Parlux earnings jump back into the black

By Simon Pitman

- Last updated on GMT

Related tags Personal care products Revenue

Parlux says cost control helped to stem previous losses for its 1Q that helped to edge net earnings back into the black, thanks also to a modest gain in sales.

Net sales jumped 2 percent, from $23.6m to $24.1m, despite the fact that the company no longer holds the licensing agreement for Guess personal care products, which attributed $11.8m in sales during the corresponding quarter last year.

Meanwhile, net income jumped from a loss of $2.5m in the second quarter of 2009, to a positive figure of $232,000, a result that reflected the fact that the cost of goods sold fell from $8.25m in Q2 2009, to $5.77m for the current quarter.

The reduction in the cost of goods sold reflected the fact that operating expenses were reduced by $3.6m or 21 percent compared to the corresponding quarter last year.

Retail environment still slow

“Although the retail environment has not returned to previous levels, our management and staff are energized by these achievements,” said​ Parlux CEO Frederick Purches.

“We believe that the market value of our stock is far below its intrinsic value and we expect our new strategy will merit renewed shareholder confidence."

However, despite the optimistic note the company said that the loss of the Guess license is likely to further impact sales during the next two quarters, after it stopped selling the brand’s personal care products in December 2009.

Loss of Guess license continues to hurt

Indeed, Purches noted that sales for the next two quarters will continue to be negatively impacted by the loss of the Guess license. This comparison is expected to be more pronounced in the fourth quarter.

Following on from a very difficult 2009 for the fragrance industry in general, Parlux is battling to maintain market share as well as trying to create new opportunities.

New licensing agreements are expected to be an integral part of the company’s ambitions, evinced by the recent signing of a fragrance licensing agreement with fashion brand Vince Camuto.

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