Elizabeth Arden Inc. narrowed its net loss by $50.6 million for the quarter ending Dec. 31, posting a $6.3 million loss compared with a $56 million loss in the year-ago period.
The company’s net sales declined 5.2 percent for the quarter ended Dec. 31, to $316.2 million from $333.6 million year-over-year. The company’s net loss per diluted share also decreased to $0.19 from $1.90 in the year-ago period. Net income a share was $0.10, compared with $0.28 for the same period in 2014. Gross margins increased by 60 basis points year-over-year to 44.2 percent, after taking into account about 45 basis points of negative foreign currency impact.
Arden increased net sales for Elizabeth Arden-branded products by 3 percent, on an adjusted and constant foreign currency basis. Growth was driven by higher fragrance and skin-care sales, which increased 8 percent and 2 percent, respectively. The company’s new Superstart Skin Renewal Booster is performing better than projected and driving improved retail sales, according to the company.
Net sales for non-Elizabeth Arden branded fragrances were down by 4 percent. Net sales of designer fragrances increased 7 percent, driven by the John Varvatos fragrance brand, which grew 32 percent in the quarter, and Juicy Couture, Curve and White Diamond fragrances. Though celebrity fragrances offset growth in designer fragrances, “the negative impact from celebrity fragrances is diminishing,” said chief financial officer Rod Little.
The company said that net sales growth was strong in international markets — net sales grew in greater China by 18 percent on an adjusted currency basis. When president JuE Wong stepped into her role in August, Arden highlighted her skills in developing new markets in Asia.
The Britney Spears line, which is considered part of the heritage portfolio — not the young celebrity group — has faced problems in Brazil, where macroeconomic trends contributed to an inventory backlog that reduced demand, the company said. Arden executives said new innovation is coming to that brand this summer that it expects to “reverse” the sales problems.
The U.S. mass channel makes up 50 percent of Arden’s global sales, according to the company, but fragrance in that channel frequently fails to resonate with consumers – a sentiment Arden and Coty executives agreed on during their respective webcasts. “The fragrance category in mass hasn’t penetrated into that customer base,” said chief executive officer Scott Beattie. But he pointed out that that some mass retailers, particularly Walgreens Boots Alliance, had “renewed” their focus on beauty.
Arden continues to evaluate its fragrance portfolio, in line with previously announced performance improvement plans. Beattie said that if the company doesn’t see value in a brand, it will either slowly phase it out or decline to renew the license.