Inter Parfums' sales jump beyond expectations

Inter Parfums has reported a sharp rise in net sales for the fourth quarter beating its expectations and prompting the company to increase its profit guidance for the year. The prestige perfume manufacturer posted a 32 percent increase in net sales for the three months ending December, 31, taking the total figure to $119.2m. Meanwhile, sales for the year were up 21 percent on 2006 to $389.4m beating the company's forecast of $378m. While favorable exchange rates helped push up the value of sales, the figures were still well above average for the fragrance market. At comparable foreign currency rates, sales for 2007 were up 15 percent. This compares favorably with a recent estimate of global fragrance market growth for 2006 of 4.5 percent from Euromonitor. The market research firm also said fragrance sales were falling in the US and rising solidly in Europe - an observation that is borne in the breakdown of Inter Parfums' sales. US sales were up 14 percent to $22.6m for the fourth quarter but were dwarfed by European sales which increased 37 percent to $96.6m. Fourth quarter sales are crucial to the company as they make up 38 percent of annual sales due to the importance of the holiday period. Sales growth in the fourth quarter was significantly higher than expected leading Inter Parfums to increase its net income guidance for the year to $21.9m from $22.3m. The company also reconfirmed its sales forecast for 2008. Net sales are expected to increase 15 percent to around $437m while net income is forecast to rise to $24.1m. Inter Parfum's CEO Jean Madar recently told investors at the Cowen & Company Consumer Conference in New York that he expected future growth to be high despite the gloomy economic backdrop. Madar said manufacturers at the cheaper end of the market were more likely to be hit by an economic downturn because their customers, unlike high earning luxury buyers, are often forced out of the market. In addition, Inter Parfums plans to fend off macroeconomic pressures by expanding its cosmetic and skin care ranges and increasing its brand portfolio. The company specializes in manufacturing perfumes for luxury fashion brands and has so far avoided the celebrity trend, which many industry experts believe has reached its peak in the US. As well as publishing its sales figures, Inter Parfum announced yesterday that it has purchased 350,000 shares of its subsidiary Inter Parfums S.A. for €30 per share, which represents 2.9 percent of the business. Commenting on the purchase, the company's chief financial officer, Russell Greenberg said: "We determined that the fair value of our subsidiary's stock was significantly greater than its market value, making it what we believe to be a good long-term investment."​