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Elizabeth Arden, Inc. announced financial results for its first fiscal quarter ended September 30, 2013. For the quarter ended September 30, 2013, the company reported net sales of $343.6 million, which compares to $344.5 million for the prior fiscal year period. At constant foreign currency rates, net sales increased by 0.6%. On a reported basis, net income per diluted share was $0.06. On an adjusted basis, net income per diluted share was $0.22, as compared to net income per diluted share of $0.44 for the prior year period. Adjusted net income per diluted share excludes non-recurring costs relating to the Elizabeth Arden brand repositioning and restructuring activities, and for fiscal 2013, adjusted net income also excludes costs relating to fragrance brand acquisitions completed in fiscal 2012.
Net sales for the company's international segment increased by 5.3%, or 7.2% at constant foreign currency rates, over the prior fiscal year period. Sales growth was strongest in the company's Greater China and European markets. Net sales in the company's North America segment declined by 3%, reflecting significant fragrance launch volume in the prior year period.
For the quarter, net sales of Elizabeth Arden branded products increased by 11.1%, or 12.3% at constant foreign currency rates, as compared to the prior year, with increases across the skin care, color cosmetics and fragrance categories. Retail sales at the company's Elizabeth Arden flagship counters have increased 20% in North America year over year since conversion, and retail sales at the company’s international flagship doors have increased 13.4% since conversion, or 21.6% excluding underperforming travel retail doors in Korea. Elizabeth Arden brand net sales growth was strongest in the company’s focus markets of China, North America and Europe.
E. Scott Beattie, chairman, president and CEO of Elizabeth Arden, Inc., commented, “Overall results for the quarter were essentially in line with our expectations. We are pleased with the progress of the Elizabeth Arden brand repositioning as well as our other key initiatives. Recall, we had strong sales growth in the first half of last year due to the contribution of acquisitions and an unprecedented level of fragrance launch volume. This clearly has an impact on revenue growth and gross margin improvement comparisons for this fiscal year. As we head into the holiday season, we expect to continue to execute against our plans, but our outlook remains cautious given the continued challenging economic environment globally.”
Beattie continued, “We are pleased to welcome Eric Lauzat to our company as executive vice president and general manager, international. Eric has had a distinguished career at L’Oréal where he was a key commercial leader instrumental in building prestige beauty businesses in various regions of the world. He has an exemplary track record of organization building and commercial brand development of prestige beauty brands across categories in the regions he managed, including the Lancôme and Biotherm beauty brands, as well as the Giorgio Armani, Ralph Lauren and Yves Saint Laurent fragrances. Eric’s organizational leadership of our international business should help accelerate the development of our international teams, our customer relationships and our brand portfolio.”
“I am extremely excited to be joining Elizabeth Arden. The iconic Elizabeth Arden brand and the company’s impressive fragrance portfolio have tremendous untapped potential to build market share in existing markets, as well as to expand into high growth beauty markets. The company has had a remarkable track record of growth over the past 20 years, and I am convinced that there are opportunities to drive accelerated growth over the next several years,” added Lauzat.
Regarding its outlook, Elizabeth Arden noted that esults for the second fiscal quarter ending December 31, 2013, will be largely dependent on retail performance during the holiday season and replenishment orders, particularly of the company’s larger North American mass accounts. While the environment remains relatively unchanged, both of these factors have been volatile over the past year. ThecCompany is currently forecasting net sales to range between $450–475 million and for earnings per diluted share to be in the range of $1.30–1.60.
Given its current expectations for the second fiscal quarter, the company expects to achieve the midpoint to lower end of its annual fiscal 2014 net sales and earnings guidance that called for a net sales increase of 3–5% over fiscal 2013, and earnings per diluted share of $2.15–2.30. The annual net sales guidance includes an anticipated unfavorable impact from foreign currency of approximately 0.4%, as compared to the prior year period.