A new twist in the Parlux tale

By Simon Pitman

- Last updated on GMT

Related tags Stock Parlux

Parlux Fragrances says it has received a request from a shareholder
for approval to increase ownership in the company, the latest turn
in a series of events that has seen the company's share tumble more
than six-fold in the space of a few months.

According to a press release from the company, Glenn Nussdorf sent executives a letter confirming that he had obtained more than a 5 per cent stake in the company's share stock on the open market as of August 28.

He also added that he and his brother, Stephen, were planning to build on this investment, with the aim of pushing its investment in common stock beyond the 15 per cent marker.

In accordance with US investment laws, the brothers made their declaration after their investment exceeded 5 per cent, forcing them to make the request to secure a Stockholder Approval from the Parlux executive board.

The executive board is believed to have given its approval to the request on the grounds that no shares are purchased from members of the executive board.

News of the investment caused Parlux share prices to exceed $6 a share in the course of the last week, the first significant rise in nearly one month.

The Nussdorfs own 37 per cent of E Com Ventures, a major customer to Parlux, and together with their sister, Arlene, control Model Reorg, a fragrance distributor, retailer and manufacturer.

To many industry experts, the news would appear to be a last ditch attempt to save a company that appears to be facing massive challenges to survive.

Two weeks ago the company received a warning that it would be delisted from the Nasdaq if it did not comply with regulations and publish its most recently quarterly results.

Further to that, the company has also had a significant number of lawsuits issued against it by stock holders who believe that company executives misled them over the company's future prospects and violated federal securities laws.

At the end of June the company blamed the late filing of its quarterly results on a high rise in the level of administration work that required to produce its annual report on time.

Evidently the company's administration team had not been able to keep up with rapid expansion over the course of the last year, when sales more than doubled from $47.44m in 2005, to reach $111.77.

However, further to this, the company has revealed that its sales results for the most recent quarter, ending June 30, would be significantly down on last year's results. It blamed slowing sales in department stores and other upmarket retail outlets in the US.

Parlux, is the license holder to big fragrance names such as Perry Ellis XOXO, Ocean Pacific and tennis star Andy Roddick, and really hit the big-time by licensing deal to produce fragrances and asscessories using the name and image of media figure and heiress Paris Hilton.

The Paris Hilton brand is undoubtedly a valuable asset to the company, but for the time being it is likely that the smaller brands that will be sold off first.

Indeed, on August 24, Parlux indicated that it was in discussions to sell its Perry Ellis brand to New Jersey company Victory for an estimated $140m. The company said that this move would enable it to concentrate on its celebrity-branded perfumes.

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