Parlux Fragrances announced selected financial results for the three month and six month periods ended September 30, 2006. Net sales for the three months ended September 30, 2006 were approximately $39.1 million, compared to approximately $39.3 million for the same period of the prior year. Net income was approximately $3.5 million compared to approximately $4.4 million for the same period of the prior year, a decrease of approximately 20%. The decrease in net income is attributable to lower gross margins, minimum royalties for certain non-fragrance products, duplicate warehouse and temporary storage expenses and additional interest expense. Acccording to the company, these additional costs were partially offset by an approximate $1.8 million gain from the sale of its investment in E Com Ventures, Inc.
Parlux also announced today that its board of directors has authorized a common stock buy-back program not to exceed 10 million shares, subject to price and other limitations.
"We are pleased with the operating performance of Parlux, and are optimistic about our brand portfolio's prospects, as sales of our continuing brands for the third quarter ended December 31, 2006 were higher than the same quarter last year," said Ilia Lekach, chairman and CEO, Parlux. "The more than $60 million in cash received from our recent sale of the Perry Ellis fragrance license and related assets leaves Parlux well-positioned to enhance value for our shareholders. We have paid down our bank debt and intend to continue to invest in the company's most promising growth opportunities, while returning value to shareholders through our stock buy-back program."
In addition, Parlux announced that the review of its financial results for the period ended September 30, 2006 by its independent auditors has been delayed as a result of an Amended Class Action Complaint filed on November 8, 2006. Parlux believes that the allegations of the complaint are without merit and legal counsel continues to vigorously contest the action. As a result of the allegations in the complaint, the company's Audit Committee, in late November, 2006, engaged experienced Special Audit Committee Counsel who then simultaneously engaged experienced independent forensic accountants to investigate the allegations. Their investigation is in process. The company anticipates filing its Form 10-Q for the quarter ended September 30, 2006, shortly after the completion of this investigation.