several emerging markets like Russia we gained share in Western Europe and in Eastern Europe, but sales fell in the Middle East where our results were also affected by our decision to adjust inventories of multiple brands. The UK market slowed as Brexit affected consumer confidence, which primarily impacted certain brick-and-mortar departmental freestanding stores. We increased investment in new winning channels. Online was a bright spot driven by retailer.com. M•A•C was our first brand on Asus [ph], an online company that caters to younger consumers. It was followed by GLAMGLOW, Too Faced and others. Prestige beauty was buoyant in North America and in each major category we had brands that gained share in the U.S. La Mer in Skin Care, Estée Lauder and Too Faced in Makeup and Jo Malone and Tom Ford in fragrances. We have been building our distribution towards faster growing channels and the scales started to tip in our favor. Our incremental sales in specialty multi and on our brand.com sites were greater than the decline we experienced in bricks-and-mortar department stores. Our business trend in U.S. department stores overall showed improvement from the year before and our sales on their online sites are rising rapidly. However, total U.S. department stores sales declined mainly due to the liquidation of Bon Ton. Over the past two years we have successfully offset the loss of more than 150 million in annual net sales in North America from the closing of Bon Ton, Sears [ph] Canada and other department store doors. Despite these challenges we had growth in North America in fiscal year 2018. Our Clinique brand was the most impacted by the loss of Bon Ton and those in our other department stores doors. Nonetheless, Clinique recouped a large portion of the business by staying in touch with consumer emigrating them to other Clinique doors. In total, Clinique North America retail sales increased by focusing on fast growing channels, product categories and new consumer segments. Our strategic investment in advertising spending on all our brands helped get our products noticed. Now each brand has a digital presence and digital accounted for nearly two thirds of our ad spending, up sharply from about 50% the year before. People are the heart of our company and we announced our benefits to be loyalty and attract the best talent. We expanded our benefits around adoption, child and elder care, an awarded a special bonus to employees who don't receive equity-based compensation to recognize their terrific contribution. As we realign the company focus to strengthen our position in the areas that will lead future growth, we hired and developed talented employees with the skills needed in these new areas. We also began offering learning and training opportunity online through our LinkedIn Learning helping our employees build competencies in a variety of areas. We are proud that our commitment to our employees is being recognized. Our company was named the top rated workplace by the job site Indeed and recognized by Forbes as one of America’s best employees for women. Fiscal year 2018 gave us a lot to celebrate, but we are now focused on the future. To that end, we updated our 10-year compass which identifies industry and demographic trends. These insights confirmed the strategic focus areas where we have invested to build growth and where we plan to continue over the next few years including skin care, online, traveling consumers, digital marketing and omni-channel retail. We will continue to seek growth globally among a more diverse and growing middle class, especially in growth markets like China and in our U.S. home market. We are the number one prestige beauty company in the U.S. which still remains the largest market and where we are focused on regaining share. We continue to build distribution in high growth channels and leverage better data and analytics to tailor our product assortment by retailer and by specific doors. This helps us address hyper local demand by having the right products on the right shelves with relevant messages. We forecast continued growth in our EMEA region with strengths in both Western Europe and emerging markets along with a return to growth in the Middle East. Our innovation pipeline is powerful and focused on hero franchises elevated packet [ph] and new technologies deployed against key sub categories. We expect this without our growth become more balanced across our four product categories. Fast moving technology innovations continue to enhance the luxury beauty experience and we are advancing features like Augmented Reality and voice assisted shopping which are gaining favor among consumers. Behind the scenes, we are focusing on improving our capabilities in data and analytics. Using cutting edge tools and techniques we are connecting data and insights to measurable actions across our brands. Now I want to update you on the review of certain testing related to product advertising claim support that we discussed in our last call. The review is ongoing and based on the review to date the company does not believe that this matter will be material. In addition, we are closely watching the evolving global issue concerning tariffs and trade including Europe and China important markets for us where we intend to remain focused on our long-term growth. We believe we will have some flexibility to address the potential impact of existing and proposed tariffs and remain committed to satisfying global consumers with our quality products. Our strategy is solid has been validated by our updated compass and should allow us to continue to deliver strong topline and double-digit EPS growth over the next few years. Our growth will be supported by Leading Beauty Forward which is projected to deliver greater savings than originally planned. We will invest a portion of the savings in area driving the next stage of growth including digital advertising, social media, talent acquisition, technology and other capabilities. At the same time, we are driving efficiencies throughout the organization and leveraging growth enhancing our profitability. Tracey will give you an update in a few minutes. Global prestige beauty is exciting, dynamic and fast growing with a proven successful strategy and brands and products that are coveted around the world we expect to continue to drive industry leading sales and gain share. I want to thank my leadership team and all the company global employees for truly remarkable results even in the midst of ongoing challenges. We look forward to delivering another year of strong top and bottom line results. I am happy now to introduce Stephane de la Faverie, Global Brand President at Estée Lauder, who will discuss our iconic brands, stellar year and the strategies that have kept it relevant to the new generation.

Thank you Fabrizio and good morning everyone. I joined the Estée Lauder Company over seven years ago and was honored to become the Global President of the Estée Lauder brand two years ago. Today 72 years after its founding our flagship brand is not only the largest in the company but one of the fastest growing as well. Estée Lauder is stronger than ever and demonstrates that our authentic roots make the brand relevant for women of all ages, backgrounds, and ethnicities around the world. The brand strategy which is fully aligned with the company's 10-year compass has resulted in accelerating growth. The fourth quarter of fiscal 2018 was the fifth consecutive quarter of double-digit sales increase culminating in growth at nearly 22% in constant currency for the full year. The brand gained share in virtually every market around the world. The main element of our success our focused on hero products, digital marketing, and social engagement and fast growing channels. Our winning strategy is also concentrated on the turnaround of our home market, the U.S., and the acceleration of our business as we serve and delight emerging middle class Chinese consumers around the world. The first element of our strategy is our focus on hero products which has reinvigorated the brand, generated strong double-digit growth in both skin care and makeup globally. Skin Care outpaced the growth of the overall brand for the year. The brand's largest franchise Advanced Night Repair has been growing high double-digit in virtually every market and channel. The July 2017 launch of Advanced Night Repair, Eye Matrix Concentrate has been a resounding success and helped solidify our leadership in the eye treatment subcategory. Everyone of our top-five skin care franchise is growing and addressing different consumer benefit and needs. Makeup grew at about the same rate as the overall brand enabling Estée Lauder to gain share globally largely driven by our Double Wear foundation franchise. The collection has been supported by newly activated communications around a wider range of size and form such as Cushion Compact to address the needs of consumers worldwide. Our success in the recruitment and retention of all consumer age groups is evidence that our strategy to modernize the brand has paid off. Today Estée Lauder consumers are about one-third millennial, one-third Gen X and one-third ageless. This mix puts us in a strong position to continue to win in all prestige channel and in our key product categories around the world. In addition, the brand global spokesmodel celebrates women of all ethnicity and ages to help the Estée Lauder brand win in virtually all markets. Our newest face is a Anok Yai, a Gen Z who was born in Egypt of the Sudanese decent. She joins Millennial actress Yang Mi from China and our longstanding American model Carolyn Murphy to name a just few. The second part of our strategy is our focus on being a truly digital first brand. About two-thirds of our global media spend is in digital and social helping us to reach new consumer on platforms such as Instagram, Facebook, Weibo, WeChat and TalkTalk [ph]. We are partnering with major digital and social players worldwide to leverage improved consumer insights and data to enhance our storytelling to connect in a deeper way with consumers and build campaign with even stronger returns on investments. In addition, we have activated the use of influencers. We have super influencers including our latest celebrity model Karlie Kloss and [indiscernible] our Digital Native Global Beauty Director. We utilize influencers in many markets and leverage our beauty adviser, who have been trained to become what we call Estée micro-influencers. Taken together, the voice of the brand has been unleashed in a more authentic and powerful way. The strategy has helped us to better connect with younger consumer at the point of search and decision making which is done on social and digital platforms. And third, we continue to evolve our distribution in fiscal 2018 over 50% of our business came from fast growing channel, which includes specialty-multi, online and travel retail. In specialty-multi our expansion into Ulta in the U.S. has allowed us to reach younger consumers, many of whom are new to the brand. Today half of our consumers are Ulta millennials. Our global online business grew 60% and represent more than 10% of our total sales and even more than 20% in the U.S. and China. Online is growing from our own brand.com sites, retailer.com and third party platform like Tmall which allows us to connect with new consumers every day particularly in smaller cities where we have less physical presence, which makes our consumer reach extremely efficient. We are also experiencing a rapid acceleration in travel retail where our Tmall doing exceptional work to support the desirability and the equity of the brand by connecting with consumers throughout their journey, starting at home into the airport and at their final destinations. From a geographical standpoint, I am proud to say that net sales in every regions are growing, including a solid performance in North America for the year. In fiscal ’18 the Estee Lauder brand passed 1 billion market retail for the first time in the U.S. and gained share in Makeup in 10 out of the last 12 months. In the U.S. we’re the number one prestige beauty brand in over 350 department stores and the number one brand on retailer.com nationally. In addition we continue to hold top ranks in skin care and age specialist and foundation sub categories. Thanks to our laser focused strategy on hero franchises, online acceleration and the rapid diversification of our distribution, we gained over 1 million new U.S. consumers who are younger, more diverse, and more affluent than the average existing consumer of the brand. We believe we have successfully turned around the U.S. business and are poised for continued growth going forward. The Estee Lauder brand now generates 80% of its business outside of North America and we've been particularly successful in Asia Pacific. We continue to be the number one luxury beauty brand in the region led by exceptional performance in China. For the second consecutive year we were the only brand ranked as Genius by the L2 Research Firm which placed us as the top brand in Digital IQ. These performances are fueling our already strong brand equity and desirability with Chinese consumer around the world. In addition we continue to serve Chinese consumer with a deep understanding of their needs and diversity by creating relevant products and communication uniquely designed for them. Estee Lauder is also outperforming in the U.K. growing 5% in the context of the flat prestige beauty market. Our Double Wear liquid formation is the top luxury beauty SKU in the market. We also have strong momentum in our markets in our Europe and Latin America region, thanks to a consistent global strategy. Last but not least, as part of our Leading Beauty Forward initiatives, our teams around the world have been relentless in reallocating resources effectively to focus on consumer engagement activities while delivering increased profit margin to the company. We reduced certain selling costs by increasing productivity in profitable distribution channels, rationalizing non-profitable [indiscernible] and accelerating our distribution shift to less costly models. Our promotion expense has also been significantly reduced as a percentage of net sales. As a result, we dramatically increased our advertising spend especially in digital and in addition we continue to price in line with inflation and further improve our gross margin. In summary, thanks to a strategy aligned with the company, we believe our success is repeatable and sustainable. Our great progress in fiscal ’18 was largely driven by same-store growth, no distribution expansion, as well as an increase in repeat repurchase from existing consumer, high new consumer acquisition, especially among younger ones and strong creativity and innovation. All of it taken together makes the Estee Lauder brand a sustainable and profitable growth engine for the company and at the same time demonstrates that big brand can grow fast while building desirability and exclusivity around the world. I would like to personally thank my extraordinary boss Jane Hertzmark Hudis, my amazing team, and my colleagues around the world for their commitment to the iconic Estee Lauder brand and to our success. And now I will turn the call over to Tracy.

Thank you, Stephane. And I believe many of the elements of the strategy you just articulated are already inspiring the plans of our other big brands. My commentary today excludes the impact of restructuring and other charges and adjustments including those related to our Leading Beauty Forward initiative and the new U.S. tax legislation. All net sales growth numbers are in constant currency unless otherwise stated. Starting with the fourth quarter, net sales rose 12% to $3.23 billion compared to the prior year, all regions grew with the largest contribution coming from Europe, the Middle East and Africa. Net sales in the region rose 16% led by a strong double-digit increase in global travel retail. The momentum achieved in the travel retail channel reflects a 6% rise in international passenger traffic, share growth in all travel retail regions, as well as double-digit gains across virtually all of our brands. In addition to travel retail, the EMEA region also benefited from double-digit sales growth in Greece and India as well as solid growth in Italy, Russia and Benelux. This growth was partially offset by weaker results in other markets notably the Middle East, the U.K. and Germany. Our business in the Asia-Pacific region rose 24%. Continued momentum in China and Hong Kong, both with strong double-digit growth largely drove these results, which was broad based across brands, product categories and channels. We also achieved solid sales growth in Japan, Australia and Thailand. Net sales in the Americas grew 2%, Latin America rose 8% led by double-digit increases in Mexico and Colombia which were partially offset by a sales decline in Brazil. Sales in North America rose 2% as growth in Canada brand.com and specialty multi retailers were partially offset by continued softness in department stores including certain door and retailer closures as previously discussed. The continued rebound in Skin Care led product category growth this quarter. Skin Care sales grew an outstanding 26% with strong contributions to growth from innovation within key hero franchises such as Estee Lauder, the Estee Lauder brands Advanced Night Repair franchise, La Mer's The Moisturizing Cool Gel Crème and Clinique's dramatically different and Moisture Surge franchises. Origins and GLAMGLOW also contributed to the growth and all regions grew Skin Care sales. Net sales in Makeup grew 2%. Many of our brands reported higher sales. Estee Lauder benefited from the continued success of Double Wear foundation, Tom Ford Lip and Eye products drove growth in Asia-Pacific and travel retail, Too Faced launched Super Coverage Concealer and extended shades and its Born This Way Foundation line and La Mer launched its Luminous Lifting Cushion Compact in Asia. These gains were partially offset by declines from M•A•C and Clinique. M•A•C's outstanding grow in Asia in travel retail was offset by continued weakness in the U.S. and U.K. in bricks-and-mortar as well as inventory rebalancing in the Middle East. Sales of fragrances grew 9% led by the continued strength of our Luxury and Artisanal brands. Jo Malone’s limited editions Blossom Girls collection was popular in Asia in travel retail and a variety of Tom Ford fragrances resonated across all regions. Le Labo continued its strong comp door growth and expanded its reach in the Middle East, Australia, Europe and travel retail. Our Hair Care sales rose 6% primarily driven by Aveda's launch of Invati Advanced, the professional color line Full Spectrum Demi+, and the relaunch of Cherry Almond Shampoo and Conditioner. Bumble and bumble’s expansion in specialty multi retailers also aided growth in the category. For the quarter, our gross margin improved 20 basis points compared to the prior year due primarily to favorable pricing and mix partially offset by higher obsolescence and the higher cost of some new products. Operating expenses increased as a percent of sales by 110 basis points primarily reflecting the significant planned increase in advertising support behind digital activities partially offset by efficiencies in selling operations. As a result, operating income rose 3% and operating margin decreased by 90 basis points. Diluted EPS of $0.61 was 20% above the prior year and grew 11% in constant currency. Earnings per share for the quarter included $0.05 of favorable currency translation. Now let me cover a few highlights of our full-year results. Net sales grew 13% of which incremental sales from our most recent acquisitions contributed approximately 2 percentage points, our gross margin decreased 10 basis points as favorable manufacturing costs and foreign exchange transactions were more than offset by the full-year impact of the fiscal 2017 acquisition. Operating expenses as a percent of sales improved 80 basis points primarily due to greater efficiencies in our selling model. We strategically redeployed these savings into digital advertising, social media and influencer outreach. Our full-year operating margin rose 70 basis points to 16.6%. This margin included 40 basis points of favorable currency translation and 20 basis points of dilution from the fiscal 2017 acquisitions. Our Leading Beauty Forward initiative and ongoing cost saving programs contributed more than $270 million in savings which helped offset the strategic investments we made to support future growth. The changes in our P&L reflect the accelerated restructuring of our cost structure to increase our flexibility to both reinvest in areas of profitable growth and to mitigate risk. Our effective tax rate for the year came in at 22.3%, an improvement of 540 basis points over the prior year driven by excess tax benefits on share based compensation and the lower U.S. statutory rate. Net earnings grew 31% to $1.7 billion and diluted EPS rose 30% to $4.51. Earnings per share included $0.20 of favorable currency translation and at constant exchange rates grew 24% for the year. In fiscal 2018, we recorded approximately $193 million after-tax or $0.51 per share in restructuring and other charges for our Leading Beauty Forward initiatives. We are making remarkable progress on the program and have identified additional opportunities with existing initiative as well as new ones. We plan to approve specific initiatives under Leading Beauty Forward through fiscal 2019 and complete them by the end of fiscal 2021. We now expect to incur charges of between $900 million and $950 million before taxes in aggregate over the life of the plan. Through this plan, we've established more efficient and effective shared services and procurement organizations which are generating savings and allowing us to invest in critical areas of the business for future growth. We now expect the annual net benefit before taxes to range from $350 million to $450 million which represents an improvement in the cost benefit ratio. This will afford us greater flexibility to meet our profit objectives while also continuing to invest for sustainable growth and manage additional risk. We also recorded three items related to the new U.S. tax legislation which we consider non-recurring. These charges the combined impact of which is $427 million or a $1.14 per share are provisional and are expected to be finalized within the one-year window allowed by the Tax Act. Moving on to cash flows, cash generated from operations jumped an impressive 43% to $2.6 billion, reflecting our outstanding earnings growth, improvements in our working capital management, and the benefit of certain one-time items related to tax refunds. We utilized $629 million for capital improvement primarily for consumer facing counters and gondolas, retail stores and e-commerce support, as well as supply chain improvements and IT. We’ve returned cash to stockholders at an accelerated pace in fiscal 2018. We repurchased 6 million shares of our stock for $759 million representing a significant increase versus the prior year. We paid $546 million in dividends reflecting a 12% increase in our dividend rate, the ninth consecutive year of double-digit dividend growth. In total cash returned to shareholders rose 45% compared to last year. Overall fiscal 2008 was an outstanding year for our company. Our sales growth of 13% far exceeded our long-term target of 6% to 8% annual growth in constant currency and was enabled by our improved insight in analytics on where to invest. We delivered 50 basis points of organic operating margin growth in line with our objectives. Importantly, we did so well making strategic investments to build capabilities and support our brands for the long-term health and sustainability of our business. We delivered double-digit growth in earnings per share in line with our long-term targets. We saw 12 day improvement in inventory days to sell. We recruited new talent and invested in our existing employees to align our capabilities to future needs. So looking ahead, Global Prestige Beauty growth have been exceptional in recent years and we do expect it to rise in the range of 5% to 6% annually over the next few years, barring a significant political or economic macro event. Our goal is to grow at least 1 point ahead of the industry with possibly 1 percentage point of that sales growth contribution coming from acquisitions over the next three years. Our Leading Beauty Forward initiative was launched two years ago is providing the fuel to innovate, accelerate changes to meet future demand, and engage effectively with consumers. We continue to target average annual margin improvement of approximately 50 basis points and double-digit EPS growth over the next three years. Capital investments have historically averaged between 4% and 5% of sales annually. We do expect this level to increase to between 5% and 6% per year over the next three years as we invest more to increase the capabilities and capacity of our supply chain, enable enhanced consumer experiences with our new technology and invest in our facilities to optimize some of our work spaces. We are dedicated to pursuing working capital improvement to free up cash particularly in inventory. Our progress in this area has been slower than expected. This was partially due to the complexity and shifting geographic mix of our business. Our strongest growth is coming from geographies further from our manufacturing facilities, increasing inventory and transit time. We now plan to reach approximately 165 inventory days to sell by the end of fiscal 2021. Now let's take a look at our expectations for the fiscal 2019 full year and first quarter. We are implementing the new revenue recognition accounting standard beginning in the first quarter of the fiscal year. We will adopt the new standard on a modified retrospective basis. There are cumulative adjustments to retained earnings. This method does not require us to restate prior year periods. However, throughout fiscal 2019 we will provide a bridge between the new standard and the old one. The guidance we are providing today reflects the new standard, but we have also bridged to the comparable growth expectations we have for our business. The new rule will impact where we reflect certain costs in the P&L along with the timing of revenue recognition. As such, our sales and profit growth, as well as margins, will be affected. Additionally, our initial revenue deferrals based on this implementation will impact fiscal ’19 results. The main impacts are the costs for certain promotional goods such as samples and testers will be reclassified from advertising and promotion to cost of goods. Certain payments to customers such as the cost of in-store demonstration will be reclassified from selling, general and administrative expenses to a reduction in net sales, and the timing of our revenue recognition will be impacted primarily by customer loyalty programs and certain promotional goods provided to retail customers. The overall effect on fiscal ’19 is expected to be a reduction of net sales and increase in cost of goods and a reduction in operating expenses. This will negatively impact sales growth for the year by approximately 1 percentage point, decrease gross margins by 260 basis points, and decrease operating margins by approximately 30 basis points. Earnings per share growth is expected to be negatively impacted by 2 percentage points for the year due primarily to the change in timing of revenue recognition on some promotional programs. The changes in the timing of revenue recognition for certain promotional goods will also cause variability in our quarterly sales this year. We anticipate that revenue deferrals in the first half of the year will begin to be recognized in revenue in the second half of the year. For the year net sales are forecasted to grow 7% to 8% in constant currency and excluding the impact of the new revenue recognition accounting standards at the high end of our long term goal. Pricing and targeted expanded reach are expected to each contribute approximately 2 points to our growth and the strength of our existing business will account for the remainder. We expect growth to continue to be driven by Asia Pacific, the beginning of a turnaround in the Middle East and improvement in North America. All major product categories are expected to grow with the greatest contributions from Makeup and Skin Care our two largest categories. Currently translation is expected to turn unfavorable in fiscal ’19 as the dollar strengthens. Based on June 30 spot rates at 1.16 for the euro, 1.31 for the pound and 6.63 for Yuan we expect currency translation to negatively affect reported sales for the full fiscal year by about two percentage points. We expect to continue to achieve cost savings through indirect procurement, AMP [ph] effectiveness and selling costs within our ongoing programs and from Leading Beauty Forward, which are expected to increase to approximately $350 million this year. Some of the savings will be reinvested in increased digital marketing and advertising to support strong growth as well as for the expansion of our smaller brands. Cost savings provide us with the fuel and the flexibility to both invest more in capabilities, advertising and brand expansion as well as deliver margin growth. As we mentioned on our second quarter call, additional provisions of the U.S. Tax Act become effective for us in fiscal 2019. We now expect that the fiscal 2019 effective tax rate will be approximately 24% which includes the impact of a lower U.S. statutory rate as well as our current estimates related to the provisions from the Tax Act that go into effect this year. The impact of the accounting for stock based compensation is not included in our estimates. Diluted EPS is expected to range from $4.62 to $4.71 before restructuring and other charges. This includes approximately $0.20 of dilution from currency translation. In constant currency and with comparable accounting we expect EPS to rise by 9% to 11%. In fiscal 2019 we expect cash flow from operations of approximately $2.4 billion, slightly lower than fiscal ’18 due to the prior year one time benefits for tax refunds and the first installment of the toll tax. Capital expenditures are planned at approximately $835 million or 5% to 6% of sales as discussed earlier. Our sales in the first quarter are expected to rise 9% to 10% in constant currency using comparable accounting for revenue recognition. Currency translation and the accounting change are each expected to negatively impact growth by 2 percentage points to 5% to 6% reported including both of these items. We expect first quarter EPS of $1.18 to $1.21 including dilution of about $0.04 from currency translation. EPS growth in constant currency in comparable accounting is forecast to rise by 7% to 10% for the first quarter. In closing, we are clearly pleased with our outstanding results in fiscal 2018 and are excited about the momentum behind our strategic initiatives. Global prestige beauty is a fast moving and competitive industry and the macro environment grows more volatile by the day. Our ability to adapt in this rapidly changing land landscape is a testament to our sound strategy and to our amazing people. That concludes our prepared remarks. We will be happy to take your questions at this time.

The floor is now open for questions. [Operator Instructions] Our first question today comes from Erinn Murphy with Piper Jaffray.

Great, thanks good morning and a lot of great content in those remarks. I guess my question first is on the U.S., you called it out being positive in the fourth quarter, can you talk a little bit more about the dynamics that you're seeing between the department stores and then the growth in particular you've been seeing within specialty multi and online? And then Tracey, as you think about the guidance for fiscal ’19, what are you assuming for the growth rate within the Americas? Thank you.

So on the U.S. we do see improvements, mainly coming from the strong retail.com of our department stores and we are encouraged also to see brick-and-mortar business in North America department store doing better than last year. However, in addition remember that we are facing the liquidation of 250 stores of Bon Ton that have significantly impacted our business. For perspective, Bon Ton just in the fiscal year ’18 was for a $68 million in net and as I said we had to face the closure of the equivalent of $150 million in net of department store doors in the past two years, so this has impacted, but despite that we have been offsetting this with the improvement in retail.com of department store and by the very good performance that we see in specialty multi and in our online sites. So we are committing, we're really committed to continue collaborate with our department store and with our specialty multi-traffic to continue drive traffic. And also I want to say that we have and the Leading Beauty Forward, we have restructured our sales force and the new sales force has just been deployed early July and we have reduced the paper work and administration activity resulting in a 70% increase in consumer facing activity and product served and more tailored to each store starting this August. So we are pretty positive on what we're doing to turn around the business in the U.S.

And as it relates to the Americas for fiscal 2019, we're expecting low single digit growth.

Our next question comes from the line of Dara Mohsenian with Morgan Stanley.

Hey, good morning. So first off Tracey, can you give us the impact to earnings from FX if you use spot rates today, I’m estimating another $0.08, $0.09 of earnings impact for the full-year, does that sound like it's in the ballpark and then hopefully that's just the clarification question, so hopefully that doesn't count as my question. The broader one Fabrizio, I wanted to get your thoughts on the potential for tariffs on the U.S. beauty industry in China, you mentioned specifically you've assumed some impact in your fiscal 2019 guidance, so I was hoping you could be more specific there, and are you basically sort of assuming an impact just from already announced plans or are you assuming there may be some factors that emerge that are transparent today either directly or indirectly on consumer spending whatever it may be that have an impact on your outlook for fiscal 2019? Thanks.

So on the currency, I'm not sure I picked up exactly on your question, but we expect a negative currency impact this year of $0.20 and obviously we experienced a positive currency impact in fiscal 2018.

Yes. On the tariffs, so the tariff in China has not been yet implemented, it is only a proposal. So first of all it is not clear if the proposed tariffs will be implemented or not. But for information currently less than one-third of our products that we sell in China are currently originated in the U.S. On the other side, if tariff were applied we will be also impacted from imports of components from China into the U.S. The other thing to consider is that we have 80% gross margins, so the impact on tariffs on this kind of industry will be less onerous than what happens on commodities. We believe we can mitigate the impact of tariffs if they had to happen through some flexibility within our guidance, our manufacturing footprint, our LBS programs. And we will do our best to manage tariffs if they happen without impacting pricing directly, because we will stay oriented to the long-term. We want to continue serve the Chinese consumer in the long-term, continue growing market share in China and we will stay focused on that. I want also to clarify that we are already managing tariffs in Europe which actually is a bigger business which are fully reflected not only in our guidance and in our fourth quarter partially, in our fourth quarter, but definitely in our guidance for next year and we are managing these also doing our best not to do price increases because of tariffs or relative to tariffs. So that’s our situation, but we continue to hope that tariffs will not be applied also because beauty is not a category of tension and represents benefits for all countries.

Our next question comes from the line of Andrea Teixeira with JPMorgan.

Hi, good morning. It’s Christina Brathwaite on for Andrea. Thanks for taking our question. So I just wanted to talk a little bit more about the reason the forward saving signs, can you just dive into what the drivers are there or you had some more incremental savings and should we expect that to sort of flowing through into Americas possibility we were surprised that trended negative this quarter. So any kind of color on when that can stabilize, that would be great? Thank you.

Yes, so let me answer both of those questions. And as it relates to the Americas just recognize that in the Americas segment we also have our corporate expenses. So bonus accruals for the corporation, we have some of it is our global production expenses related to some of our advertising programs flow through our Americas segment. So those are some of the drivers along with some incremental spending for programs to support some of our brands in the Americas. As it relates to Leading Beauty Forward, some of the additional programs that we've added and we've spoken about them before, enabling our creative team to create more digital assets, so really transforming the processes and the technology in our creative areas in order to be able to create more digital assets, restructuring some of our field organization to actually create more support organizations for them so that they can spend more time out in stores coaching and selling with our beauty advisors and with our selling staff. In our supply chain area, we're investing to increase the agility and speed of our supply chain, certainly managing all of the complexity that we see in our global network as well as the frequency with which innovation is happening in our portfolio.

Our next question comes from the line of Ali Dibadj from Bernstein Research.

Hey guys, I have a few questions just about your momentum and just to get a sense of whether that's going to continue and really like two dimensions, one is I want to get underneath what's happening between your strong top line guidance for next year and at least about your consensus EPS growth and I guess taxes, your tax rates changing and all that, but what is your like-for-like EBIT margin percentage going to change? There is a concern among investors that yes, you're growing, but you’re buying your growth and factoring investments will have to continue to increase whether it would be on M•A•C or channel shifts and other stuff you shouldn’t be doing. It's just that your margin is going to be under pressure as you invest a lot more. So that is one part of momentum and the second one is if you have seen anything at all to temper the enthusiasm of the Chinese consumers globally obviously a big part of your top line and your margin mix across travel retail and Asia-Pacific. I mean we certainly have heard some companies voicing some very, very recent like past couple of weeks worry about the Chinese consumer getting little bit more concerned around trade wars and everything else impacting their businesses. So thanks for those on momentum.

Yes, let me start just the overall on the first and Tracey will give you also her specifics. We are really committed to the 50 points of margin growth in the next years and what we see we will deliver, we will deliver these. There are impact on taxes, accounting, currencies, and we are managing through these and I hope you realize we are trying to put it on the table in the most transparent possible way, the assumptions that we are taking in managing that complex amounts or restatement. But as far as the ongoing business the combination of Leading Beauty Forward programs together with the merging equities aspects or many of the new channels in markets in which we are expanding should guarantee us to continue increasing half a margin points and invest in growth at the same time. To be clear, the promotional discounting as percentage of the sales is going dramatically down, so our investment is all about brand equity building and we have gone for a few brands that we have advertised with 30 brands in our portfolio advertised, so creating the power of long-term growth in the new kind of channels that we are addressing. So to be clear this wing of channels goes with this wing of support with the consumers and they go hand in hand and are providing us a stronger and you know growth than in the past and as I said, thanks to the other elemental margin the 50% margin. Tracy if want to add?

No, thank you. I think you answered it well. So if you, Ali think about fiscal ’18 we actually delivered 70 basis points of organic margin expansion. So we did have positive currency benefit of 40 basis points, the acquisitions did suppress our margin by about 20 basis points, so when you look at all of those factors we delivered about 50 basis points organic operating margin in line with our objectives. So to Fabrizio's point, on average our model suggests that we can comfortably deliver 50 basis points on average of operating margin expansion and continue to invest in all of our growth areas. That certainly is enabled by Leading Beauty Forward and some of the work that we're doing under that program over the next few years.

On China, today we do not see a sign of slowdown of Chinese consumer into sales out there, neither in China mainland nor in the traveling corridors that we are monitoring. So I have - we want to clarify that the assumptions in our guidance for the year assume a certain level of normalization of the growth of China and travel retail in the rest of the fiscal. But in terms of the power of the long term opportunity, I remain completely convince the China market has the potential of a double digit growth year-after-year because the fundamentals drivers are not changing. They are rising or the need the class, the love of luxury and beauty particularly. The ability of the online execution in China to serve the 650 cities where we do not have physical distribution and the ability to have our physical distribution designed in the most productive way of the world with the super high productivity because only focus on high traffic areas and the rest is served by online, so that model is extremely powerful it has long term potential. Now it may go to up and down depending on the overall economy trend in the U.S. or other potential impacting in the short term obviously yes and that's why we are assuming a certain normalization next fiscal year, but these remains one of the biggest long term opportunities in front of our company in my opinion.

Our next question comes from the line of Caroline Levy with Macquarie.

Good morning. Congrats on an amazing year. I would like to just get your assumptions for what's going to happen in the European department store environment in fiscal ’19 and maybe even longer term it looks like the U.K is facing a bankruptcy today I don't even know if it's a chain that you're operating in but do you see it going the way of the U.S. and are you prepared for that in the way that you've done your projections and maybe just the last thing on how it might be different from what we've seen in the U.S. please?

Yes, first of all what is very different from what we have seen in the U.S. is the penetration of department stores in Europe. So if you mean U.K. I will talk to U.K. in a second, but in Western Europe of the penetration of department store is very, very limited. So, the amount of selling square meters per person are really completely different. So the impact in Europe even if there was the same worrying trend that we have seen the last years in the brick-and-mortar retail in the U.S. It will not have anywhere similar impact. The other thing is that the - frankly the online penetration in Western Europe is individually lower than the one that is in the U.S. And so the ability of moving sales online in Western Europe for the moment has been inferior and because of that the brick-and-mortar is more solid and less exposed to sudden changes in this area. As far as the U.K. is concerned there are some department stores which have been affected by crisis, how is a Fraser is the most significant one and we are monitoring - we are in House of Fraser for perspective in proportion to the U.S. is that the comparison you are making also Fraser is less than 10% of our U.K. business and is more in proportion is what Bon Ton was for the US but this for the moment we don't have signs to this retailer will close actually we have signed that would be restated and that some doors we've closed it will be rationalized for a business that could be even stronger after this rationalization. But in the U.K. the same thing is happening, meaning sales are growing the luxury part, they are growing more in the online area, the online channels and so the mitigating factor we're doing so much earlier and better in online there that obviously this is compensated. The other part which is more specific to Estee Lauder, is that don't forget that in the U.K. we have Boots which is a significant percentage of our business and so our business in the U.K. is less concentrated in department stores.

Our next question comes from the line of Steve Powers with Deutsche Bank.

Yes, can you hear me?

Yes.

Okay, great. Hey, so first just to clean up on the guidance Tracey and then a longer term question. The first one is, you just - can you talk a little bit more about why the revenue recognition change has a $0.10 impact this year and is that something you'd get back in 2020 or is that more of a permanent step down a catch up from where you ended 2018? That’s the clean up question. And then thinking more I guess strategically for beauty, I was wondering if you could just expand more on what you see as opportunity in emerging markets outside of China, clearly in fiscal ’19 you would contend with a significant amount of macroeconomic volatility, but even with that, I think your guidance implies opportunities for growth in that block of markets and as you think about your 10-year compass recognizing the importance of markets like the U.S. and Western Europe and China, I'm just curious as to your expectations for other emerging markets as a driver of growth for Estee Lauder? Thanks.

Okay, so as it relates to revenue recognition and the $0.10 of EPS impact, it is an accounting and reporting issue only. It is a shift in terms of when we can recognize revenue relative to our promotional programs, so it requires us to defer a portion of our revenue until certain promotional activities have occurred, which is different than how we were accounting for it in the past. So it is a shift forward and we would expect though being under this guidance next year will be comparable but it will also shift some revenue forward but at least fiscal ’20 and fiscal ’19 will be comparable. Our commercial activities will not be impacted. There is no change to our shipping patterns or to actually the timing of promotional activities. Just and spend related to those activities will not change as well. It's just a recognition of revenue, so it is a shift.

And as far as emerging markets, we really believe that the emerging markets will continue to be a driver of growth. However, emerging markets are by definition more volatile and that's why we look at it as a portfolio where we have several emerging markets. We are building in each one of them at a different speed and with the flexibility of allocating resources every year to the one that represents the best opportunity not only of growth but also return on investments. So is portfolio markets where we use enormous amount of flexibility depending on the situation with the clear long term goals to have strong market share in each one of them in the medium term. So today we have reached already 50% of business as we said before growing 24% we expect this to continue. In the next year what we have in mind is that we see continuous accelerating opportunity actually exciting I should say in India where we are growing all the way in Russia, in this moment is very strong. We see the opportunity next year to stabilize Middle East that has been a drag to our overall portfolio and we see the opportunity to restart growth in Brazil and obviously we are waiting to see the elections in October, November, but that could be a great opportunity. We expect to continue success in Mexico and other areas where we are doing really, really well and amplify the portfolio of new markets in Asia like the Philippines, Indonesia where we are seeing some amazing growth in this moment and great opportunities for the future. But as I said, there will be every year one or two of these markets that would be an issue and one or two that will be in those areas a tremendous opportunities and you should see us as having the flexibility to direct our investment as needed year-after-year while we stay focused on the long-term.

Our next question comes from the line of Olivia Tong with Bank of America Merrill Lynch.

Good morning, thanks. First, I was wondering if you could give a little bit more detail on the investments that you’re doing in M•A•C in North America and then talk about your profit expectations are for 2019 in the U.S.? But more broadly the U.S. has obviously been a struggle for some time and I know you're not interested in expanding into the largest online provider, but what is the line on the stand on incremental retail expansion beyond like the Ultas and the Sephora and such, I mean would you consider partnering with other retailers potentially specialty apparel other ones to sort of spur activity in your home market? Thank you.

So Olivia, I’ll start. In terms of M•A•C, and as you're aware, we have expanded M•A•C and Ulta it’s doing quite well. We will look for further expansion there. The brand is doing quite a bit as well in terms of their social media programs to improve the productivity per door of the business here in the U.S. and as it relates to specialty and whether or not we would partner with the specialty retailer, I mean certainly the M•A•C brand has done that in the U.K. with ASUS. If there were one here that had the same type of characteristics that we look for in terms of a third-party presence for our brands on line, then we would consider that as well, but there is a tremendous amount going on with the M•A•C brand in terms of everything from in-store experience to driving their online business more and certainly other considerations.

And again, I want to add just innovation, so M•A•C is working on innovation in the U.S., it is working on improved digitalization in the U.S. and so it’s not only distribution swing, it is not only an improvement distribution, it is an improvement in every single hospital the brand that we are working on and we believe we'll deliver results. In terms of which retailers to do with frankly in this moment in the U.S. we've really focused on growing same door in the best possible way is a matter of as I said we have the new sales force with much more attention to consumer facing activities we can improve our activity in-stores on all fronts and we can support our current retail partners to deliver much more from our brands and continue the online expansion where we are doing fantastic in the U.S. And the current model or brand.com or retail.com is working very well and leads the way of third-party platforms of high quality we definitely consider them and with that strategy the Lauder brand if you heard the presentation of Stephane, it is exactly the strategy the Lauder brand is following the U.S. and Stephane just explained what the great results the brand had, may be Stephane you want to clarify that again?

Yes, absolutely Fabrizio, I think like in the U.S. like we mentioned in introduction, I think we've seen now a sustainable turnaround of the brand and actually we see our like-for-like growth in-store being actually super than our overall growth. So basically the half and the renovation that we put on the shift of distribution for accelerated like fast growing channel is actually proven that today there is a sustainable growth without necessarily needed today to increase distribution, but like Tracey said, if opportunity comes then we will explore them.

Our next question comes from the line of Jason English with Goldman Sachs.

Hey good morning folks. Thank you for squeezing me in. I guess I want to followup on Olivia’s question around the Americas profitability because maybe I missed it, I don’t think you addressed that? The margins have clearly come under a lot of pressure. You mentioned that this year you have some of the corporate expense allocation there which was a headwind particularly in the fourth quarter, can you quantify that to give us underlying read for the business? And then thinking on Forward, we've got growth in online, we've got growth in specialty multi. But it seems like that’s going to be balanced or potentially more than offset by de-leveraging your freestanding stores or department stores, is there a path to margin recovery that will get you back in sort of historical high single digit range or is this sort of permanently rebased or even worse is there a glide path where it can continue to be pressured on the forward?

I will start, Jason. In terms of the North America team has done a terrific job in terms of recognizing the retail environment and the declining traffic as well as Fabrizio said the door closures that we've experienced in the U.S. with right sizing and resizing business in order to stabilize margin and then start to improve margins. So in the fourth quarter, the bulk of the decline was related to corporate expenses and the North America business was relatively flat in terms of profit. In terms of what we expect going forward, we do expect as I said we do expect North America to deliver or the Americas to deliver low single digit growth. So we do expect North America as well to deliver low single digit growth. And with some of the continuing work that they're doing as it relates to executing some of the Leading Beauty Forward initiatives and some of the other programs that they're working on to really improve door productivity in the remaining doors and certainly the top doors in the U.S., we do expect to start to see margin recovery in the Americas and in North America for sure.

Yes. And in terms of the balance of the distribution, the question there is, and I said it in my prepared remarks the scale is changing in our favor, so this being fiscal year 2018 has been the first year where the extra sales we built in fast growing channels were superior to the sales we lost in brick-and-mortar department stores and freestanding stores. So that’s the key thing that happened. So if you exclude the impact of the very big door closures from the year as I explained $164 million over two years, $68 million in fiscal year 2018, if you exclude this balance, these closures the scale is in our favour. I mean we have now the right platform of distribution to grow same doors in the correct way for the future. So a lot will be about the power of our innovation, the power of our investment in media, the power of getting traction from the brand and then keep in mind the door closures also were pretty good in maintaining the consumption on our brands even when the door closed. However, there is a transition period when door closed where this has to happen that can have a short term impact on sales that happened already in fiscal year 2018.

Our next question comes from the line of Lauren Lieberman with Barclays.

Great, thanks, good morning.

Good morning.

Good morning.

I was wondering if you could talk a little bit about Clinique and some of the metrics you have given brands like Estee Lauder and M.A.C in terms of those brands performance in some of the stronger doors, so if you would look at Clinique I guess particularly in U.S. and closures exclude the departments that brick and mortar department store channel, are you seeing any sort of positive encouraging signs on Clinique and how it’s resonating with different consumer demograph or cohorts in terms of age group, I know you mentioned what is your target any other franchises how they’ve been doing? Thanks.

Yes, okay, Tracey indicates I should answer this one.

I won’t, so I can answer I mean Clinique is doing incredibly well in Ulta it’s doing very well online, so in the U.S. Clinique we are certainly starting to see as you indicated Lauren a pick up outside of the department store channel. The innovation this year and certainly heading into next year is quite strong. So we’re quite excited about what we've seen thus far from Clinique, Moisture Surge they continue to innovate under that franchise, it's doing very well Dramatically Different which is their legacy franchise they introduced a new jelly product which is my daughter is particularly fond of, so that too is doing quite well and their fresh pressed franchise is also doing well. So they've got a lot of great Skin Care heading innovation heading into next year and they've got some exciting new innovation that will let the brand downs and tell you about going forward and so we're very encouraged by the signs that we see from Clinique this year and again as Stephane indicated, we certainly have a track record for having a large brand resume growth in North America and in the U.S. even with the current environment.

Yes and I just want to add I'm really passionate by the work that Clinique is doing in this moment. I think you will see Clinique results in North America in the next year is getting better and better. The innovation as Tracey said is really promising in my opinion particularly the Skin Care innovation. And I also want to remind that Clinique is the most affected of all our brands to disclosures. So the results of Clinique being able to grow retail in the last quarter in the North America in presence of Bon Ton since April basically not taking shipments and not working and in the closures of what happened in Sears in Canada in the previous period and in other doors closures. So Clinique has been offset all of these and stabilize or grow depending by category in a way that as soon as this negative will moderate we will see the power of Clinique acceleration.

Our next question comes from line of Steve Strycula with UBS.

Hi, good morning. Few questions on China. One of two first, of all Tracey give us context as to how large China is, I know it's growing very rapidly it is down nine, 10% of company sales and what did it grow in fiscal 2018? And then I have a followup. Thanks.

Okay, so you’re spot on. China is about nine - little over 9% of our sales now with the results that we saw in terms of China growth. We don't comment on individual country growth but rest assured that China grew very very very strong double digit in fiscal ’18 so great performance in China.

Okay and then a followup for Fabrizio. I just wanted to understand, it sounds like you're getting a lot of incremental consumers across China even with Tmall’s presence. Can you give us a sense as to how Tmall’s your ramp on that platform has impacted different tiers of cities like Tier 1, Tier 2 versus Tier 3 and Tier 4 and how at all has it impacted department store sales within greater China? Thank you.

Yes, the growth of China has been extraordinary like doors and so our department store in China have as we speak the strongest light door growth, they ever had in the 10 years. Tmall in that sense is not negatively impacting the department store growth. The reason for that is that as you indicated we are in about 118 cities with our physical distribution in China today across all our brands. Obviously 118 is the number of Lauder that other brands match less so when you go to brands like M.A.C. and others we are still in I think around 50 or whatever 60 cities, so there is enormous amount of physical distribution opportunity within the top 100, let’s say 120, 150 cities of China. But the Tmall reached 650 cities and from the data we see the large majority of our sales in this area came from the cities where we do not have physical distribution. And that’s is a very efficient model because the physical distribution in the 118 cities is very efficient because the productivity per door is high and growing and that the new consumers in the city where physical distribution is not yet there or where the level of productivity will not justify physical distribution for the time being can access the brands via Tmall or via brand.com. This model is working and creates this increase of consumer in a very efficient way and also with reasonable capital cost.

Our final question comes from Dana Telsey with Telsey Advisory Group.

Thank you. Stephane just wanted to touch on this, as you think about the Estee Lauder brand and the improvement that it has made, how do you think about the distribution channels for this business, what should it ultimately be and how do you see the margin opportunities? Thank You.

Thank you for your question. I think what I was trying to highlight in the presentation that we are is, we've been able to have this amazing growth without increasing distribution. We have some shift of distribution in some areas of the world as we really believe that today our really growth is coming from on one side strengthening our position in the existing distribution, especially focusing on all our flagship doors around the world, but at the same time making sure that we sell the consumer in the fast growing channel like specialty multi online and travel retail. And we really believe that this new distribution that is growing faster than the average is really helping us today to increase the desirability and the equity of the brand overall in the world. So, today the opportunity is in front of us. The Estee Lauder brand is basically like building on all these opportunities and really believe again that makes the model a very sustainable and profitable model actually for the company going forward and the most exciting thing is showed a path for all big brands actually to be able to just like apply the same strategy and to grow like that globally.

And I just wanted to underline that being able to grow 22% without increase of distribution since our profitability is a lot influenced by same-door sales this obviously speaks highly for the ability of the Lauder brands to continue improving profitability.

That concludes today’s question-and-answer session. If you were unable to join the entire call, a playback will be available at 1 PM Eastern Time today through September 3. To hear the recording of the call, please dial 855-859-2056, passcode number 10665254. That concludes today’s Estee Lauder conference call. I would like to thank you all for your participation and wish you all a good day.