Fabrizio FredaThank you, Dennis. Good morning, everyone, and welcome to our fiscal 2012 third quarter earnings call. I'm pleased to report that the successful implementation of our company's strategy continue to drive our strong performance. We reported 4% sales growth, which was ahead of our forecast. Earnings per share were $0.38 before restructuring, which was also higher than we anticipated. The increase was due in part to greater cost savings and better-than-expected currency trends, which helped us further leverage our sales gains. Product mix and pricing contributed to our gross margin improvement of 140 basis points to 79.1%. Sales from our underlying business were even stronger, rising 9% in local currency, after adjusting for sales shift for SAP implementation and a charge for anticipated sales return related to new SPF regulations. Our gains span in all regions and major product categories, illustrating the broad strength of our business. We believe this performance was greater than the growth of global prestige beauty. Around the world, except for a few countries, prestige beauty has been outperforming mass, showing particular strength in the U.S. and China. As the global industry leader, we continue to drive this demand through our effective advertising strategy and improve our retail position. We have proved that we can gain share or growth not only in robust emerging markets such as China, and even in more mature ones such as Germany and Italy. Importantly, we are uniquely positioned to continue benefiting from these encouraging trends since our business is solely focused on prestige beauty. The company's solid performance this quarter reflects our ability to manage our business effectively and sustain our commitment to creativity and innovation. Our employees' talents are evident in hundreds of highly desirable, locally relevant products and effective advertising strategy across various media platforms that attracts customers into stores, and our High-Touch service that creates a pleasurable shopping experience and generates loyal consumers and repeat business. Our portfolio of luxury brands, including La Mer, Jo Malone, Tom Ford, achieved excellent sales growth. Across the globe, affluent customer are spending more on brands they covet that offer good value, especially when combined by superb service. As a result, these high-end brands continue to thrive.
In the Americas, our greatest growth this quarter was in the high-margin skin care category, where we have put much of our focus since we began our strategy 3 years ago. In prestige department and beauty specialty stores in the in the United States tracked by NPD, we gained an impressive 1.6% share in skin care, led by 3 of our brands: Clinique, Estée Lauder and La Mer. Our skin care lineup is so powerful that in the quarter, our brands had 8 of the top 10 SKUs and 20 of the top 25 products. Importantly, our skin care sales in these channels expanded 23% at retail in this recent period over the same quarter last year. Estée Lauder, in particular, had great results, with its skin care business rising 21% at retail in the United States.But our success isn't just in skin care. Our makeup sales in the U.S. prestige department and beauty specialty stores were 8% higher than last year, while our fragrance sales expanded nearly 4%. Our ongoing strategic collaboration with North America department stores to reinvigorate the beauty floor is reaping many benefits for us and for them. Virtually all of our brands showed good growth in the channel. Overall, prestige beauty continues to outpace mass in industry-wide prestige beauty sales, up nearly 14% in the quarter compared with just 1% for mass brands. Read the rest of this transcript for free on seekingalpha.com