International markets will drive Elizabeth Arden growth

By Katie Bird

- Last updated on GMT

Related tags: Elizabeth arden, Elizabeth arden brand, Income, Revenue

Future growth for Elizabeth Arden will be driven by international
markets that currently make up less than half of the company's
trading.

At the Wachovia Nantucket Equity conference, CEO Scott Beattie said the company was looking to expand its international presence and hoped to take the Elizabeth Arden brand above the billion dollar brand. Focus on international fragrances ​ Currently 60 percent of the company's business is US-based and a significant proportion of this comes from the distribution of fragrances in the mass market retail channel, said Beattie. However, according to the head of the cosmetics giant, growth in the next ten years will be driven by international markets, which are less saturated and stronger than the US. Latin America, Eastern Europe and the Middle East are the leaders of the fragrance pack, he said, adding that Asia is not such a strong market at present. Furthermore, Beattie highlighted the company's aim to expand its signature brand. Signature brand should be one of top ten ​ At present the Elizabeth Arden brand brings in about $600m annually, approximately 25 per cent of the company's yearly sales turnover. Referring to its international presence Beattie said: "The Elizabeth Arden brand is bigger than the business, this is a gap we want to close." According to Beattie, the brand should be bringing in more than a billion dollars annually and be one of the top ten global brands in terms of size. Unlike the market for fragrances, it is the Asia-Pacific region that holds significant potential for growth and the company has recently opened an office in Shanghai in order to further exploit this market. Liz Caliborne deal will improve margins ​During the presentation, financial senior vice president Marcey Becker was questioned over the recent Liz Claiborne deal that gives the company ownership of a brand they have previously distributed. Although the effect the deal is expected to have on earnings and revenue will be published in August, Becker did say that the acquisition should improve the company's gross margins in 2009 and 2010. Before the company took ownership of the brand, it had acted as a distributor, buying finished products from Liz Claiborne and therefore incurring higher costs. The acquisition of the brand will increase the percentage of the company's fragrance business that is owned in comparison to that which it distributes thereby improving margins. Beattie added that the sales revenue of the Liz Claiborne business at the time of the transaction was $250m, although Elizabeth Arden was already seeing $70m of this through its distribution agreement.

Related topics: Business & Financial

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