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Inter Parfums' Q3 Results Down, But US-based Sales Up
Posted: November 8, 2012
Inter Parfums, Inc. reported results for the third quarter ended September 30, 2012. Compared to third quarter 2011, net sales decreased 3.2% to $166.3 million from $171.7 million; at comparable foreign currency exchange rates, net sales rose 2%. European-based operations generated sales of $148.6 million, down 4% from $154.7 million, while sales by U.S.-based operations were $17.7 million, up 4% from $17 million.
Through the first nine months of 2012, net sales were $477.2 million or 12% ahead of $426.1 million in the same period of 2011. At comparable foreign currency exchange rates, net sales rose approximately 16.9%. Net income attributable to Inter Parfums, Inc. increased 11.8% to $31.5 million or $1.03 per basic and diluted share from $28.2 million or $0.92 per basic and diluted share.
Jean Madar, chairman and CEO of Inter Parfums, commented, “As previously reported, in local currency, several key brands within our European-based operations achieved strong growth in the third quarter. Notably, Lanvin fragrance sales rose 12%, Montblanc fragrance sales rose 67%, and Jimmy Choo fragrance sales were 44% ahead of the same period last year. However, last year’s third quarter net sales included the global launch of Burberry Body, making for a difficult year-over-year sales comparison. With respect to U.S.-based operations, the 2012 third quarter was favorably impacted by the inclusion of Anna Sui fragrance sales, international distribution of U.S. specialty retail brands, and fragrance launches for namesake stores earlier in the year."
Russell Greenberg, executive vice president and CFO for Inter Parfums, pointed out, “The strength of the U.S. dollar has had a significant effect on sales and gross margin as the average dollar/euro exchange rate for the three and nine months ended September 30, 2012 was 1.25 and 1.28, respectively, as compared to 1.41 for both corresponding periods of the prior year. Over 40% of European-based net sales are denominated in dollars, while corresponding costs are incurred in euros. Thus, while a stronger U.S. dollar has a positive effect on gross margin during the current third quarter, gross margin declined slightly due to product mix and the sale of certain slow moving goods at a discount. On the other hand, SG&A as a percent of net sales decreased primarily due to reduced promotional and advertising spending as last year’s third quarter included the largest product launch in our history for Burberry Body. Also notable, foreign currency losses aggregated $1.4 million for the current third quarter as compared to a gain of $1.2 million in the corresponding period of the prior year.”
Madar also noted, “We plan to announce our initial guidance for 2013 on November 21, 2012. Our expectations for the coming year will factor in our previously announced transition agreement with Burberry, a process slated for completion by March 31, 2013. We also have new product launch plans in the works for many of our brands, including Jimmy Choo, Lanvin, Van Cleef & Arpels, Boucheron and our first Repetto fragrance in July for European-based operations, plus new product introductions for the Anna Sui and Bebe brands for U.S.-based operations. Beyond 2013, we are enthusiastic about the business opportunity resulting from our new relationship with the the iconic Karl Lagerfeld brand, under the 20-year license agreement we entered into last month. The first new fragrance launch from the brand is scheduled for 2014.”