Higher marketing costs hit Inter Parfums profits

By Simon Pitman

- Last updated on GMT

Related tags Mont blanc Thomson reuters Jimmy choo

Despite record sales in 2011, the fragrance player’s profits slipped for its final quarter as costs continue to escalate, causing it to miss market expectations.

For the fourth quarter 2012 the company reported net profits of $4.1m, compared to $6.2m in the corresponding period last year, against sales for the period of $189.1m.

On average Thomson Reuters had expected that the quarterly profits would be around $4.5m mark, but the results showed that the impact of costs was higher than expected.

Increased costs linked to marketing expenses

The company said that the increased costs mainly related to intensive marketing campaigns to promote leading new brand extensions, including Burberry Body, Jimmy Choo and Mont Blanc Legend.

However, the analysts had also estimated that sales for the quarter would be approximately $177.8m, a figure that the company comfortably beat.

The preliminary sales results were announced at the end of January, and yesterday’s full results confirmed there was a rise of 68 percent compared to the same period last year, to $189.1m.

Full year sales increased by 34 percent to reach a record $615.2m, on account of a strengthening of existing brands, on top of the addition of several new brands, including Balmain, Repetto and Anna Sui.

Prestige brands and new launches account for gains

“Several of our prestige portfolio brands showed stellar sales gains.  Notably Burberry sales rose 20 percent for the year in local currency due to the launch of BurberryBodyand the staying power of the brand’s historic lines,”​ said Jean Madar, CEO and chairman.

Madar also pointed out that following the debut of Montblanc Legend, sales were more than three times greater than in 2010, while the company recorded first time sales for the Jimmy Choo signature fragrance that ‘far exceeded expectations’.

Likewise, he pointed out that an increase in sales in the US was driven by the  new productToo Toofor Betsey Johnson, while the continued distribution of specialty retail products helped drive overseas sales.

Looking ahead to 2012, the company says it is expecting that profits will be further impacted by rising costs, while it also reaffirmed its forecasts for full year sales, stating that the figure should be around $625m.

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