By  on November 6, 2006

NEW YORK — Due to restructuring costs related to its two recent acquisitions and increased promotional spending, Elizabeth Arden Inc. posted a net loss of $1.3 million in the first quarter.

Chairman and chief executive officer E. Scott Beattie said the integration of the two companies, namely Sovereign Sales and Riviera Concepts, is on track and that the beauty firm has an appetite to bring additional beauty brands into the fold.

"We look for brands that are strong, particularly fragrance brands that have strong global demand and are established businesses that we can leverage across all of our distribution channels," Beattie told analysts during a conference call Friday. "Those are our key target acquisitions."

The company completed the acquisition of prestige fragrance distributor Sovereign Sales in August, and the purchase of Riviera Concepts Inc.'s brand licenses, including Badgley Mischka and Alfred Sung, a month earlier.

A bevy of new fragrance launches, including With Love Hilary Duff and Danielle by Danielle Steel, and its ultra-luxury skin care brand, Prevage, bolstered the company's net sales 12.1 percent to $254.8 million for the quarter ended Sept. 30, up from $227.4 million. The $1.3 million, or 5 cents per diluted share, loss in the quarter compares with a gain of $895,000, or 3 cents, in the prior year.

Regarding sales by channel, the company said its mass market business increased 12 percent, and its department store business gained 25 percent, despite the disruption of Federated Department Stores' string of store closures. Sales of the Elizabeth Arden brand soared 37 percent, helped by relocation of Prevage to its department store beauty counter. Beattie noted that international sales were up 11.5 percent, aided by a 53 percent sales surge in the Asia-Pacific region. He added that travel retail sales increased 6 percent, slowed somewhat by the liquid ban in U.S. and European airports in August and conflicts in the Middle East.

Beattie acknowledged that the Hilary Duff scent had a slower than anticipated start due to delays in producing creative materials and the TV commercial, which is slated to air in the next few weeks. As a result, the company will shift much of its promotional spending for the singer's scent to the second quarter, closer to Thanksgiving.During the quarter, the company said it increased its advertising and promotional spending by 30 percent.

In regard to the company's second-quarter outlook, Beattie said he anticipates a "relatively strong Christmas." The company confirmed its fiscal 2007 guidance, stating that it anticipates net sales will increase by a range of approximately 15 to 18 percent to $1.1 billion to $1.3 billion. Guerlain to Appeal Court Ruling
PARIS — Guerlain said last week that it will appeal a court judgment that it had counterfeited the spiral glass bottle of its latest women's scent, Insolence.

A Paris judge ruled last month in favor of Parisian packaging designer Jean-Pierre Cardiet, who claimed the LVMH Moët Hennessy Louis Vuitton-owned luxury brand's Insolence flacon is a copy of a bottle he created in 2001, but which was never commercialized.

In a statement, Guerlain said French sculptor Serge Mansau, who designed the Insolence flacon, was inspired by a sculpture he created in 1973 as well as other works of his, which were realized in 1996.

"Guerlain has decided to appeal the High Court's decision and remains confident as to the outcome of the process," the statement said.

Guerlain continues to manufacture Insolence, which is fronted by award-winning actress Hilary Swank. It was launched in the U.S. in August and internationally in September. Dior Picks a Pair
Dior has promoted two of its North American beauty executives. Terry Darland, former senior vice president of sales and education for Dior Beauty, has been named general manager of Parfums Christian Dior in North America. Lisa Hawkins, former vice president of marketing for Dior Beauty, has been appointed senior vice president, marketing, for North America. "These well deserved promotions are in recognition of their increased responsibilities within the newly formed region, and their contribution in restructuring and dramatically improving the U.S. business," Pamela Baxter, president and chief executive officer of LVMH Perfumes & Cosmetics, North America, said in an announcement to LVMH employees Thursday. Both executives will continue to report to Baxter.

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