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Has Inter Parfums passed its peak?

By Simon Pitman , 04-May-2006

Continuing the decline in sales experienced during 2005, Inter Parfums has reported a dip in its dollar sales for the first quarter of 2006 as the company struggles to improve its ground in a hugely competitive market.

The company said that net sales were $70.9 m, down from $71.1m in the first quarter of last year. However, at comparable foreign currency exchange rates, net sales for the first quarter are up 5.5 per cent, reflecting the strength of the US dollar on foreign markets.

The company said that it would be releasing full operating results for the quarter on May 10, when analysts will be keen to see how costs have affected results.

 

In recent results the company has been struggling against the rising cost of licensing agreements. Indeed during the course of 2005 the costs associated with its licensing agreement for its top selling Burberry perfumes had a significant impact on the bottom line.

 

Company CEO Jean Madar said that there was still evidence of strong sales across all fragrance families, pointing to the fact that in particular Lanvin sales had been particularly robust during the quarter.

 

He also said that the initial launch of Burberry London for women in the US and much of Europe during the quarter had made a significant contribution to the results.

 

Given its performance the company's management reaffirmed its projection for the full year, stating it was on course to fulfill its objectives of $301m in sales and a net income of around $16.9m, assuming the dollar remains at current levels.

 

For the full year 2005, the company reported sales of $273.4 million, narrowly missing its $274 million estimate. However, for the fourth quarter of 2005, total sales only grew by just under 3 per cent to reach $65.5 million, compared to the same period in 2004, reflecting a downward trend that has continued into this first quarter of 2006.

 

One ray of light is the fact that the company has signed major licensing agreements with popular clothing brands Quicksilver and Gap in recent months. Indeed an agreement to supply a complete personal care line to Gap is expected to start paying dividends by the final quarter of 2006.

 

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