Expiration of Guess license hurts Parlux sales and profits

By Katie Nichol

- Last updated on GMT

Related tags Guess license License Generally accepted accounting principles

Fragrance manufacturer and distributor Parlux has highlighted the negative impact of the expiration of its Guess license on its sales and profits.

The company’s unaudited fourth quarter results revealed a 37 percent drop in net sales - a figure of $17.7m (€14.4m) compared to $28.2m for the same period last year. The Q4 net loss was $9.8m compared to net income of $1.4m for 2008.

A 2 percent drop in audited net sales for fiscal 2010, a figure of $148.1m, was reported. Net loss came in at $14.8m for the year, compared to the corresponding 2008 figure of $4.3m.

Negative effect of Guess license expiration

“It is obvious that this past fiscal year was a very difficult one,” ​said Parlux chairman and CEO Frederick Purches, adding that most of the losses for the fiscal year 2010 were linked to the ‘write-down of the Guess inventory and excess holiday returns’.

“The negative effect from the expiration of our Guess license was considerably more than expected,” ​he said. “This was further impacted by anemic consumer spending and by higher post-holiday returns.”

Last year it was announced that fragrance company Coty would take over the Guess licensing agreement from Parlux beginning January 2010.

Return to positive results expected

Despite the poor performance, Purches remained optimistic that improved results will be achieved in the future.

“The company’s focus and structure have been realigned to provide positive results for our shareholders in the future,” ​he said.

Parlux said its recently signed $20m credit facility with GE Capital Corporate Finance will help it focus on growth and profitability, with the additional funds being used for initiatives such as new licences as well as ensuring the company can meet the fluctuating stock requirements posed by seasonal demands.

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