By  on February 4, 2005

NEW YORK — Elizabeth Arden Inc. can thank Britney Spears for double-digit earnings gains in the second quarter.

For the three months ended Dec. 31, the New York-based beauty products manufacturer posted a 49.6 percent earnings gain to $31.7 million, or $1.06 a share, outpacing Wall Street’s consensus estimate of $1.03. Comparatively, the company reported earnings of $21.2 million, or 9 cents, in the year-ago period.

While the profit increase was noteworthy in its own right, Arden’s most impressive feat was coming out of the holiday season on top of the crowded celebrity fragrance market. After its September 2004 launch — the same month Spears became Mrs. Kevin Federline — her fragrance, Curious, quickly grabbed the top selling position in U.S. department stores, a position it held through what beauty executives deemed a crucial holiday season.

According to a statement released by the company on Dec. 10, Curious was the top-selling beauty product on for the month of November. It was also the top-selling scent in Canada, Australia and New Zealand, the only international markets in which it was released. “In Australia, after only five weeks of sales, [Curious] became the most successful fragrance launch ever at Australia’s largest department store, Myer,” said the statement.

“It was one of the most successful launches in the last five years in the fragrance category,” said Scott Beattie, chairman and chief executive officer, during the company conference call.

“In New Zealand, Curious generated retail sales six times higher than the previous largest fragrance launch,” said Paul West, president and chief operating officer, during the call. “In fact, Elizabeth Arden had four of the top five fragrances in that country for the holiday season.”

Curious, combined with strong sales of Arden’s Provocative Woman fragrance, ultimately drove sales up 9 percent to $323 million from $296.3 million. Excluding the benefits of currency exchange, sales rose 6.8 percent.

“Clearly, the brand innovation, particularly with Provocative Woman and our skin care and color innovation, has brought a new customer to the counter and has provided additional opportunities for cross-selling existing customers with new products,” said Beattie.The euphoria surrounding Britney was tempered by problems with Wal-Mart and J.C. Penney. According to West, shipments to Wal-Mart were down 10 percent as the megaretailer experienced lower foot traffic due to higher energy prices. Beattie is looking to a partnership with Nascar and celebrity race car driver Jeff Gordon to turn the Wal-Mart business around. The company plans to launch its Halston Z-14 fragrance, with Gordon as a spokesman, at the Daytona 500 on Feb. 20.

Meanwhile, shipments to Penney were down “in excess of 40 percent,” said Beattie during the call, pointing to weakness in Penney’s overall fragrance category.

For the first half of the year earnings jumped 62.1 percent to $36.5 million, or $1.23 a share, from $22.5 million, or 11 cents, in the year-ago period. Sales rose 8 percent to $535.1 million from $495.2 million.

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