Patience pays off as Rihanna aids double digit sales growth for Parlux

By Andrew McDougall

- Last updated on GMT

Related tags Digit sales growth Generally accepted accounting principles Sales Business

Patience pays off as Rihanna aids double digit sales growth for Parlux
Fragrance player Parlux has announced its unaudited results for the second quarter, crediting its double digit sales growth to the launch of its latest Rihanna scent and the advertising investment made in support of this.

Net sales for the quarter, ended September 30, 2011, were $46m, compared to $38.6m for the prior year quarter. Net profits were $3.3m or $0.16 per share, compared to a net profit of $1.1m or $0.05 per share, for the comparable prior year period.

"Our quarterly sales increase of 19% was strong, and results were in line with the range previously announced,”​ commented CEO Frederick Purches.

Investment pays off

"We have returned to profitability for the six-month period and recovered the first quarter loss due to our advertising investment, primarily used to expand the launch of ​[the] Rihanna ​[fragrance].”

Parlux had seen a dip in sales in the first quarter, when the Rihanna fragrance was first launched, but attributed this loss to the increased expenditure on advertising and promotional costs.

At the time Purches explained the company were ‘cautiously optimistic’ that the increased spend would pay off, and second quarter results appear to have reinforced his statement.

Targets achievable if economy holds up

The CEO also explained that the company has achieved significant increases in both sell-in and sell through at the retailer level, and believes the previously targeted sales levels of $145-150m for the fiscal year are achievable ‘as long as the global economy does not worsen.’

"At the end of the quarter, we had a cash position of $12 million with no borrowing after the production of our holiday gift sets. Our balance sheet is healthy, with working capital in excess of $94 million, and a book value per share of $4.93. We remain optimistic regarding our future performance,"​ he added.

For the cumulative six month period, net sales also saw a double digit increase recorded as $68.9m compared to $62.7m for the prior period. However, net profits were $0.4m, compared to $1.3m for the prior period.

Possible business combination

The fragrance firm also remains in discussions with American fragrance retailer Perfumania over a possible business combination.

The companies had announced earlier this year that they had entered into a Mutual Confidentiality Agreement to allow them to proceed with discussions and customary due diligence regarding the possible business combination.

And last month, both Parlux and Perfumania agreed to extend the Agreement until December 2, 2012.

Parlux has declined to provide further comment or updates with respect to a possible transaction unless and until an agreement is reached.

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