Restructuring charges added to a wider third-quarter loss at Elizabeth Arden Inc. even as the beauty firm beat Wall Street expectations and lured investors Thursday with sales gains and an improved outlook.

This story first appeared in the May 7, 2010 issue of WWD. Subscribe Today.

In the three months ended March 31, the New York-based cosmetics maker’s net loss grew 4.1 percent to $3.9 million, or 14 cents a diluted share. A year ago, its losses totaled $3.7 million, or 13 cents a share.

Barring restructuring charges and other one-time items, Arden’s loss per share was 11 cents versus an adjusted loss of 19 cents a year ago. Analysts polled by Yahoo Finance had been expecting a loss per share of 15 cents, on average.

Sales in the third quarter grew 6.7 percent to $217 million compared to $203.5 million in 2009.

In the nine months, the company’s net income totaled $17.2 million, or 60 cents a share, versus a loss of $2.6 million, or 9 cents a share, a year ago. Sales in the three quarters grew 2.1 percent to $875.5 million from $857.7 million.

Chairman, president and chief executive officer E. Scott Beattie said the company’s recent steps to restructure its business have strengthened margins, which helped shave its adjusted loss. The company’s gross margin rate improved 440 basis points in the quarter to 46.9 percent.

“We expect continued improvement in gross margins into the fourth quarter and as we enter fiscal 2011,” Beattie said on a conference call.

Beattie credited stronger mass fragrance revenues in the U.S., better international sales and a general global improvement in the company’s namesake brand for the raised top line. Those gains were partially offset by worse-than-expected fragrance sales in U.S. department stores, he said.

Looking to the close of its fiscal year next month, the company maintained its outlook for sales growth of between 2.5 percent and 3.5 percent for the 12 months. The firm raised its earnings per share outlook to between 69 cents and 76 cents a share. It had previously predicted full-year EPS to range between 63 cents and 73 cents.

Shares of Elizabeth Arden gained 96 cents, or 5.7 percent, in trading after the earnings announcement to close at $17.81.

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