Inter Parfums performance impacted by expenses
sales growth and increased income for its full financial year,
despite the bottom line being impacted by taxes and interest on
debt repayments in the final quarter, reports Simon Pitman.
Inter Parfums reported sales of $236.0 million, up 27 per cent from $185.6 million in 2003. However, the weakness of the US dollar meant that at comparable foreign currency exchange rates, net sales for 2004 were up 22 per cent compared to 2003.
Fourth quarter sales were up 30 per cent, from $49.2 million to $63.8 million, reflecting a strong holiday season trading.
Net income for the full year rose 13 per cent to $15.7 million compared to $13.8 million for 2003. However the fourth quarter income figures were hit hard by increased expenses, declining 6 per cent to $3.5 per cent, compared to 2003's figures.
Jean Madar, Inter Parfums CEO said, "The decline in fourth quarter net income and diluted earnings per share were also attributable to several other factors including: net interest expense in the fourth quarter of 2004 versus net interest income in the final quarter of 2003, and a substantially higher fourth quarter tax rate."
The company also its quarterly cash dividend had increase to $0.04 per share or $0.16 per share on an annualized basis. The new dividend represents a 33.3 per cent increase over the previous dividend.
"As we reported in January, fourth quarter sales growth was primarily due to the excellent performance by Burberry Fragrances with gains stemming from Burberry Brit, the brand's fragrance leader, and solid results from Burberry London, Burberry Weekend and Burberry Touch," Madar said.
"The increase in gross margin percentage, which continues the trend of the entire year, related primarily to product mix as prestige product sales have been growing while mass market sales have been declining," he added. "In addition, we are beginning to see the impact of the increased distributor prices put into effect during the fourth quarter of 2004. The increase in S,G&A as a percent of sales is primarily due to the higher Burberry royalty rate that went into effect on July 1, 2004 and, to a lesser extent, because of increased expenses incurred in connection with compliance with the new Sarbanes-Oxley internal controls requirements."
Looking ahead to launches in 2005, Madar said that he was pinning hopes for the new Celine fragrance line for men and women, Fever, being launched in France, the Middle East, Russia and the UK, during the course of this month and April. He said that it would be launched elsewhere in Europe from Many onwards.
He also said that a new Christian Lacroix fragrance family with products for men and women will be launched, with the first new Lanvin fragrance, Arpege for men, expected in the fall of 2005.
He went on to say, "As previously mentioned, initial steps, most notably higher selling prices to distributors, have been taken to partially offset the higher royalty and marketing costs under the terms of the new Burberry license. Supplier price concessions are also in the works. In our opinion the most productive step will be the formation of joint ventures or Company-owned subsidiaries within key markets to handle Burberry fragrance distribution. Next week, Marcella Cacci, who was in charge of Burberry's global licensing operations, joins our Company to head the Burberry Fragrances business, and we believe that we have a great new asset on the team."
Madar added that brand extension were likely to continue as a means of providing growth, stating that several existing brands may well be suited to skin care and cosmetic lines.
Looking to the financial year ahead, Russell Greenberg, executive vice president & CFO, noted, "As previously reported, we are looking for 2005 sales to come in at $280 million and net income and diluted earnings per share to approximate 2004 levels."
