Elizabeth Arden posts weak results on falling fragrance sales
During the quarter, adjusted sales were $191.4m, which represented a decrease of 9.2% compared to the corresponding period last year, and a fall of 6.0% at constant foreign currency rates.
This resulted in a net loss of $35.06m, compared to a net loss of $26.4m in the corresponding period last year, while EBITDA came in at a loss of $15.7m, compared to a loss of $12.3m the previous year.
Star-endorsed fragrances not selling
Looking closer at the sales revenues for the quarter, it was noteworthy that sales of Elizabeth Arden branded products were up by 3%, which represented a jump of 10% at constant currency rates.
However, sales of non-Elizabeth Arden branded fragrances - which includes top-selling lines bearing names such as Britney Spears, Hillary Duff, Elizabeth Taylor and Juicy Couture – fell by 18%, underlining weakness in the celebrity fragrance market.
On a geographical basis, sales in North America declined by 12%, whereas the underlying results for the international markets were much stronger, with reported net sales decreasing 6%, but up 1% at constant currency rates.
The company said that gains in the international market were mainly driven by skin care, particularly in Asia, on the back of an new distribution strategy.
Outlook
In the final and fourth quarter, the company is predicting further gains in international markets, while also predicting that celebrity fragrance sales will continue to decline in North America.
The company also said it is predicting gross margin expansion on an improved sales mix, together with lower selling, general and administrative costs, which should lead to improved EBITDA margins.
“Our performance improvement initiatives continue to drive down costs and improve efficiencies in our business,” said Elizabeth Arden CEO Scott Beattie.
“Indirect overhead savings anticipated from our 2014 Performance Improvement Plan remain on track through the third quarter, and we remain committed to achieving a total of $40 million to $50 million of annualized savings.”
