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Elizabeth Arden Profits Fall in Q2

Results were impacted by a tough holiday selling season in the mass channel.

Some key Elizabeth Arden initiatives.

Citing a tough holiday season in the mass channel, Elizabeth Arden Inc. on Wednesday reported that net income attributable to company shareholders in the second quarter was $35 million, or $1.16 a diluted share, compared with $44.8 million, or $1.47 a share, in the year-ago period. Net sales for the quarter declined 10.6 percent to $418.1 million, compared with $467.9 million in the prior-year period.

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Net sales in the company’s North America segment decreased by 13 percent in the quarter, impacted by a tough holiday selling season in the mass channel. The company said that its performance at prestige retailers was solid and in line with expectations. Sales of the Elizabeth Arden flagship brand gained approximately 4 percent in the quarter.

Net sales in Arden’s international segment in the quarter decreased by 5 percent, or 4 percent at constant currency rates, compared with the year-ago period. Growth in the Greater China region was offset by weak performance in the European markets, where fragrance sales were impacted by an increased level of promotional and discounted activity, according to the company.

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E. Scott Beattie, chairman, president and chief executive officer, stated: “Our results in the second quarter are highly sensitive to the performance of North American mass retailers, which was weak during the holiday season. We are confident that this is not an issue with the commercial execution of that business, the fragrance category or our brands, and that our recent results are not reflective of the underlying strength of our fragrance brand portfolio.” He added, “Right now, the priorities for the company are to return to more consistent profitability and improved return on invested capital.”

Beattie cited the fragrance business in the U.S. mass market, conservative replenishment on the part of retailers and the company’s international fragrance business, particularly in Europe and its distributor business, for the causes of the weakness.

For the first half, net income was $36.7 million, or $1.21 a diluted share, compared with $47 million, or $1.54 a share. Net sales declined 6.3 percent to $761.7 million, compared with $812.5 million.