As talk of a possible acquisition circulates, Elizabeth Arden Inc. is getting its house in order, disclosing the first details of the company’s restructuring plan.
The plan, which was first disclosed in May and approved by Arden’s board on Monday, calls for reducing head count; exiting underperforming businesses, retail doors and fragrance licenses; discontinuing certain products, and shuttering the Puerto Rico affiliate. The effort, dubbed the Performance Improvement Plan, is expected to yield annual savings of approximately $27 million to $35 million, according to the company, and is part of a larger restructuring and cost-cutting program intended to wring out $40 million to $50 million in annual savings once fully implemented.
Arden shares closed at $27.41 on Tuesday, down 3.14 percent.
The details of the various elements of the program remain sparse, but Arden plans to more thoroughly outline the effort during its August earnings call.
Arden did not comment on the number of job cuts or retailers that it may exit as part of PIP, but B. Riley analyst Linda Bolton Weiser said 175 eliminations are planned and retailers include smaller regional nameplates, such as Sears Canada. “Arden is trying to go through and clean up its distribution,” she said.
In addition to the turnaround plan, in May Arden said its board hired Goldman Sachs to explore potential strategic alternatives. Arden tapped Goldman shortly after speculation surfaced that the South Korean firm LG Household & Healthcare Ltd. was reportedly considering a bid for the beauty firm.
SunTrust Robinson Humphrey analyst Bill Chappell said Arden’s turnaround plan makes for a solid plan B should the beauty firm fail to attract a buyer. “This is largely expected,” he said, noting that he anticipates the company will continue to focus on the recovery of its flagship Elizabeth Arden brand, as it trims underperforming fragrance brands.
Arden did not name which fragrance licenses it may trim. More details are expected on that front later this summer, but during the company’s earnings call last month, E. Scott Beattie, chairman, president and chief executive officer, acknowledged, “We are experiencing stronger erosion from several fragrance brands, including the Justin Bieber and Taylor Swift fragrances.”
Arden’s challenges were underscored by its third-quarter losses, which widened to $26.4 million, or 89 cents a share, from $1.3 million, or 4 cents, a year earlier.
Beattie told analysts during the company’s third-quarter earnings call, “Our brand portfolio and organization is strong, but over the past year, we have not commercially executed the business well. We aligned with the management team to implement the changes required to improve the commercial execution of our business and return to the consistent improvement in gross margins, EBITDA [earnings before interest, taxes, depreciation and amortization] and return on invested capital we experienced from 2009 through 2013.”
Change is already rumbling through the organization’s executive ranks. Kathy Widmer on Monday stepped down from her post as chief marketing officer and executive vice president, and plans to leave the company on Aug. 28, and earlier this month Francine Gingras, Arden’s vice president of global public relations, announced plans to leave the firm. Additionally, Rod Little joined Arden as chief financial officer and executive vice president on April 1, following the departure of the company’s former cfo Stephen Smith on Sept. 1.
Bolton Weiser wrote in a research note on Tuesday that Little “appears to be moving fast to executive a turnaround, which is good, but this news does make it seem like perhaps the company is not about to be imminently sold, despite recent media reports that [LG] has finished its due diligence.”
My character, Dinah Madani, is just the coolest, [most] badass woman imaginable," says @amberroserevah. The actress stars in @marvel's newest series on @netflix, @thepunisher. To prepare for her role, Revah sat down with Homeland agents to get a real sense of with Dinah's day-to-day life is really like. Read our full interview on WWD.com. #wwdeye (📷: @jilliansollazzo)
A scene from the 91st annual @macys Thanksgiving Day Parade. The parade, which boasts 50 million TV viewers and 3.5 million on-site spectators, is considered one of the largest and most watched parades in the world. (📷: Jason Szenes/EPA-REX)
The circus came to @bloomingdales 59th Street on Tuesday night and lit up Lexington Avenue with acrobatic dancers, death-defying knife throwing, sword swallowing and aerial acts with no net. The 45 minutes of theatrics built up to unveiling the holiday windows depicting @swarovski crystal-encrusted circus pieces and scenes from “The Greatest Showman” – songs from the soundtrack included. See the rest of the photos on WWD.com #wwdfashion (📷: Joshua Scott)
The psychedelic fashion that pervaded the ’60s is back with an exhibit at the @museumofcityny. “Mode New York: Fashion Takes a Trip” chronicles the changing styles from 1960 through 1973 and features designers such as @ysl, @oscardelarenta and more. The exhibition, which is on display through April 1, is organized into four periods: First Lady Fasion, Youthquake, New Bohemia and New Nonchalance. Pictured here is model Pat Bardonella during the Garvey Day Parade in 1968. (📷: @kwamebphoto) #wwdeye #wwdfashion
“People should be a lot more honest in expressing both the dark and light of themselves. We need to give each other the space to do that because it’s the only way we can grow and evolve,” says @noelwells of her new film “Mr. Roosevelt,” which is largely based on her own struggles. Unexpectedly leaving @nbcsnl in 2014 after just one season, Wells felt set back in her self-esteem and career trajectory. She quickly refocused her energy to more personal projects, which led to the completion of “Mr. Roosevelt.” Read the rest of WWD’s interview with the “Master of None” actress on WWD.com #wwdeye (📷: @jilliansollazzo)
@barbrastreisand is giving fans a chance to see her perform up close in a new concert series, which makes its debut on @Netflix today. From behind-the-scenes takes to her concert performance in Miami last December, the two-hour streaming special captures Streisand in her element. Pictured here is the singer/actress photographed for WWD in 1963. (📷: Palmieri Tony) #wwdeye #wwdarchive
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion (📷: Dominique Maître)
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)