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Elizabeth Arden Q2 results down, lowers forecast for full year

20-Jan-2014
Last updated the 20-Jan-2014 at 16:43 GMT

Elizabeth Arden reported that sales growth in the all-important holiday period remained stagnant, forcing the company to downgrade forecasts for the full year.

The preliminary results show that net sales for the quarter should be in the region of $415m to $418m, compared to net sales of $468m in the corresponding period last year.

The company predicts that earnings will also be hit by the fall in sales, with adjusted EPS estimated in the region of $1.05 to $1.08, compared to $1.58 in the corresponding period last year.

Results impacted by discounter and weaker holiday sales

“Our results were significantly impacted by an increased level of highly promotional and discounted activity globally and weaker than anticipated holiday retail sales and replenishment orders at a number of our non-prestige retail accounts in North America,” said Scott Beattie, chairman and CEO.

“While we are disappointed with these results, we made the strategic decision in the quarter not to participate fully in the heavy promotional and discounted environment.”

The quarterly year-on-year comparison for earnings and sales is difficult because the results for the second quarter of 2012 recorded strong growth, but the current quarterly results are still well below expectations.

Fragrance sales down by 10%

For the first half of the 2014 fiscal year, the company said Elizabeth Arden branded product sales were up 2%, but the weakness had been in sales of fragrances, which are traditionally very much higher in the holiday season but nevertheless fell by 10% during the quarter.

Weakness during the six month period was also seen in the company’s mainstay North America market, where sales were down by 9%, while the company’s international sales fell by 1%.

Looking ahead to the rest of the year, Beattie stated that the core opportunity to drive the business would be to focus on commercial expansion of the international business, though he did also point that the performance of the business had been inconsistent in recent quarters.

“With new leadership in place under Eric Lauzat, Executive Vice President and General Manager, International, we are engaging in a fundamental reorganization of how we commercially execute our international business, focusing on priority markets, strengthening our travel retail and distributor relationships and exiting low-return businesses,”  Beattie said.

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