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Inter Parfums Inc. may be bidding adieu to the Burberry license, but it is expecting big things from Karl Lagerfeld.
“Karl Lagerfeld is a fabulous addition to our luxury portfolio,” Jean Madar, Inter Parfums chairman and chief executive officer, told analysts during the company’s third-quarter earnings call on Thursday. “We will give the brand a fresh start.” The company inked a 20-year global licensing agreement with the Karl Lagerfeld brand last month, and said it plans to introduce the first new fragrance in 2014.
As part of the deal, Inter Parfums will pay an advanced royalty payment to the licensor of 9.6 million euros, or approximately $12.5 million at current exchange.
As previously reported, Burberry plans to move its beauty business in-house and will buy back its fragrance license from Inter Parfums, which has a portfolio of fragrance brands that includes Lanvin and Jimmy Choo. As part of the transition agreement with Inter Parfums, Burberry will pay 181 million euros, or about $230 million at current exchange, exclusive of receivables, inventories and other assets, before the end of the year.
“We had a great run with Burberry and we are very enthusiastic about our corporate life without Burberry,” said Madar. The company’s French subsidiary, Inter Parfums SA, will continue operating the business for this brand until March 31, at which time the business will be turned over to Burberry.
Inter Parfums on Thursday reported that net income attributable to the company for the quarter ended Sept. 30 declined 3.9 percent to $10 million, or 33 cents a diluted share, from $10.4 million, or 34 cents a share, in the prior-year period.
Net sales for the quarter declined 3.2 percent to $166.3 million, from $171.7 million. At constant exchange, revenues gained 2 percent.
Sales from the company’s European-based operations declined 4 percent to $148.6 million, while sales by U.S.-based operations gained 4 percent to $17.7 million.
For the nine-month period, net income attributable to the company gained 11.7 percent to $31.5 million, or $1.03 a diluted share, from $28.2 million, or 92 cents. Net sales during the period gained 12 percent to $477.2 million, from $426.1 million. At constant exchange, revenues gained 16.9 percent.
Madar said the company has a full pipeline of products planned for 2013. He said, “Almost all of our brands will have a new fragrance next year.”