By  on May 8, 2009

Elizabeth Arden Inc. continued its efforts to control costs during the third quarter, as it dealt with continued inventory de-stocking at retail and door closures.

“We have a very sound business strategy,” E. Scott Beattie, chairman, president and chief executive officer, told analysts during the company’s earnings call Thursday, naming Arden’s decision to outsource and consolidate manufacturing, its move toward a shared services model, a multichannel distribution strategy and full product pipeline.

Despite currency fluctuations and retail destocking, Arden narrowed its loss in the quarter ended March 31, to $3.7 million, or 13 cents a diluted share, compared with a loss of $3.8 million, or 14 cents a year in the year-ago period. Excluding restructuring expenses for its global efficiency reengineering project, the company posted a 19 cent loss, compared with a 10 cent loss a year ago. Sales declined 3.4 percent to $203.5 million from $210.6 million, but ticked up 1.3 percent on a local currency basis.

Arden’s international business, which accounts for about 33 percent of total revenue, fell 9.8 percent during the quarter, or 3.5 percent in local currency, as retailers continued to trim inventory across the globe. Overseas markets, Europe in particular, continued to feel the pinch of the recession. Travel retail sales have slid 22 percent, year to date, as consumers curb their travel plans in the wake of economic concerns and virus scares.

“This business tends to be very volatile,” said Beattie, referring to travel retail. “During the periods of SARS and post-9/11, we saw a tremendous decline in these businesses, and they tend to rebound quite quickly as well, although it’s very difficult right now to have the visibility to determine when that rebound will occur.”

Turning to the company’s North American fragrance business, which accounts for 65 percent of the volume including department store and mass market scents, sales in the division gained 5 percent in the quarter, and dipped 1 percent for the fiscal year to date. Arden’s department store business benefited from the addition of the Liz Claiborne fragrance portfolio, which helped double Arden’s shipments to the channel.

Fragrances on deck for this year include Juicy Couture’s Couture, Couture and new scents from Usher, Mariah Carey and Britney Spears.

For the year, Arden said it expects sales to decline by 6 to 6.5 percent, or by 2 to 2.5 percent excluding the impact of the unfavorable currency exchange.

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