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Fourth-quarter losses were narrowed at Elizabeth Arden Inc. as sales slipped for the three months ended June 30.
This story first appeared in the August 14, 2009 issue of WWD. Subscribe Today.
The Miramar, Fla.-based firm incurred a $3.6 million loss during the quarter compared with a loss of $10.4 million during the same period a year ago. On a diluted earnings per share basis, the loss was 13 cents, versus 38 cents a year ago.
Wall Street analysts were expecting a loss of 8 cents a share, according to Yahoo Finance.
Revenues came in at $212.6 million for the quarter, a decline of 10 percent from $236.3 million last year, due to “weakness” in the U.S. and travel retail during the third and fourth fiscal quarters.
Quarterly gross profits were up slightly at $91.9 million, from $90.1 million the previous year, a 1.9 percent gain. As a percentage of sales, the company posted a gross profit margin of 43.2 percent, from 38.1 percent in the year-ago period. Depreciation and amortization for the quarter totaled nearly $7 million, while, the previous year, that figure totaled $6.3 million.
Two-thirds of Arden’s business is based on fragrance in North America, which includes department stores and mass market retailers, as well as the firm’s businesses in Canada, Puerto Rico and online.
“[The firm’s] U.S. department store business had a very difficult year, especially in the second quarter, due to [retailers’] deleveraging of inventory, particularly fragrance inventory,” E. Scott Beattie, chairman, president and chief executive officer, told analysts during a conference call after the close of the stock market Thursday.
He added that this destocking is ongoing.
“We finished fiscal 2009 as we had anticipated, and while it was a challenging year, we accomplished a great deal,” stated Beattie. “Our Global Efficiency Re-engineering initiative allowed us to improve gross margins, reduce inventories by $90 million year-over-year and generate cash flow from operations of $37 million.
A third of the company’s business is international and Beattie noted that, while the Elizabeth Arden brand helped drive the international business, the firm’s international distribution and travel retail businesses were “extremely soft for the second half of the year.” In addition to the performance of the Arden brand, another bright spot was Asia Pacific, which helped offset declines overall on the international front.
Beattie said the firm’s “long-term goal is to double the size of the Elizabeth Arden brand,” with a focus on its core skin care and related color brands. He added the brand will be celebrating its 100th anniversary in 2010.
For the full fiscal year, the firm swung to a loss of $6.2 million, or 22 cents a share, from profits of $19.9 million, or 68 cents a share, the previous year. Full-year sales were $1.07 billion, a 6.2 percent decline from $1.14 billion the previous year.
The company set guidance for the first quarter of fiscal 2010 of net sales of $255 million to $265 million and a loss per diluted share of 3 cents to 8 cents.
For the fiscal year ending June 30 company expectations are for net sales to increase by 2 percent to 3.5 percent, the firm stated, and earnings per diluted share to be in the range of 50 cents to 65 cents.