Parlux sales turn the corner, though profits fall

By Simon Pitman

- Last updated on GMT

Related tags Percent reduction Marketing New york stock exchange

New fragrance launches help to drive sales growth at Parlux, but higher costs mean profits slide for the second quarter results.

Net profits fell from $3.64m in the corresponding quarter last year, to reach $2.96m, a fall of 18.7 percent, reflecting the fact that operating expenses rose considerably during the quarter.

Net sales for the quarter, which were already announced in the company’s preliminary results last month, grew by 8 percent to $56.5m compared to $52.4m in the same period last year.

Investors react positively to results

Investors reacted well to the results, which were above both market expectations and the company’s forecasts, resulting in share prices rising by 17 percent on the New York Stock Exchange yesterday, to close business at $2.25 yesterday.

"We have strategically continued to invest in building the Parlux portfolio of brands, led by the recent launches of Queen Latifah, Josie Natori, and Marc Ecko, all of which are exceeding retailers planned sales in their respective distribution channels,"​ said Neil Katz, Parlux chairman and CEO.

This means that the company has launched three new fragrance brands during the quarter, while also launching new Paris Hilton and Jessica Simpson brands, a situation that has enabled it to turn around the loss-making position the company found itself in during the first quarter.

Back in the black

The company has been struggling to fight its way back into the black, with the first quarter for this year showing a net losses of $2.46m – although this figure is a significant improvement on the $4.88m in losses experience in the first quarter of the previous year.

The reduction in losses was largely attributable to the company’s cost cutting program, which saw operating expenses decrease by 14 percent, brought about by a 17 percent reduction in advertising and promotions, 18 percent reduction in selling and distribution costs and general admin charges lowered by 17 percent.

Looking ahead to the full financial year, the company said it remained ‘cautiously optimistic’ to record a positive cash flow for the business, while also stating that it was expecting an improved holiday season trading.

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