Marionnaud’s Much-Awaited Results

PARIS — After months of delays, Marionnaud Parfumeries published its first-half net results, which came in at steep losses of $96.9 million at current exchange rates, or 79 million euros, against net profits of $7.8 million, or 6.4 million euros, in the prior-year period.

The perfumery chain’s results for the January-through-June half were negatively impacted by $114.1 million, or 93 million euros, incurred from changes in accounting methods concerning loyalty points and the correction of errors dating back to 2002 and 2003. These included inaccurate estimations of provision calculations such as for end-of-year rebates and advertising displays paid for by suppliers.

In November, the firm had projected the impact on its profits would be around 20 million euros.

The posted losses come on sales of $632.4 million, or 515.3 million euros, up 8.5 percent on a constant basis.

“I personally assume the written errors made,” said Marcel Frydman, company president, during an analyst conference call Monday. He added that he is involved in taking steps such as instituting new internal controls with a “major international audit firm,” the appointment of a new financial director and the closing of some stores — including up to 20 in France — “so that this never happens again.”

Marionnaud said the published readjustments do not generate any cash outflow for the company.

Its net debt rose to $671.3 million, or 547 million euros, in the half.

The market had been waiting for the publication of Marionnaud’s profits since Oct. 26, the first of three dates when the company put off reporting.

Generally, analysts were pessimistic about the results.

“We reiterate our ‘Reduce’ recommendation,” wrote Alexandra Nizard, an Ixis Midcaps analyst who has been historically negative on the stock, in a research note. “We are lowering our EPS estimates by more than 45 percent. For the first time since being floated, Marionnaud has generated a historic loss. However, we wonder about the external auditors’ responsibility, notably in respect of the accounting methods applied to suppliers’ discounts since the group’s flotation. A number of capital operations (five capital increases, an issue of ABSA — shares with warrants attached — and the February 2002 issue of OCEANE, bonds convertible into new shares or exchangeable for existing shares) were thus made based on an incorrect estimate of the group’s profitability.”

This story first appeared in the December 21, 2004 issue of WWD. Subscribe Today.

Other concerns compounded analysts’ recent jitters, too. Alarm bells rang when trading of the retailer’s stock was suspended on Dec. 10 on the French Bourse. At that time, Marionnaud’s unit price was at 21.8 euros, or 25.3 percent lower than at the start of 2004.

Market tensions rose again when Marionnaud last week launched an unexpected 20 percent price reduction on all of the products sold in its French stores.

The discounting, to last through Dec. 22, kicked off a perfumery price war in France, with Sephora joining the fray on Friday. The LVMH Moët Hennessy Louis Vuitton-owned chain now offers a 20 percent discount on products sold in its stores near Marionnaud doors. Elsewhere, customers may ask for a similar rebate if they mention that they can find lower product prices in other perfumeries.

France’s Nocibe perfumery chain now grants 20 percent price cuts on items to those asking for them, as well.

All of this seemed hauntingly familiar to the discounting war that erupted in France in 2002, which raised questions regarding Marionnaud’s margins.

Yet, during the conference call, Frydman said it was necessary to kick off such a campaign this year, since his firm’s local competitors, particularly the domestic department stores, have been offering price promotions.

Looking ahead, Frydman said, “We have cleared up, cleaned up, put in order [our company] and now are ready for a second wind.”

Marionnaud’s stock is due to start trading again on Tuesday. The company’s sales will be published on Jan. 24.

The perfumery chain, with 1,225 doors — of which 567 are in France — posted profits of 38.7 million euros, or $51.8 million, on sales of 1.14 billion euros, or $1.5 billion, in 2003.

White Named Deputy GM of Lancôme

NEW YORK — Nina White has been named deputy general manager and senior vice president of marketing for the Lancôme division of L’Oréal USA. She succeeds Odile Roujol, who has been transferred back to Paris for a position that’s still being defined. Roujol came to the U.S. in 2002 after working as general manager of Lancôme France. She joined the L’Oréal Group eight years ago.

White, who has been with L’Oréal USA for nine years, was most recently senior vice president of marketing for L’Oréal Paris. In her new post, White will oversee the development, execution and implementation of all marketing and advertising strategies for Lancôme in the U.S., L’Oréal USA stated.

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