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Second, we have a real and immediate opportunity to focus our brand-building efforts behind your limited -- more limited number of brand-country combinations, and to invest behind them at scale. We have already begun activating this approach in the third quarter as we shifted our media dollars from non-priority businesses and increase media investment for priority brand-country combinations.

Third, we have identified a real upside in business simplification as the analysis has shown that our prior focus on short-term growth has led over time to an overly complex product range to excessive proliferation of sub-ranges and SKUs expansion. We are convinced that by addressing this complexity, we will unlock substantial opportunity for cost saving and shelf productivity improvement.

Finally, and most importantly, our people at Coty are skilled and have a very strong result orientation. They value business approach based on data, which in turn enables them to go on their creativity and rigorous insight. So we think that they will respond well to our agenda.

As we get closer to the completion of Coty's strategic plan, I can therefore already confirm, as substantiated by our analytics and market visits, that our initial intuitions were correct. We are more than ever convinced that the core business principles which were outlined in the last quarter's earnings goal are the most relevant levers to maximize value creation in the short and medium term, and of course starting as much as possible in fiscal year '20. This principle includes driving a better business before bigger one, being gross margin obsessed, and building brands through selective and scaled investments.

We all truly think that Coty is a company which has short- and medium-term earning improvement potential, and we will immediately focus our energy and resource -- and resources on capturing this upside. Yet we also understand that we need to raise Coty's growth ceiling to have a long-term future. This is a more strategic task that will take more time to achieve. We will make sure that we address our longer-term growth potential while we deliver on our more immediate turnaround plans.

Now turning to the third quarter. Our results clearly indicate that supply chain issues are largely resolved, and we are pleased to say that we expect very limited impact from supply chain disruption in the remainder of the year.

Performance this quarter also shows the increased control that we have over our cost structure both in term of G&A as well as proactive management of A&CP. Taken together, these factors have allowed us to deliver solid adjusted operating income in line with the expectations we laid out last quarter.

However, while we are pleased with this quarter's profit delivery, unsurprisingly the weak top line shows that there is still much to be done to turnaround the business, specifically in Consumer Beauty as I discussed previously.

I want to assure you that we will take no shortcuts, and although we won't be slow, we will also aim for consistent results over time. We indeed have much work to do, and as I said earlier, beyond running our operations effectively, our focus now is to ensure that we have a reliable strategy going forward. This should be completed toward the end of June, and I look forward to speaking with many of you as we roll out the communication of our strategic plan.

With that I will turn it over to Pierre-Andre.

Pierre-Andre Terisse -- Chief Financial Officer

Thank you, Pierre, and good morning, everyone. I'm happy to be with you today again to comment on our Q3 earnings. I'll go to page 3 of the deck. As Pierre mentioned, third quarter financial results were consistent with the expectation we laid out on the second quarter earning call, and importantly, supply chain disruptions had minimal impact on our operation.

Our focus this quarter was squarely on profit and cash flow delivery. So while the top line remained weak, we are pleased that the actions we undertook delivered the expected profits and a strong free cash flow. Additionally, consistent with our deleveraging objective, we're initiating a stock dividend reinvestment program giving shoulders the option to receive their full dividend in cash or to receive their dividend in 50% cash and 50% common stock. Our quarterly business will stand at $0.125 per share or $0.50 on an annual basis, and shareholders will need to make their choice on a quarterly basis beginning with the third quarter dividend payment in June.

Overall on revenues, third quarter revenues declined minus 3.7% on a like-for-like basis. This top line result included approximately 2 percentage points of negative impact from the change in revenue recognition accounting and reflected unfavorable COGS in Luxury for the quarter.

Underlying trends were very much in line with that of the previous quarter with a strong Luxury division, a Professional Beauty division recovering from low service levels and the continuing weaknesses in the Consumer Beauty division.

Going forward in the rest of fiscal '19, we expect top line like-for-like trends to be tracking the similar range as in Q3. Our main focus for now remains profit and cash flow, while we are finalizing our strategy review and getting prepared to improve the support behind key brands and overall top line as we move into fiscal '20.

Despite these continuing top line pressures, Q3 adjusted operating income of $230 million was in line with last year, thanks to smaller impacts from supply chain disruptions and tight cost management. With the supply chain disruption impact now largely behind us, we expect the total impact for fiscal '19 to be approximately $150 million of lost sales and approximately $100 million lost profit. I do want to caution that we do not expect to fully recover lost sales and profit in fiscal '20, but rather steadily, very gradually improving our customer relationship and service levels quarter after quarter.

I will now turn to the divisional performance starting with a Luxury page 4. The Luxury division maintained its mid-single digit growth trends with like-for-like revenues of 2.8% on a high comparison base and including an approximately 1% headwind from temporary factors. Solid first quarter results were supported by continued strength in Burberry, Gucci, in Calvin Klein, and the return to solid growth in Hugo Boss as supply chain disruption abated, and the brand regained momentum beyond the launch of Boss Bottled Infinite which you see on the left of the screen.

The continued sell-out strength of Chloe Nomade and Marc Jacobs' Daisy drove sustained share across -- she gains, sorry, across multiple markets. On Marc Jacobs I'm very pleased that we recently renewed the Marc Jacobs fragrance license reinforcing the strength and longevity of the Luxury brand portfolio and Coty's position as a licensee of choice for leading fashion houses. We also continued to see great momentum in our Luxury e-commerce sales, which continued to increase as a percentage of total sales.

Last, we're very excited about the launch of our new Gucci lipstick collection which represents our latest collaboration with Gucci Creative Director, Alessandro Michele. The collection features wide range of shades and finishes and represents the first step in our relaunch of the Gucci make-up line.

Slide 5, from a profitability standpoint, the Luxury division, significant improvement in operating income and margin expansion, both in the third quarter year-to-date highlights the division's strong operating leverage. Third quarter adjusted operating income of $126 million increased 26% versus the prior year driven by the combination of gross margin improvement on cost of sales savings linked with the supply chain integration and solid fixed cost reduction. This profit expansion was consistent with a year-to-date Luxury operating income growth of 28% driving a year-to-date adjusting operating margin of 16% which marks a 310 bps improvement from the prior year.

I'll now turn to Consumer Beauty, slide 6. In Consumer Beauty, the third quarter like-for-like decline of 10% included approximately 300 bps of negative impact from temporary factors, implying a high-single digit underlying like-for-like decline in both the third quarter and year-to-date. This performance continues to be broadly in line with sell-out trends as our brands remain pressured by continued weaknesses in the global mass beauty market, particularly in the US and Europe, even as we continue to see moderation in the pace of our share losses.

Younique revenues and profits were down year-over-year driven by declines in presenter sponsorship. Although we continue to refine our product offering in an effort to improve presenter recruitment and retention, the turnaround of Younique remains a key focus.

Despite these poor overall results, there were a few positive brand performance in the quarter, and one particularly with Brazil. Our Brazilian local brands grew sell-out and continued their share gain trajectory. This quarter net revenue growth in Brazil was significantly higher as we lapped the decline in third quarter full year -- fiscal year '18 when Brazil net revenues were temporarily depressed following our pricing intervention. And Wella Retail grew sales and share in both hair coloring and hair styling with particularly -- with practical strength in ALMEA driven by recent innovation, including the addition of a Root Touch-Up Range to the Wella portfolio.

On slide 7, the third quarter adjusted operating income of $56 million declined from $97 million in the prior year resulting in an adjusted operating margin of 6.6%. This decline included a $23 million impact year-over-year from the revenue recognition accounting change. While disappointing, this result does reflect significant reductions in fixed cost and active prioritization of the A&CP which we will continue in the fourth quarter as we pilot the business (inaudible) with a strategic plan.

I must stress here that even as we emphasize profit delivery of the top line in the near term, our goal over time is to use a portion of our profit growth to reinvest in the business and drive a healthy and consistent top line trajectory and this as soon as next year.

Turning to Professional Beauty, slide 8. Revenues declined modesty on a like-for-like basis with most of the success in North America business. Excluding the temporary factors, the decline is linked to the lingering impact of supply chain disruptions as well as trade inventory reduction at a few key customers.

While it will take some time to rebuild the customer relationship, we're confident that the Professional business is on solid run and that our brands are fundamentally healthy. With service levels now largely restored for OPI, the brand returned to strong growth and we continued to enjoy very strong momentum in ghd with the launch of the GHD glide hot-brush in the quarter and the continued success of the Platinum Plus styler. Wella innovation also continues to perform very well.

Slide 9, Professional Beauty adjusted operating income grew 57% to $47 million with the adjusted operating margin up 450 bps to 11.2%. This was driven by strong gross margin expansion and good fixed cost reduction. Despite close to a $30 million impact from supply chain disruptions and foreign exchange, the year-to-date Professional Beauty adjusted operating income grew over 18%, resulting in 240 bps of margin improvements to 12%.

I'm now moving to the overall Coty P&L, slide 10. The third quarter adjusted gross margin of 62.9% was lower by 140 bps versus the third quarter of last year as last year gross margin was unusually high given weak sales in the lower margin Consumer Beauty Brazil business. Sequentially, however, our gross margin improved since last quarter by 80 bps reflecting continued margin expansion in Luxury and Professional Beauty. Year-to-date adjusted gross margin of 61.8% was still down 60 bps versus 2018 driven primarily by the supply chain disruption in the early part of the year.

As mentioned earlier, we focused this quarter on delivering profit and protecting working media investment, and we on the other hand, proactively reduced other key expenditures, including non-working media and other fixed costs. Adjusted operating income of $230 million was in line with the prior year despite significant foreign exchange headwinds of approximately 5%. Our adjusted earnings per share of $0.13 was in line with last year with profit, interest, and tax expense, all stable year-over-year, and minority interest expense lower in the third quarter reflecting the weakness of (ph) Younique .

Slide 11, for the year-to-date; year-to-date adjusted operating income of $693 million declined by 10% from the prior year, including foreign exchange headwinds of approximately 4% with an adjusted operating margin of 10.6%. Excluding the effect of foreign exchange, the amount would have been $724 million.

I'm now going to cash flow, slide 12. So turning to cash flow and balance sheet. Cash from operations grew by over $300 million year-over-year to a total of $214 million. This improvement reflected the impact of working capital management initiatives, including a solid improvement in the aging of our underlying receivables and the contribution of approximately $110 million from the receivables factoring program.

This cash flow performance coupled with the $50 million decline in CapEx drove third quarter free cash flow of $142 million for the quarter and $121 million year-to-date despite over $300 million of one-time cash outflows during the same period.

The third quarter free cash flow performance net of our $94 million dividend payment resulted in approximately $30 million of cash available for debt pay-down and with favorable FX improvement in quarters, our net debt decreased by $100 million from the end of the second quarter to total net debt of $7.4 million.

This resulted in a net debt to adjusted EBITDA leverage ratio of 5.7 times, slightly lower than our second quarter ratio, and importantly, our covenant adjusted leverage ratio remains comfortably below our permitted threshold.

Having been immersed in the business for several months now and getting involved in the formulation of the strategic plan mentioned by Pierre, I'm pleased to confirm our medium-term target of the net debt to adjusted EBITDA ratio of less than four times which will be achieved through a combination of EBITDA growth and net debt paydown.

Slide 13, as discussed earlier, we are initiating a stock dividend reinvestment program this quarter. Shares will trade ex-dividend June 6 with an election deadline on June 20 and payment on June 28th. Alongside this decision, JAB, our largest shareholder, has informed us that they will elect to receive 50% of their dividend in common stock and this until we have reached our targeted leverage of less than four times in the debt to adjusted EBITDA. The introduction of the stock dividend shows JAB is fully supportive of Coty deleveraging priority and of our medium-term leverage target. We anticipate, thanks to that, annual cash saving of $112 million from JAB action alone, and we expect this will result in only modest potential dilution in the coming quarters.

This decision, together with the increased focus on the generation of free cash flow and the first result obtained in this third quarter emphasize the importance of deleveraging for the new Coty management. It also confirms our dividend policy, which we view as an important component of shareholder remuneration and which expresses our confident in the earning prospect of Coty.

Slide 14, on the key recent developments. This election by JAB to support our deleveraging target by participating in this dividend reinvestment program comes, as you have seen, after the close of JAB Tender Offer. Having acquired 150 million shares, JAB now owns 60% of Coty outstanding shares. And as stated by them, the tender offer was a very clear expression of JAB confidence and support of Coty.

I will conclude slide 15 with the outlook. As we look to the remainder of the year, the delivery of these Q3 results give us confidence in our guidance for full year -- for fiscal '19, with an adjusted operating income expected to be between $950 million and $1 billion at constant currency, which implies a solid profit performance in the fourth quarter of '19, despite expected continued weakness in top line. We also continue to expect positive free cash flow for fiscal '19 with solid free cash flow generation in the final quarter of the year.

As I said our objective in this second half of '19 has been and remain to protect profit and cash flow, and we are successful in getting control of those. Beyond '19, we see as essential the recovery of our top line, and this is another objective we've been working on, in particular in the context of the strat plan we are preparing. We expect to report back to you on this as well as on our overall plans for the coming year around the end of June.

With that, we are now ready for questions and you can get in the line for it. Thank you.

Questions and Answers:

Operator

Thank you. (Operator Instructions). Your first question comes from the line of Nik Modi of RBC.

Russell J. Miller -- RBC Capital Markets, LLC -- Analyst

Hi. This is Russ Miller on for Nik.

Pierre Laubies -- Chief Executive Officer

Morning.

Russell J. Miller -- RBC Capital Markets, LLC -- Analyst

Hi. We were -- we were wondering if you could comment in more detail on how working advertising and promotion spend during the quarter compared to a year ago and what your plans are for working A&P over the coming quarters? And then I have a follow if you don't mind.

Pierre Laubies -- Chief Executive Officer

Thank you for the question. If I remember well my figures, I think our working media are broadly in line with what they -- what they were last year for the quarter. And clearly there has been some reallocation between categories. I think that we're probably up in Luxury and slightly down in Consumer Beauty. And non-working media has been, basically speaking, fairly done. I think that we have -- we have reduced them quite substantially, mostly because at the same time we already had a lot of assets in place. And that's basically speaking, reduced sample, testers, and things like that, which are not that positive necessarily all the time.

So going forward, I think we're probably -- again this year, I'll be honest, we are managing a pragmatic line between delivering our financial objective target and doing as much as we want from a media standpoint. So we will always aim at maximizing our working media. But clearly, our objective -- and you will see, we just have hypothesis at this stage until -- since we don't have approval yet of our operating plan for fiscal year '20, but our fiscal year assumption today for '20 is a substantial increase in our working media versus last year.

Russell J. Miller -- RBC Capital Markets, LLC -- Analyst

That's helpful. Thank you. And as a follow-up, were there any incremental distribution losses or new headwinds that weighed on the Consumer business during the quarter since we last spoke and should be mindful of going forward? Thank you.

Pierre Laubies -- Chief Executive Officer

No, at this stage nothing. And we have -- the main thing that we have done with the team that we have engaged with most of our customers and during the last period and have communicated some element of our strategies which have been I think well-received. And clearly, as I alluded in my speech, really I do believe that we have a lot of opportunities focusing on productivity of our -- of our planned shelf layout. And clearly this is behind which -- an item behind which the whole team is really focused at the stage.

Operator

Your next question comes from the line of Wendy Nicholson of Citi.

Wendy C. Nicholson -- Citigroup Global Markets, Inc. -- Analyst

Hi. My first question is just on the share dividend. Does the fact that JAB is going to participate in that up to 50%, does that change at all their agreement to be capped out at a certain ownership level based on their recent Tender Offer?

Pierre Laubies -- Chief Executive Officer

No, it does not.

Wendy C. Nicholson -- Citigroup Global Markets, Inc. -- Analyst

Okay. And then my second question is actually on -- so they go up to -- they go up to a maximum 69% ownership. Is that the right number?

Pierre Laubies -- Chief Executive Officer

Yeah.

Wendy C. Nicholson -- Citigroup Global Markets, Inc. -- Analyst

Okay, got it. And then my second question is just on the Luxury side. That business I know has been very lumpy and there have been some distribution issues and the supply chain disruptions have sort of wreaked havoc on that business. But still we've seen a couple of the other sort of fragrance companies have a little bit slower growth in the fragrance segment over the last quarter or two, and the 3% number on like-for-like growth you quoted is again a little bit on the lower end than what we had been expecting. So can you just talk about sort of the fragrance category, Luxury fragrance category generally? It's coming off a couple years of really strong growth. Do you think that sustains? Do you think fragrance may be softening? Just a few comments on the category as a whole? Thanks.

Pierre-Andre Terisse -- Chief Financial Officer

Yeah. It's Pierre-Andre. Just to comment on the base and the numbers and then I'll let Pierre elaborate. Last quarter we said that (inaudible) the Luxury at around 15% which was fairly high, or high single digits, which was fairly high. And in excess of what we see as their underlying pace, which is around 5%. This quarter is below but it's all a question of comparison base. Last year we had in Q3 a lot of launches. In Q2 we had a weak Burberry, and therefore that gives different numbers.

Underlying, we continue seeing Luxury between 4% and 5%. This is what we have -- this is what we have as underlying trend and this is what we expect for the -- for the year. So no -- I mean for me you should not read anything in the numbers in terms of design. It remains a strong -- a strong business. And then I can let Pierre elaborate on that.

Pierre Laubies -- Chief Executive Officer

Yeah. I think which is a category I think growing at 3% over the last -- over the last 12 months. And the combination of both quarters, last quarter and previous quarters, at 3%, too, I suspect there are dates which move the growth from one quarter to the other one. But pragmatically speaking, we don't see a substantial reduction in that category. And our innovation rate remains strong and we feel confident about our performance.

Operator

Your next question comes from the line of Shannon Coyne of BMO Capital Markets.

Shannon E. Coyne -- BMO Capital Markets Corp. -- Analyst

Hi. Thanks. You talk basically about your bigger project and now that -- and you just talked about having upside even without substantial innovation. I'm just wondering how that (inaudible) markets and newness that the beauty consumer demands and what your thoughts are there?

Pierre Laubies -- Chief Executive Officer

I think it is -- it's definitely a subject on which I am personally learning. I never realized the intensity of some of these categories in term of innovation, I would say, or newness, and you're right, this is -- this is one of the codes of the market and we'll adhere to the code and we may not have necessarily done that in the past. I think when I was talking of the potential earlier I was really more referring to the fact that we have in our assortment items which have higher velocity than others. We have places where we have more competitive edge than others. We have item which are well-positioned in prices and others which are not well positioned in prices. I think it is really what we are after, identify the product which are selling the fastest and we make more money and sell more of them. The Bottled is simple in that one.

I think that it is easy in the beauty business to lose track of this very -- of these very fundamentals because of the sheer complexity of the ranges and also to a certain point of time, I would call it, the low level of barrier to entry to innovation and renovation. There are a lot of opportunities there to invent stuff, and the problem is not really to invent stuff but to actually to be consistent, be clear about where are your key value item or your key SKUs and make sure they always deserve the right exposure or the right level of advertising.

So for me, we do see -- for us, sorry, we do see a very substantial opportunity in being very precise in our assortment, pricing, subranges, and shelf performance.

Shannon E. Coyne -- BMO Capital Markets Corp. -- Analyst

That's helpful. And then I'm just -- I'm curious to know why you think you've lost the most ground in CoverGirl. It looks like to us like you're -- you've actually gained ground recently in the younger demographic, but you're still losing in the older, in the 35-plus consumer. And I'm just curious if you're seeing the same thing. Does that -- and then what do you think you need to do to turn that around, and how fast do you think you can do that? Thanks.

Pierre Laubies -- Chief Executive Officer

Yes, we do see the same thing. And I think we need to do several things. One, (inaudible) would probably need to turn on the TV again, which is what we are doing. Two, we also need to have advertising which sell hard versus advertising which hardly sells and which means that it is advertising which resonates with your consumers and advertising which capitalizes on our distinctive assets. And we have just conducted a distinctive asset research and the results are not surprising for us. And therefore, we are going to get -- we are going to integrate these results into our advertising going forward.

We just did the same, for instance, with Clairol where we put back a very simple advertising and very effective advertising and immediately we got a sales uplift. So these things require again consistency, persistency, rigor in understanding what works and what doesn't work and apply it systematically across all our bands, all our markets.

Operator

Your next question comes from the line Robert Ottenstein of Evercore ISI.

Robert E. Ottenstein -- Evercore Group LLC -- Analyst

Great. Thank you very much. You mentioned in the press release that the supply chain issues are largely fixed, which is tremendous. I'm wondering if you could just kind of review for us maybe kind of a checklist of what those issues are. Like in the past it was SAP Warehouse. What you've done to fix them? How you have confidence that they -- that they have been fixed? And then kind of looking forward, how these improvements will manifest themselves in your business and to what extent, if any, you're in the penalty box with certain retailers and how long that may last? Thank you.

Pierre-Andre Terisse -- Chief Financial Officer

Pierre-Andre. Thanks for the question. Supply chain issues were of different nature, but the two bigger ones were in relation with on the one hand -- sorry, distribution centers, DCs, which were blocked and which will not reflect any more correctly. So what we have done basically to make them work progressively better to find solutions to increase -- to increase the capacity of these DCs and to -- and to put it at the right level, solve the systems issue. And Germany, if I'm not mistaken, was solved already last quarter. We had still an issue with an US distribution center this quarter, but it's almost solved now and it's operating close to normal.

The second part of issue was about the supply with two other suppliers not being able to supply us the (ph) combs and some -- and some buttons for Luxury. This has been -- this is being progressively resolved. So the amount of shortage we have is getting lower and lower. And in fact that's the -- that's the remaining part of the supply chain issues, but it's progressing every month. So we now see very limited impact of the issues.

So that's for the part which we have -- which we have sold and basically we don't expect that to come again. I'll remind you that the reason why the supply chain arose is that we were in the process of an accelerated integration. The integration is now over. And not being on -- not being existing anymore. Therefore, it doesn't have any risk to cause again supply chain issues. And obviously as you can imagine, the new management of supply chain is extremely careful with that.

I will complete this long response -- answer, sorry, by telling that another impact from the supply chain issues has been some losses of customers. That particular the case -- particularly is the case in Professional Beauty and losses in market share as a result. And it has been as well some delay in some launch and initiative. This is not solved and will not be solved immediately. It will be solved over time. As we move into fiscal '20, we are progressively -- we believe we are progressing going to regain this customer, regain these market shares, and be able to launch the innovation we had planned to launch. But it will not have an immediate effect on the plan from this point in time. I think that's ...

Robert E. Ottenstein -- Evercore Group LLC -- Analyst

Can you give us ...

Pierre-Andre Terisse -- Chief Financial Officer

Sorry.

Robert E. Ottenstein -- Evercore Group LLC -- Analyst

What kind of magnitude of losses were there?

Pierre-Andre Terisse -- Chief Financial Officer

Hard to -- I mean total losses were $150 million in revenues and $100 million in profit, as I said during my -- during my presentation. You can expect that so this is largely behind us and we'd probably recover the majority -- more than the majority of it as soon next year, and then gradually it will increase.

Operator

Your next question comes from Faiza Alwy of Deutsche Bank.

Faiza Alwy -- Deutsche Bank Securities Inc. -- Analyst

Yes, Hi good morning. So I guess I wanted a little bit more color around the simplification strategy that you talked about. So focusing on specific brands and scaling investment in those brands and focusing on countries. I guess are you -- are you foreshadowing sort of more portfolio divestments, or is it more just a question of reallocating advertising spending?

Pierre Laubies -- Chief Executive Officer

No, we do not foresee portfolio divestment. We do foresee strengthening of the structure of our portfolio in the existing brand. So we will reduce the number of sub-brands within the band, and we will make sure that within each of these key sub-brands, the assortment that we have is the fastest rotating one as well as the highest gross margin one. So that's the fundamentals of that. And we do that by using, we call it, proprietary analytics which enables us to leave no stone unturned. Of course, all the assortment of any given brand, and we have -- we are rolling this methodology out as we speak today on our four top key markets. Very extensive work and intensive work, mobilizes a lot of energy, but at the same time, gives us a lot of insight and gives us a lot of insight for innovation going forward.

So that's broadly that from, I would call, it the effectiveness of our -- the effectiveness of our assortment. When it comes to brand, you're basically speaking to brand-country combination. We have about 55% of our business is growing 3.5% and 45% of our business is declining 10%. The 55% which is growing 3.5%, we aim at growing that faster by attributing it more advertising, and next year we will concentrate probably behind this 55% of the business that we have which is growing probably 70% of our working media.

And so yes, some of the other market will decline but it is very mission-critical that the growing and strong part of our portfolio grows faster and for that it requires advertising at scale.

Faiza Alwy -- Deutsche Bank Securities Inc. -- Analyst

Okay, great. Thank you.

Operator

Your next question comes from Steph Wissink of Jefferies.

Stephanie S. Wissink -- Jefferies LLC -- Analyst

Thanks. Good morning everyone. Two questions. The first is related to cost of goods. If you could just share with us your outlook for some of your costing initiatives maybe across each of the division and then just remind us what percentage of your goods coming into the US are sourced out of China? And if I could throw in a second question, just on the weakness in Younique, if you could help us diagnose maybe what's happening with that business and any strategies you have in place to start to see some improvement there? Thank you.

Pierre-Andre Terisse -- Chief Financial Officer

You'll take Younique or ...

Pierre Laubies -- Chief Executive Officer

I'll take Younique.

Pierre-Andre Terisse -- Chief Financial Officer

Okay. No problem.

Pierre Laubies -- Chief Executive Officer

Okay. So regarding Younique, I mean the weakness is relatively simple. Younique, like all multi-level marketing businesses, go through a phase of classic hype and it's gone through a phase of hype. Unfortunately, we are in the de-hype phase, if I can -- if I can say so. But basically speaking, we do struggle to recruit presenters at Younique. And for couple of reasons. We do think that effectively -- so there is probably an element of -- to answer to the rejection of sales at Younique, we probably have over-complexified the portfolio and maybe there is an amount of fatigue of our presenters or complexity of the operation for presenters. So we have an agenda of simplification there.

The second, (inaudible) we think that some algorithm changes at Facebook has probably not helped the performance of the Younique business. So we are engaging into a dialog with Facebook specifically on this matter.

And three, possibly we need to look at expanding into other digital media channel beyond Facebook to develop the business and we are exploring this opportunity. So that's broadly speaking the action that are in place.

Also and we have alluded to this -- to this conversation earlier when we are talking of the reason of innovation, and one of the key value item of Younique is mascara. And the reason of innovation of Younique hasn't been sufficient on mascara. This is a -- this is a category which require high degree of innovation.

And we just launched 4D mascara, which is off to a very, very good start. So we (inaudible) that again. Probably we didn't respect exactly the laws of beauty, and we need to go back to that. And at the -- at the same time, the launch of our -- the launch of our skincare range is off to reasonably good start, too.

So I think that expanding the business to relevant partition or following the road of innovation of the industry are going to be mission-critical for Younique going forward. But we clearly monitor the situation very closely.

Stephanie S. Wissink -- Jefferies LLC -- Analyst

Okay. And on the COGS -- on the COGS question. So several things. The first one is that obviously we continue having strong productivity from the supply chain. Somehow you've seen the supply chain disruption, but the result of that is that we are generating productivity (inaudible). And to some extent you see that in gross margin which is holding up pretty well despite a negative top line and that's one of the reasons due to the effort in COGS.

We'll continue next year. We believe we have -- we have significant potential to further improve the COGS. In fact we believe we can step up the effort. We'll tell you that during the strat plan. And one element of -- one element of improvement will lie as well in the simplification. Simplification is going to be helpful from a top line standpoint and helpful because this is going to allow us focusing our medial efforts on a fewer number of brands, and therefore making them bigger. It's also going to help on the COGS side because that's going to drive simplification and therefore reduce the COGS.

On the -- on the China -- on the China point specifically. We have an exposure which is in the -- around $10 million, $20 million -- around $50 million, goods coming into the US from China. So it's not a very high one, but we are monitoring the topic, of course.

Operator

Your next question comes from line of Joe Lachky of Wells Fargo Securities.

Joseph B. Lachky -- Wells Fargo Securities, LLC -- Analyst

Hi, thanks. So I was hoping to get back to Consumer Beauty and maybe if you could walk through the changes you're making in the business. In particular, if you could address the weakness you're seeing in retail hair care, since that continues to be a drag. And then along those same lines, it kind of sends some conflicting comments in regards to Consumer Beauty where you mentioned you're going to be reinvesting profits in the segment, but then you also mentioned you might be pulling advertising and working media away from the business. So maybe if you can reconcile that, and if you are truly calling media away from Consumer Beauty, do you think that just delays any sort of recovery? Thanks.

Pierre Laubies -- Chief Executive Officer

Yeah. Over time we will invest in media in Consumer Beauty. Again, like I said, this year we need to manage with pragmatic fine line. So we advertise as much as we can -- as we can afford for the remainder of the year. But again, we're already in May. So the remainder of the year is not a lot of time. But next year, going forward, we will reinvest in media in Consumer Beauty substantially, and we will fund that through a combination of focusing on our high profit item. Basically speaking, we will fund that through improving our gross margin essentially, and combination of strategic revenue management, combination of -- combination of reducing non-working media, combination of reducing our COGS, combination of reducing office cost. So broadly speaking, improve the gross margin and invest in working media at the expense of -- at the expense of the overall budget into the P&L of the company. So that's very clear intention and this working media will not only be -- being reinvested, but they will be reinvested in a more focused manner.

So that's the -- that's the fabric of our plan for fiscal year '20. And I feel very confident that it will -- it will change your trajectory. It won't change the trajectory of the category. That is very clear. I mean that's not -- that's not our intent, but it will change the trajectory of our market share in the category, and that's the plan.

When it comes to hair, it is mission-critical category for us. We think that we have an opportunity here. And if you take that Clairol, for instance, it is the most underleveraged brand in the whole category when you balance -- when you rebalance its salience and its penetration. It is the (inaudible). It has a much lower penetration than it deserves, and mostly speaking, the reason why it has lower penetration than it deserves is because actually we are not necessarily focused on the -- on the right shades, our assortment is not the right one, or we are not necessarily using our distinctive assets on our packaging. So we have a lot of, I would call, it 101 job to be done there, and to improve our performance.

And when it comes to the category, yes, there are some categories which are not necessarily going in hair in retail, but there are categories which are going and Root Touch-Up, for instance, is very -- is a very nice business performing very well and I think it deserves a lot more innovation than we have -- we have given it the opportunity to -- we have given it the opportunity so far. And we think that we have a real substantial opportunity to drive value and to drive penetration in that category.

Joseph B. Lachky -- Wells Fargo Securities, LLC -- Analyst

Thanks.

Operator

Our next question comes from the line of Mark Astrachan of Stifel.

Mark Astrachan -- Stifel -- Analyst

Thanks and good morning everybody. I wanted to revisit the dividend decision optionality there because I'm curious why do it given it's a relatively small amount of cash savings relative to almost $8 billion of debt. Is there anything we should read into change in your views of free cash flow expectations going forward?

Pierre Laubies -- Chief Executive Officer

Thanks for the question. Yeah, it does. I mean the reason is that in the order of -- in the order of the topics we are taking, free cash was a very important one, the level of leverage was a very important one, and the dividend -- the dividend option is a construct which comes on top of very solid free cash flow. So I mean what we have seen -- what I have seen for the past three month is that we have a lot of opportunities on free cash flow. And what I have seen is that these opportunities have started to materialize. And I believe we still have more opportunities and we have opportunities to generate more free cash flow and therefore to have more deleverage.

The dividend definitely is achieving two things at the same time. Number one, it provides some flexibility or it helps a bit the deleverage; and number two, it closes the topic of the dividend, which has been a topic until last quarter. And I thought that was very important to close it. So it's a solution which I think is a clever one. It helps the deleverage and at the same time we can focus on the free cash flow, which is a real thing, which is going to improve the debt of -- the debt of the company.

So that's the sense and the reason why we've done that. And I think that's a pretty good solution and a pretty sustainable solution, by the way. And by the way, it has as well helped us to clarify what we -- where we want to go in terms of leverage and to affirm the four times net debt to EBITDA medium-term objective. And now we have, therefore, a very clear target for the medium term and a very clear direction.

I just want to add to this comment or to somehow hijack your question to say -- to say something which is that what we are doing with Pierre and with the team is to try and take things one by one and in the order. We are not here to solve everything at once because we think this is not possible. We are here to take the topics and address them one by one, so that we have sustainable value creation and performance in the company.

So the first thing we've done has been to address the supply chain issues and to stabilize -- and to stabilize the company from that standpoint and we've done that. The second thing has been the free cash flow. The third has been the operating income. It's very important that we stabilize the operating income of this company. We stabilize the margins. At the same time, we're assessing what we need to do in terms of top line because the worst thing we could do would be to immediately start shooting everywhere, to waste money behind things which are improper, instead of doing what we do, which is to review the portfolio and to understand really where we need to put the money.

And this is exactly what we are doing at the moment. As soon as we are ready, I can tell you that our objective will be to reaccelerate the top line. Simply we cannot do everything at the same time. So when you look at the results, my take is that we are absolutely delivering what we want to deliver. We are delivering on the line, we are delivering on cash flow, we are closing this topic of the dividend, and we are getting prepared for the top line, and everything we see so far makes us confident that we have opportunities and that we'll be able to reactivate that as soon as 2020.

So, yeah, sorry to have hijacked your question, but I thought that was very important to make this point because this is really the spirit of the company, the spirit of the management, and the way we are taking the things. Thank you. We have time for one more question.

Operator

Your next question comes from the line of Andrea Lisher of JPMorgan

Andrea F. Teixeira -- J.P. Morgan Securities LLC -- Analyst

Thank you for taking me in. Good morning. So on the dividend payment in stock, I understand obviously it's going to help you unlock part of the use of cash, but there's also a negative impact on the share count dilution. And you talk on the slides that you expect a moderate impact. But should we assume you not be able as Coty to buy back the shares to neutralize it? And then the second question is in the growth of ALMEA. What is the growth ex-Brazil because as you pointed out last year you had a negative impact from the price increase, and if you're looking embedding in your guidance for operating income for this year, if you are assuming or if you are taking pricing in Brazil as we speak so to neutralize that? Thank you.

Pierre Laubies -- Chief Executive Officer

Yeah. So the only thing about Brazil I can say is that Brazil represents approx 5% of sales and it doubled in the third quarter because their base was very low last year, and therefore, its rate increased, was 100%. It's obviously one of, i.e., it's a lot about the base of last year more than the performance of this year, but it's a -- it's a business which is growing in a pretty healthy way.

On the dilution, so if you make the math now, you take the number of shares held by JAB divided by two, it's a dilution of about 2 million share per quarter, it's about 1% to 1.2%. So that's a dilution. It's a modest one, but that's a dilution. We just consider that it's something -- I mean 1% dilution is nothing if you compare to our hopes and targets of EPS accretion through the various things we are -- we are doing. So the fact we have closed the topic of the dividend, the fact to have the cash flow to put the topic of the leverage and covenants aside and to be able to focus on the business and create value, is going to create far more EPS rather than to try and optimize the scheme through different layers. That's our position.

Andrea F. Teixeira -- J.P. Morgan Securities LLC -- Analyst

Thank you.

Pierre Laubies -- Chief Executive Officer

I think we're done. We both want to thank you for your attendance and your support. And we'll be happy to come back to you as soon as the end of June, so not waiting for Q4, but the end of June to tell us what we want to do over the medium term. Thank you and see you on the road probably.

Pierre-Andre Terisse -- Chief Financial Officer

Thank you.

Operator

Thank you, ladies and gentlemen. This does conclude today's conference call. You may now disconnect.

Duration: 59 minutes

Call participants:

Pierre Laubies -- Chief Executive Officer

Pierre-Andre Terisse -- Chief Financial Officer

Russell J. Miller -- RBC Capital Markets, LLC -- Analyst

Wendy C. Nicholson -- Citigroup Global Markets, Inc. -- Analyst

Shannon E. Coyne -- BMO Capital Markets Corp. -- Analyst

Robert E. Ottenstein -- Evercore Group LLC -- Analyst

Faiza Alwy -- Deutsche Bank Securities Inc. -- Analyst

Stephanie S. Wissink -- Jefferies LLC -- Analyst

Joseph B. Lachky -- Wells Fargo Securities, LLC -- Analyst

Mark Astrachan -- Stifel -- Analyst

Andrea F. Teixeira -- J.P. Morgan Securities LLC -- Analyst

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