Due to our very strong project pipeline, we are increasing our target for savings in fiscal 2024 to $110 million, $120 million from our previous outlook of over $100 million. The savings are driven by material cost savings, structural A&CP savings and trade investment. Importantly, the increased savings are helping us fuel reinvestment in our structural growth capabilities and teams, particularly in digital and skincare. Looking to next year, we reaffirm our fiscal 2025 savings target of $75 million. In sum, having delivered over $660 million of savings life-to-date, we continue to optimize our processes and expenditures, positioning Coty to be flexible and fully equipped to invest in our strategic priorities Moving to our gross margin performance.
Q2 adjusted gross margin of 65.1% was in line with our expectations, decreasing by 40 basis points from last year. Our Q2 adjusted gross margin decrease was driven by: Increased excess & obsolescence largely tied to the inventory build-up in the Prestige business to support strong service levels. And gross margin benefits in the prior year which did not recur. The inflationary impact in the quarter was lower sequentially. These Q2 impacts to adjusted gross margin were partially offset by supply chain productivity and pricing. In the second half of fiscal 2024, we expect significant easing of COGS inflation to drive strong year-over-year adjusted gross margin improvement, which will support modest gross margin expansion in FY 2024. We will continue executing on our multi-part, multi-year gross margin attack plan, as we drive our gross margins to the mid-60s and beyond.
Let me now walk you through our marketing investments. In Q2, A&CP represented approximately 26% of sales, decreasing approximately 1 percentage point from the prior year, and in line with our expectations. We are continuing to shift media spend toward digital and social media activations, which now account for a majority of our media spend. We continue to expect A&CP to be in the high 20s percentage level of sales in fiscal 2024. Moving tour profit delivery for the quarter. Our Q2 adjusted operating income grew a strong 18%, driving 70 basis points of margin expansion. Our Q2 adjusted EBITDA grew 15% year-over-year to $366 million, with the Q2 adjusted EBITDA margin increasing 40 basis points to 21.2%. Our year-to-date adjusted operating income grew 20%, resulting in a 70 basis point increase in year-to-date adjusted operating margin.
And adjusted EBITDA totaled $727 million, growing 16% from the prior year, with the adjusted EBITDA margin up 10 basis points. We continue to expect strong income growth and margin expansion going forward. And, that brings me to our adjusted EPS. Our Q2 diluted adjusted EPS of $0.25 includes an EPS benefit of $0.06 from the mark-to-market on the equity swap due to the stock price increase in the second quarter. Excluding the swap, our Q2 adjusted EPS grew 12% year-over-year to $1.19. For the first half of fiscal 2024, our diluted adjusted EPS of $0.34 grew 6% year-over-year and had no net contribution from the equity swap mark-to-market. Looking ahead to fiscal year 2024, I would like to outline certain drivers of our adjusted EPS. First, we expect depreciation to be in the $230 million to $240 million range.
Second, we anticipate net interest expense for the year to be in the mid $200 millions. Third, in light of the change in the Swiss statutory tax rate and the $24 million one- time non-cash impact we recorded in Q1, we now anticipate the adjusted effective tax rate for fiscal 2024 to be approximately 30%. At the same time, the underlying tax rate — excluding this discrete impact remains in the high 20s going forward. Finally on fiscal 2024 share count, while our outstanding share count increased by approximately 33 million at the beginning of Q2 due to the Paris share issuance, we will execute the first tranche of our equity swap agreement of 27 million by the end of February 2024 at the very attractive price of $7.40, which will partially benefit Q3 and fully benefit Q4 share count.
Moving tour free cash flow. We generated free cash flow of $363 million in the quarter, down 20% from the prior year, due to a change in phasing of vendor payments. Looking to the full year, we expect our free cash flow to be solid and broadly consistent with fiscal 2023, due to higher working capital as we drive our growth strategy. Moving tour capital structure. We ended Q2 with net debt of approximately $3.3 billion. As a result, our leverage at the end of the quarter was around 3.1 times, down from around 3.8 times at the end of Q1 and in line with our target to end calendar year 2023 with leverage of approximately 3 times. Factoring in our Wella stake, we ended the quarter with economic net debt of approximately $2.2 billion. We remain committed to reaching an investment grade profile, targeting leverage of approximately 2.5 times exiting calendar 2024 and approximately 2 times exiting calendar 2025, which we believe we can reach through our organic free cash flow generation and EBITDA expansion.
At the same time, we also continue to target divesting our Wella stake by end of calendar 2025. In the second quarter, we entered in to a third tranche of equity swap agreements with several banks to hedge a targeted share buyback program of approximately 25 million shares in fiscal year 2026. And, we remain on track to execute the first tranche of our equity swap agreement by the end of February 2024, which will result in a share count reduction of 27 million at cash cost of around $200 million. Focusing on our balance sheet, we completed a tender to retire up to $400 million of outstanding 2026 bonds, based on our strong cash inflow in the first half of fiscal 2024. This speaks to our strengthening balance sheet and our financial flexibility, as we continue to actively reduce our debt.
Looking ahead, our strong continued progress on deleveraging and debt paydown support our expectation for our interest expense to steadily decline in the coming years. I will now hand it back to Sue to review our strategic progress in the quarter.
