Sales of Elizabeth Arden Inc.’s fragrances suffered in the second quarter, along with the company’s profits, as department stores stocked more lower-margin gift sets for the holiday season and mass stores reduced replenishment.
For the second quarter ended Dec. 31, Arden’s net income dropped 59.6 percent to $13.7 million, or 48 cents a diluted share, from $33.8 million, or $1.15, in the year-ago period. Excluding expenses and noncash charges related to the Liz Claiborne license agreement and restructuring expenses, earnings declined 48.6 percent to $17.38 million, or 61 cents a diluted share. Sales for the quarter were $370 million, down 12.4 percent, or 8.7 percent, excluding the unfavorable impact of foreign currency, compared to last year.
E. Scott Beattie, chairman, president and chief executive officer of Arden, said that Arden’s quarterly department stores sales in the U.S. were far lower than expected, with the skin care and color businesses down 8 to 9 percent and department store fragrance sales “much worse.”
He attributed the fragrance decline to retailers buying more gift sets, perceived as a greater value, rather than basic stock replenishment, which generates higher margins. Also, there was no new fragrance launch for the holiday season.
Travel retail sales were down 33 percent, attributed to “tremendous inventory de-stocking.”
Net sales and operating profit for the firm’s U.S. business were down about 10 percent for the quarter, while sales for the six months were down about 3 percent and operating profit was up 4 percent.
The firm’s mass business for the second quarter was down approximately 14 percent due to credit restraints at its smaller retail accounts as well as reduced replenishment, which Arden said came in below expectations and did not keep pace with sell-through results. Operating profit for the quarter at mass was down 8 percent. For the year to date, mass retail sales were down 11 percent. As for retail fragrance, sales were down 9 percent for the quarter and 7 percent in the year to date. Arden owns or distributes six of the top 10 women’s fragrances and five of the top 10 men’s scents. Retail sales of Arden fragrances at department stores fell 6 percent for the six months.
The launch of Elizabeth Arden Pretty, which is planned for spring, is expected to help the third and fourth quarters. Arden noted that the launch of Viva la Juicy was the best fall launch at department stores, outselling all other new brands in December, and on the mass side that M by Mariah Carey was the number-one ladies launch for the year.
Arden expects sales to decrease by 1 to 3 percent for the second half of the fiscal year. For the full fiscal year, Arden’s guidance is for net sales to decline by 4 to 5 percent, and for earnings per diluted share to be in the range of 71 cents to 84 cents.
For the six months, net income fell 96.6 percent to $1.2 million, or 4 cents a diluted share, but was down 41.2 percent, to $20.5 million, or 71 cents, excluding the effects of the Claiborne agreement and restructuring. Sales declined 5.8 percent, to $654.2 million, and dropped 3.4 percent without the effect of currency fluctuation.
There'll be no rest for those headed to Europe for men's, as Paris just closed the gap with Milan. According to a provisional calendar released by the Chambre Syndicale, Paris Men's Week will now open a day earlier on January 16. See new highlights on the official lineup on WWD.com. #wwdnews #wwdfashion (📷: @kukukuba)
BREAKING: Jonathan Saunders is leaving @DVF. The designer has resigned from his position as chief creative officer of Diane von Furstenberg, the company said in a statement on Friday. At the time of his hire, von Furstenberg said Saunders’ arrival symbolized and facilitated her stepping back from the day-to-day duties that occupy the work of a full-time creative director. The British designer joined DVF in May 2016 and was in charge of all product categories. #wwdnews
For @versace_official’s spring ad campaign, the brand emphasized the archival prints from the spring tribute collection dedicated to the late Gianni Versace. Closing out the show were five of Gianni’s favorite models: Cindy, Naomi, Carla, Helena, and Claudia. Bowing on December 18, the new campaign is yet another tribute to supermodel-dom as the images by Steven Meisel are fronted by @iamnaomicampbell, @cturlington, @gisele and more. #wwdfashion
Four-time Oscar-nominated actress Annette Bening has been waiting 20 years to play Gloria Graham in "Film Stars Don't Die in Liverpool," which will be released on December 29. The movie about Graham – a Hollywood star known for her controversial relationship with a younger Englishman named Peter Turner – is based off a memoir Turned wrote. "She felt vulnerable to him, because she loved him, she really did love him. And anyone that we really truly are in love with, we re vulnerable to in a very deep way," said Bening. Read our full interview with the modern icon of an actress on WWD.com. #wwdeye (📷: @ninebagatelles; Styled by @cristinaehrlich)
The crisp white button down: a staple that can be dressed up or down and accessorized throughout the decades. Here, on a Art Basel-goer in 2017 on the left and on the iconic Audrey Hepburn in “Roman Holiday” in 1953 on the right. #tbt #wwdfashion (📷: Andrew Morales)
Known for her work with @victoriassecret, 25-year-old model @georgiafowler is raising her profile in Hollywood. Fowler stars in @vincecamuto’s holiday campaign, which launched in partnership with “Pitch Perfect 3.” “Almost every shoot with Vince Camuto, I’ve had to face a fear…It was definitely a challenge. I’m so grateful for it, though. I’ve always wanted to be a pop star, so that was the perfect chance,” Fowler said. Head to WWD.com to read about Fowler’s experience modeling, including at the #VSFashionShow, and her relationship with Nick Jonas. #wwdeye (📷: @jilliansollazzo)
EXCLUSIVE: Huda Kattan just became the first beauty influencer to land a major beauty deal. Kattan's business, @hudabeauty, has received a minority investment from private equity firm TSG Consumer Partners. The brand, which industry sources say is on track to do $200 million in retail sales for 2017, will receive support on product, retail and geographic expansion through the deal. Get all the details on the deal and read @_a_collins' interview with Kattan on WWD.com. Link in bio. (📷: @jgreenery) #wwdbeauty #wwdnews
Peruvian model @juanaburga_official – who is known for walking the runways of @rodarte, @viviennewestwood and @torybuch – is making the move to the big screen with drama “Los Últimos.” The film premiered in Argentina in November and arrives in the U.S. and Europe in 2018. On making the switch from modeling to acting, Burga told WWD: “It’s a completely different thing – a lot of people think it’s similar or try to connect things, especially like getting used to the camera or being looked at all the time or playing these different characrers, but film is a completely different story.” #wwdeye (📷: @jgreenery)
London’s newly opened @designmuseum will look back on the life and work of Azzedine Alaïa in a show that the designer helped to curate before he died of heart failure last month. The retrospective, which Alaïa had worked on with Mark Wilson, chief curator of the @groningermuseum, will look at the impact of his work worldwide. The show, “Azzedine Alaïa: The Couturier,” will run from May 10 to October 7. Read more about the exhibit on WWD.com #wwdnews #wwdfashion (📷: @zefashioninsider)