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Nasdaq affirmation takes pressure off Parlux

19-Apr-2007

After months of uncertainty, Parlux Fragrances has the path to recovery firmer in sights after the Nasdaq Qualification Panel determined that the company could continue to be listed on the stock exchange.

Parlus had been threatened with de-listing after missing an extended deadline for its third quarter results earlier this month, as well as filing its second quarter results late.




The company said that the tardiness of its filings was down to rapid expansion, for which its administrative and accounting resources had been unable to keep up with.




However, the announcement has not prevented the continued fall of the company's share price on the Nasdaq. Yesterday the share price stood at $4.95, continuing the downward spiral sparked off by the publishing of its third quarter results last Friday.




On that day the company's share price stood at $5.76, but with the results showing that sales growth has slowed significantly and increased costs hit hard, the investment world has reacted negatively.




The company unveiled the results last Friday, showing that net income had almost tripled to $17.9m for the quarter, compared to $5.99m in the corresponding quarter for 2005.



However, those figures took into account a gain from the sale of its Perry Ellis fragrance brand. Excluding that gain the figures were not so positive, with sales from continuing operations registering a loss for the quarter of $5.5m, compared to a $1.5m for the corresponding quarter a year earlier.



This came despite the fact that sales revenue climbed by 15 per cent, up from $37.8m to reach $43.4m, although financial analysts had expected a more significant rise, in line with the company's more dramatic performance experienced in the first half of 2006.




As well as problems trying to keep apace with previous growth, inner turmoil has also beset the company, with a boardroom power struggle recently resulting in the firing of CEO Ilea Leckach.



However, the company has come a long way in a short time, making up for significant delays in its administrative and accounting processes, as well as reforming its executive board, which is currently headed up by Neil Katz.



Likewise, the recent sale of its most profitable brand, Perry Ellis, to the Falic Fashion Group, is expected to help put the company in better shape for the future, helping to consolidate and restructure its position in the hope of creating a stronger and healthier operation.



In 2005 strong growth in sales of the company's Paris Hilton fragrances and branded designer goods helped sales turnover more than double, from $47.44m in 2004 to $111.77m.



 

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