Sales up but profits stagnate for Inter Parfums

By Simon Pitman

- Last updated on GMT

Related tags Revenue

Inter Parfums has become another one of the growing number of cosmetics businesses to be affected by rising costs, after announcing record sales growth but stagnant profits.

The company, which makes the majority of its sales in Europe, said that net sales for the second quarter grew by 20 percent to reach $99.1m, compared to $82.8m in the corresponding quarter last year.

On a six monthly basis, the results were even more spectacular, reflecting the seasonal nature of sales, the company claimed.

Sales for the six month period increased 32 per cent to reach $222.2m, compared to $167.9m, which the company said was once agin attributable to the performance of its leading brands, in particular to Burberry and associated new launches.

On a geographical basis, sales for the second quarter were up 19 per cent in Europe, to reach $70.5m. Sales in the US were up 23 per cent to $12.3m, reflecting the continued increase in the Banana Republic and Gap personal care ranges.

“Burberry brand sales were especially strong due to the continued rollout of the latest fragrance, Burberry The Beat and the exceptional growth and staying power of Burberry Brit, which launched in 2003,” said Jean Medar, CEO.

However, the news on the profits front was not quite so rosy, with net income remaining steady, up fractionally from $3.7m last year to reach $3.8m for the second quarter this year.

This figure reflected a significant increase in the cost of sales during the quarter, which were up 24.5 per cent, from $34.6m to $43.1m, reflecting increases in a range of costs, including materials, ingredients and transport.

Costs are likely to remain a challenge for the coming months, given that a full pipeline of new product launches will require additional marketing and advertising expenditure.

However, with the price of crude oil falling significantly in the past few weeks, it seems that the pressure is starting to diminish regarding manufacturing costs.

This year the new product pipeline is currently concentrated on the European market, with the launch of Burberry The Beat due to be expanded, as well as new launches that include a Jeanne Lanvin fragrance and the Van Cleef & Arpels Feerie fragrance, both due to be launched later this year.

Looking ahead to the full year, the company says that the most recent results suggest that it is still on course to fulfill its 2008 guidance, which should mean sales of $460m and net income of approximately $26.8m.

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