Elizabeth Arden Inc.’s international sales growth was a boon to business in the first quarter, helping to boost net sales by 7.4 percent to $284.8 million, up from $265.2 million in the year-ago period. Excluding the impact of unfavorable currency translation, sales would have advanced 8.1 percent.
In the three months ended Sept. 30, Arden generated net income of $4.9 million, or 17 cents a diluted share, compared with $40,000, or zero cents, in the year-earlier period.
Excluding expenses associated with the firm’s Global Efficiency Re-engineering initiative, net income per diluted share for the three-month period was 18 cents.
Arden’s chairman, president and chief executive officer, E. Scott Beattie, said international sales rose 14 percent, led by sales in Europe and its travel retail business and distributor markets, which increased by 14 percent and 31 percent, respectively.
Sales in North America gained 6 percent, fueled by Arden’s mass market business, which increased 8 percent in the quarter. In the prestige channel, sales ticked up 1 percent for the quarter, aided by strong growth of Prevage skin care and hampered by a 9 percent decline in the company’s U.S. department store fragrance-counter business.
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North America, which is comprised of both mass and prestige products, accounts for about two-thirds of Arden’s total sales.
Beattie stated, “We are pleased with the performance of our brands and the progress we are making with our global brand-marketing initiatives. Sales of Elizabeth Arden-branded skin care products rose by 12 percent in the first quarter, and sales of our fragrance business grew by 8 percent overall and 17 percent in Europe. As we head into the holiday period, we are encouraged and expect our key brands and launches to perform well.”
Joel Ronkin, executive vice president and general manager, North America Fragrances said, “We’re actually seeing a greater investment being made by our key mass volume retailers in advance of the holiday season, which means they believe both in our category as well as their businesses as we head into Christmas.”
In some instances, particularly within its Britney Spears and Red Door brands, Arden has been able to take some price increases “with minimal to no impact in the volume,” said Kathy Widmer, executive vice president and chief marketing officer.
Beattie said, “The objective here obviously is to improve the overall pricing of the products across all channels of distribution and then reinvest a portion of that back into more of a pull strategy through national media, digital media and some of the other drivers of consumer awareness and consumption.”
Arden, along with its peers, is shifting marketing spending away from heavy-handed promotions, like discounts, toward advertising.
“We, like many of our competitors, believe it’s healthier to drive demand through pull strategies versus push strategies, and we view promotion and price discounting obviously as a push strategy,” said Widmer. “We too are focused on trying to shift more of our marketing resources into what we call [nonpromotional] working dollars, and you’ll see in our business that there is a larger proportion that’s all focused in fully controllable [spending], particularly in media.”