Elizabeth Arden sales up but profits down on license acquisition costs

By Simon Pitman

- Last updated on GMT

Related tags Strong sales growth Generally accepted accounting principles

Color cosmetics and fragrance maker Elizabeth Arden reported health gains in revenue for its fourth quarter, but net profit is hit by licensing acquisition costs.

The company reported that net sales increased by 4.6 percent on a reported basis to $265.5m for the quarter, but this figure would have seen an increase of 8.0 percent without the unfavorable impact of currency translations.

Net profit for the quarter fell significantly, down from $5.4m in the corresponding quarter last year, to reach $3.6m, a figure that was associated with costs relating to fragrance license acquisitions agreed during the quarter, together with license termination costs.

Full year 2012 revenues show even stronger gains

For the full fiscal year 2012, the company reported that sales were up 5.3 percent to $1.24bn, a figure that reflected a negligible impact from currency translations, given that the US dollar was not so strong earlier on in the year.

Net profit for the full year was up from $41.0m to $57.4m, a figure that reflected improvements in operating metrics and a concerted restructuring program that has bought about greater synergies for the company’s global operations.

"This was an important year for our Company as we reported another year of solid earnings growth and margin expansion, while significantly advancing our key initiatives,”​ Scott Beattie, chairman and CEO of Elizabeth Arden.

“For fiscal 2013, we expect strong sales growth and another year of improved operating performance."

International sales show the biggest gains

On a geographical basis, the company’s full year results displayed a particularly strong result for its international sales, with sales growing by 9.4 percent at constant rates, against a sales increase of 2.9 percent in the North America market.

The company said that the international sales growth was most pronounced in its European, travel retail, and emerging markets, whereas gains in the North America market were seen in the company’s prestige business.

Looking ahead to fiscal 2013, the company is banking on a strong performance, forecasting that net sales will increase by 13.5 percent to 15.0 percent compared to this year, an estimate that assumes a negative impact from foreign currencies of around 1.4 percent.

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