Analyst casts doubt on Elizabeth Arden sales
leading analyst's comments that Elizabeth Arden fragrances have
been losing luster with consumers causes share prices to fall.
Gary Giblen, analyst with Breach Murray, Carret & Co, says that the company's brand development has been disappointing recently, pointing to disappointing sales of the new Hilary Duff fragrance, Duff, during the holiday period.
He also stated that recent negative press coverage of Britney Spears is likely to impact sales of its flagship fragrance and related cosmetic products. Currently the Spears cosmetic portfolio includes the recently launched Fantasy and Midnight Fantasy fragrances, together with the record-selling Curious fragrance.
Giblen added that Wal-Mart's decision to move away from the apparel and fashion categories decision to return its focus on the cosmetic and fragrance side of the business, away from the apparel and fashion category could impact sales further.
Current Elizabeth Arden derives approximately 15 per cent of its worldwide sales from the retailer.
The analyst's notes, which were published by the Associated Press, stated: "The brand/category challenges and evident loss of the 'magic touch' not only constrain short-term numbers, in our view, but also diminish the attraction of Arden as a buyout candidate, which is a key consideration to the investment community regarding Arden."
The comments come despite the fact that in November the company announced that net sales has risen an impressive 12.1 per cent to reach $254.8m in the three months ending in November.
At the time the company said that the sales had been particularly driven by strong sales of new launches, particularly the then new Hilary Duff and Danielle Steele fragrance launches, together with fragrance sales from the June 2006 purchase of Riviera Concepts.
However, if Giblen's comments are backed up by the release of the company's second quarter financial results, it would seem that the premium-place fragrance and skin care maker may well have lost out during the all-important holiday season - a period when by far the highest percentage of premium cosmetic and fragrance purchases are made.
The value of the company's shares fell 55 cents last Friday, following the analyst's announcement, but then rallied slightly in late trading to close at $18.67, down 40 cents on the previous day.
