The fragrance company reported positive results from the second quarter of 2008 however the three month figures hid less convincing six month results.
Profits and sales up for the quarter
Sales for the three months ending September 30 reached $52m, a rise of 40 per cent on last year’s $37m.
This significant jump translated into a 79 percent increase in net profits, with the company’s bottom line reaching $3.6m compared to last year’s $2.0m.
However, this figure was enhanced by delayed shipments resulting from inventory problems the company experienced in the first quarter of this fiscal year. Sales growth for the six month period came in at just over 10 per cent.
“We experienced a problem in the first quarter of this year, in that we ran short on a number of products and were unable to ship international sales,” Parlux CFO Raymond J Balsys told CosmeticsDesign.com.
Therefore shipments that should have gone out in the first quarter were distributed during the second, he explained.
Higher operating costs
In addition, the company incurred operating costs significantly higher than those associated with the previous year, $42m compared to $29m.
This led to a net loss for the six month period of 1.2m in comparison to last year’s gain of 1.9m.
The restructuring of the company’s sales team is likely to have played a role in these increased costs.
“Over the course of the last year our new vice president for domestic sales has been realigning personnel and has added a new layer to the team dealing with department store sales. We now have people who work in department stores to facilitate sales of the products to customers. As a result our brands are doing well,” Balsys explained.
Parlux did report significant increases in department store sales in a period where many analysts are predicting lower performances from this retail sector; however this could not offset the increased costs associated with sales and the troubled first quarter.
Looking to the future, the company remains ‘cautiously optimistic’ even in the light of a difficult economic environment.
Earlier this month, Parlux announced a stock buyback of 1,000,000 shares, approximately 5 per cent of the company’s publicly traded shares, in an attempt to increase the share value.