Perry Ellis says no to sale of Parlux fragrance license
fragrance brand is not up for sale. The news came following a
decision made by Perry Ellis International (PEI) that it would not
give its consent to the sale.
The move comes after weeks of tussling over the sale, as Parlux struggles through a difficult time in the face of slowing sales, a plumetting share price and a number of failed attempts to raise funds.
After trying and failing to privatize the company, the latest attempt at raising funds has been the sale of Perry Ellis, which to date has proved to be the company's number one selling fragrance brand.
Having generated $77m in revenues last year, the brand accounted for 42.5 per cent of the company's total sales in 2005.
Parlux entered into a letter of intent to sell the brand rights to Victory International on August 16, which was subject to a number of approvals, including that of PEI.
During the proceeding six weeks, a campaign was launched by shareholders at Parlux, including leading investor Glenn Nussdorf, who has a 10.5 per cent stake in the company.
Nussdorf claimed that Victory International had not fully outlined how it was going to finance the $140m price tag for the license over a proposed five-year term, as well as discrepancies over the licensing terms, which he claimed would not allow for the deal to take place.
The latest news follows a string of incidences that has set Parlux on a rocky path and sent its share price into free fall. In the last few weeks shares have been trading at an average of $5 per share, down from a high of $19 bakc in March.
However, after news was leaked that the Perry Ellis deal was not going ahead earlier this week, share prices passed the $6 mark and closed trading on the NYSE at $5.87 yesterday.
Many investors will be reassured by the fact that the Perry Ellis deal will not go ahead, suggesting that there may still be a future for the company in its present state and reducing the threat that the brands will be sold off one-by-one as quickly as possible.
Last year it was growth in the sale of Paris Hilton fragrances and branded designer goods that helped the company's sales turnover more than double, from $47.44m in 2004 to $111.77m in 2005.
However, sales have slowed considerably recently, with the company blaming slowing retail activity in the US market for a downturn in the most recent quarter.
Parlux, is the license holder to big fragrance names such as XOXO, Ocean Pacific and tennis star Andy Roddick, and really hit the big-time by licensing deal to produce fragrances and accessories using the name and image of media figure and heiress Paris Hilton.
