Elizabeth Arden profits driven by higher sales and cost cutting

By Simon Pitman

- Last updated on GMT

Related tags Currency Generally accepted accounting principles United states dollar

Elizabeth Arden reported profits above market expectations on the back of high international sales growth and successful cost cutting measures.

The company said that sales for the fourth quarter grew by 11.2 percent to $253.8m, which represented growth of 7.7 percent when taking into account the negative impact of currency translations.

Net profits for the period more than doubled from $2.3m in the corresponding period last year to reach $5.4m, a figure that was significantly boosted by cost savings from its global cost cutting initiative.

For the full year sales were up by 6.5 percent to $1.17bn, which represented growth of 5.9 percent when taking into account the negative impact of a strong dollar against foreign currencies.

Full year profits again more than doubled, growing from $19.5m to $41.0m.

Solid organic growth of brands

"Our results include solid organic growth of our brand portfolio across all of our businesses. Net sales within our North American business increased by 5 per cent for the fiscal year and were driven by market share gains in our U.S. mass business,”​ said Scott Beattie, company CEO.

“Our international sales growth of 9 per cent for the fiscal year benefited from strength in our European and travel retail and distributor businesses. Global sales of Elizabeth Arden branded products increased by 8 per cent, reflecting our focus on organically growing the Elizabeth Arden brand and the re-alignment of our marketing organization to better support global brand management."

Looking ahead to the next fiscal year, the company says it continues to remain focused on driving organic growth for the brand portfolio, with a particular reference to growing its share of the market for fragrances in Western Europe and higher growth in the emerging markets.

Fragrances lead the way

Beattie pointed out that during 2011 the company had been particularly successful at increasing brand distribution with retailers in Europe, a factor that contributed to a 20 percent growth in fragrances to retail customers in the region, a trend that is expected to continue into financial year 2012.

Further growth in fragrance revenues is also expected to be attributed to additional licensing agreements with Liz Claiborne, which now extends to a number of new trademarks, including the Curve fragrance.

The company paid Liz Claiborne $58.4m for the new licenses and expects the deal to modestly impact earnings in 2012, while having a ‘more accretive’ impact in fiscal 2013.

Looking ahead to fiscal 2012, the company says it expects full year sales to grow by 5.0 percent to 6.0 percent, which assumes a favorable foreign currency translation of 0.5 percent, while first quarter sales are expected to be in the region of $295m - $305m.

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