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Celebrity fragrances prove to be the big winner for Elizabeth Arden

By Simon Pitman , 31-Jan-2013

A big rise in second quarter sales comes off the back of significant growth in the company’s celebrity endorsed fragrances sales worldwide, but the performance still came in below expectations, forcing the company to lower its outlook.

Net sales for the quarter rose by 8.8 percent to $467.9m compared to the second quarter last year, which represented a rise of 9.1 percent on discounting the unfavorable impact of foreign currency exchange.

The rise in net income was not so steep though, with the figure up from $42.37m to $44.80m for the current quarter, representing a rise of 5.7 percent. The EBITDA figure for the quarter was $80.51m, up by 14.2 percent on the previous year.

Strong results but below company expectations

However, as CEO Scott Beattie pointed out, the results were below the company’s expectations.

"Second quarter sales and earnings were up solidly from the prior year, with strong retail sales performance within our North America and International businesses,” Beattie said.

“Nonetheless, our net sales results were below original guidance due to lower than forecasted sales in department stores as well as softer than anticipated holiday sales at one of our major mass retail accounts.”

North American celebrity fragrance sales lead the way

In the North America market, the company’s biggest net sales increased by 8.4 percent to $311.0m, with the company earmarking its prestige and mass fragrance portfolio as performing particularly well.

The celebrity fragrance brands led the growth, with particularly strong performances including Justin Beiber’s Girlfriend, Pink Friday Nicki Minaj and Taylor Swift, which the company said all ranked in the top selling prestige fragrances during the all-important holiday season.

Contrary to this, the company reported that sales of Elizabeth Arden branded products dipped by 6 percent during the quarter, attributable largely to the fact that overall retails sales at Elizabeth Arden counters were flat, whereas sales at recently converted flagship counters showed a marked increase.

Prestige fragrance lead international sales

International markets showed even stronger growth during the quarter, rising 11 percent at constant rates to $156.8m, a result that again was driven by sales of prestige fragrances, which were up by 14 percent during the first six months of the financial year.

The lower than expected second half revenues have led the company to reduce its expectations for the full fiscal year, leading the company to believe that net sales for the full year will grow in the 9 to 11 percent range.