Elizabeth Arden Inc. sees a transformational year ahead as the company drives its stake further into the celebrity fragrance business — trying to beat Coty Inc. at its own game — and works to round out its business in prestige skin care and color with a major relaunch of its flagship Elizabeth Arden brand this fall.
This story first appeared in the August 10, 2012 issue of WWD. Subscribe Today.
The company’s top-to-bottom overhaul of Elizabeth Arden is expected to double the brand’s sales over the next five years, said E. Scott Beattie, chairman, president and chief executive officer. That goal, in turn, would also nearly double the company’s current revenue, which for 2012 was $1.24 billion, as Beattie has previously noted.
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“We expect fiscal 2013 to be a transformational year in the expansion of our business,” Beattie told Wall Street analysts during the company’s earnings call on Thursday. “Our organization has never been better prepared for accelerated revenue growth.” He said he anticipates fiscal 2013 will “be the beginning of a number of years of above-industry growth rates.”
For the fourth quarter, the company’s net income declined 32.8 percent to $3.63 million, or 12 cents a diluted share, compared with $5.40 million, or 18 cents a share, due to transition expenses and costs tied to fragrance license acquisitions completed during the quarter. Excluding those expenses, on an adjusted basis, net income a diluted share was 28 cents. The company’s net sales for the three-month-period ended June 30, gained 4.6 percent to $265.5 million, compared with $253.8 in the prior-year period. Excluding the unfavorable impact of in the prior-year period. Excluding the unfavorable impact of foreign currency translation, net sales increased by 8 percent.
Arden’s new product pipeline for fall is teeming with fragrances, due in large part to the acquisitions mentioned above. In June, Arden purchased the fragrance licenses of Justin Bieber and Nicki Minaj from Give Back Brands. The deal followed Arden’s acquisition of the global fragrance licenses of Ed Hardy, True Religion and BCBG Max Azria from New Wave Fragrances.
Bieber and Minaj — when coupled with celebrities in Arden’s existing portfolio, which include Taylor Swift and Mariah Carey among others — make Arden the leading celebrity fragrance company in the world, according to the company.
Swift and Bieber are a veritable power couple for Arden. Their inaugural scents, Wonderstruck and Somebody, respectively, accounted for more than a quarter of the total growth of the women’s prestige fragrance category in the U.S. last fall, said Kathy Widmer, executive vice president and chief marketing officer.
Both singers now have second scents in the works. Bieber’s Girlfriend fragrance launched in department stores in June, and Swift’s Wonderstruck Enchanted will follow in September. Fall launches also are planned for Nicki Minaj, Ed Hardy, True Religion and BCBG Max Azria.
Arden reaped the rewards from new product introductions in 2012, with its prestige business growing 10 percent.
However, on the mass side, its business was soft, with sales inching up 1 percent for the year. But this fall, Arden expects mass to get a big boost from fragrances cascading to the mass market from prestige, like Bieber’s Someday.
For the full year, Arden’s net income gained 40.1 percent to $57.4 million, or $1.91 a diluted share, compared with about $41 million, or $1.41 a share. Net sales rose 5.3 percent to $1.24 billion, compared with $1.18 billion in the prior year.
The company also continued to expand its international reach. In fiscal 2012, its international business gained 9.8 percent, or 9.4 percent in constant currency, over the prior year. Net sales in North America gained 2.9 percent, hampered in part by weakness in the mass market.