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Beauty Beat: Inter Parfums Net Falls 6% … Guess Heats Up Parlux Sales … Tupperware Boosts Beauty Business

Despite strong sales, Inter Parfums Inc. reported a dip in earnings for the second quarter ended June 30 as the company faced higher royalty rates.

Inter Parfums Net Falls 6%
NEW YORK — Despite strong sales, Inter Parfums Inc. reported a dip in earnings for the second quarter ended June 30 as the company faced higher royalty rates.

Net earnings were down 6 percent to $3.2 million, or 16 cents per diluted share, from $3.4 million, or 17 cents, a year prior, while sales increased 28 percent, excluding the benefits of currency exchange, to $61.3 million from $46.7 million.

Net earnings for the first half were also down, to $7.6 million, or 37 cents per share, from $8.2 million, or 40 cents. Net sales for the first half were up 26 percent to $132.4 million from $105.1 million.

The drop in profitability for the second quarter “is due to the impact of the higher Burberry royalty rate … and marketing expenses that began in January of this year,” said Russell Greenberg, executive vice president and chief financial officer, on a conference call.

The royalties for Burberry more than doubled in the second quarter, to $7.1 million, while advertising was up $2.7 million from last year. The fragrance line is still one of Inter Parfums’ most successful brands, and while its costs dragged down the company’s earnings, it still accounted for most of the big increase in net sales.

Overall, prestige product sales grew 44 percent in the second quarter, while mass sales declined 19 percent.

Executives on the conference call shied away from providing too many details on the company’s newest venture with Gap and Banana Republic, but did say it budgeted between $1.5 million and $2.5 million in start-up expenses for the second half of the year.

Inter Parfums revised its 2005 sales and earning guidance to account for these costs and for currency translation. The 2005 year-end sales were adjusted down to $274 million from $280 million, and earnings are expected to come in at $14.6 million, or 71 cents per share.

Guess Heats Up Parlux Sales
NEW YORK — On the heels of its successful launch of the Guess for Women scent and the continued rollout of Paris Hilton fragrances, Parlux Fragrances Inc. reported strong top- and bottom-line results for the first quarter.

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For the period ended June 30, net income rose 72.7 percent to $3.8 million, or 36 cents a diluted share, from $2.2 million, or 21 cents a diluted share, in the same period last year as net sales soared 46.9 percent to $33.8 million from $23 million.

The company met analyst estimates of 36 cents a share this quarter, and expects it will meet its full-year guidance of $190 million to $210 million in sales and $2 to $2.20 in earnings per share.

Though Parlux manufactures and distributes several prestige fragrances in addition to Paris Hilton and Guess, such as Perry Ellis, XOXO, Ocean Pacific, Maria Sharapova, Andy Roddick, babyGund and Fred Hayman Beverly Hills, those two remain the standouts. Guess, in fact, has achieved a top-10 ranking at all stores where it has launched to date, including the number-one spot at Robinsons-May, Foley’s and Macy’s Florida, according to Parlux. The product line will be in more than 2,000 department stores by the end of September, and in all 190 Guess freestanding stores.

Parlux expects to roll out a Guess men’s fragrance in spring 2006.

Tupperware Boosts Beauty Business
NEW YORK — Tupperware believes its $557 million cash acquisition of Sara Lee’s direct-selling business will complement its BeautiControl cosmetics and personal care subsidiary. That’s because 90 percent of Sara Lee direct selling’s $470 million in revenues is generated in Latin America and Asia, as compared with BeautiControl’s $118 million in sales volume, which is largely focused in North America.

The two firms reached an agreement Wednesday for Tupperware to buy the Sara Lee direct-selling business, an operation that includes 900,000 independent sales consultants who market cosmetics, skin care items, fragrances, toiletries and clothing in 18 countries. Simon Hemus, president of Sara Lee direct selling, will join Tupperware and continue heading the unit. The companies expect the transaction to close during the fourth quarter.

Tupperware projects that the addition of Sara Lee direct selling will increase the share of its total revenues generated by beauty and personal care products to about 35 percent. Beauty generates 12 percent of Tupperware’s $1.2 billion in total sales today.