The company said that sales fell by almost 5 percent to $22.9m, compared to $24.1m in the corresponding quarter last year, a result that reflected the extremely competitive nature of the fragrance category in the US right now and a surprising drop in sales for its leading Rihanna fragrance.
Likewise, net profit for the quarter took a pounding, falling from a positive figure of $232,000 in the first quarter of last year, to a negative figure of $2.9m for the current quarter.
Ad spend hits profits
The company attributed the fall in profits down to increased expenditure on advertising and promotional costs, a necessity given the fact that fragrance players are having to work so much harder to win over consumer spend.
“The results were in line with those previously announced, and were fundamentally due to advertising and promotional investment spending of $9.1m, compared to $5.3m in the prior year comparable quarter,” said Frederick Purches, company chairman and CEO.
Parlux has had a big push on the newly launched Rihanna fragrance, and stated that the increase in promotional spend was entirely devoted to expanding the new product launch.
Additional spend goes on promoting Rihanna fragrance
The company said that income from the Rihanna fragrance reached $5m in the last quarter, compared to $9m for the final quarter of last year. Indeed, in the previous quarter Parlux had attributed growth in sales to the successful sales figures for the Rihanna fragrance.
Net sales for the quarter ending March 31st were up by 63 percent, from $17.7m to $28.9m, while net profits for the period were $184,000, compared to a loss of $9.8m in the corresponding period last year.
The company won the license for the Rihanna fragrance last year, coinciding with the pop star’s rise to become one of the biggest selling artists worldwide.
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This follows on from a series of fragrances launches featuring heiress and high profile socialite Paris Hilton, who some years ago helped the company to further success when those fragrances became global best-sellers.
Despite the overall dip in revenues for the quarter, Purches said that the company was “cautiously optimistic that the brand and the total company will achieve sales targets in the current fiscal year.”
Purches also pointed out that the company’s currency bank balance remains healthy, showing a cash position of $21.7m and no debts.