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Elizabeth Arden, Inc. announced financial results for its second fiscal quarter ended December 31, 2013.
Net sales for the second fiscal quarter were $418 million, a decrease of 10.6%, or 10.1% excluding the impact of foreign currency rates. Net income per diluted share was $1.16. Net sales of the company’s North America segment decreased by 13% for the second fiscal quarter as compared to the prior year period. Net sales were impacted by weaker than anticipated holiday retail sales and replenishment orders at a number of North American mass and mid-tier retail accounts, in part due to decreased consumer traffic at those retailers, and a higher volume of fragrance launch activity in the prior year. Performance at prestige retailers was solid and in-line with expectations. Retail sales of Elizabeth Arden branded products in North American prestige retailers were strong, increasing by approximately 4%, which was better than the performance of the overall category. Net sales of the company’s international segment decreased by 5%, or 4% at constant currency rates, for the second fiscal quarter as compared to the prior year period. The company’s Greater China region posted strong sales growth during the quarter, but weak performance in the company’s European markets, where sales of fragrances were impacted by an increased level of highly promotional and discounted activity, drove the net sales decline for the quarter.
E. Scott Beattie, chairman, president and CEO of Elizabeth Arden, commented, “Our results in the second quarter are highly sensitive to the performance of North American mass retailers, which was weak during the holiday season. We are confident that this is not an issue with the commercial execution of that business, the fragrance category or our brands, and that our recent results are not reflective of the underlying strength of our fragrance brand portfolio.”
Beattie continued, “Right now, the priorities for the company are to return to more consistent profitability and improved return on invested capital. With the new senior leadership team, we are fully engaged in preparing and implementing plans targeted toward re-accelerating gross margin improvement and earnings growth. This is a comprehensive process that will be focused on improving the commercial execution of our international business, strengthening our travel retail and distribution relationships, better leveraging our overhead structure and re-deploying capital to priority markets and brands.”
For the first six months of fiscal 2014, net sales of Elizabeth Arden branded skin care and color products rose by 6% (at constant currency rates) in the aggregate and sales of fragrances were flat (at constant currency rates). Retail sales at the company's Elizabeth Arden flagship counters have increased 16% in North America year over year since conversion, and retail sales at the company’s international flagship doors have increased 13% since conversion, or 21% excluding underperforming travel retail doors in Korea. Net sales for the six months ended December 31, 2013, were $762 million, a decrease of 6.2%, or 5.6%, excluding the impact of foreign currency rates.