The company’s executives detailed the launches and Lagerfeld-related plans on the company’s earnings call Tuesday.
For the Karl Lagerfeld brand, Inter Parfums will send out two new fragrances “at more democratic prices,” said chairman and chief executive officer Jean Madar. That plan includes a 25 percent price cut, according to chief financial officer Russell Greenberg.
“We created a product that was quite expensive, geared for a very selective market, where the brand today we think is more accessible,” Greenberg said. “The new products that will be launching are 25 percent lower in price” and will be targeting a younger customer, he added. “We do think we’re going to find some growth in the business, we just need to reposition.”
The repositioning news comes after Inter Parfums said Monday evening it would likely cut the term of the Karl Lagerfeld fragrance license and terminate it in 2024 rather than 2032. The company also announced its earnings for the full year and that it had sold the Balmain fragrance license back to Balmain for $5.7 million.
For the year, Inter Parfums net income increased to $33.3 million from $30.4 million for 2015, and net sales gained 11.2 percent to $521.1 million. Earnings per share were $1.07, up from 98 cents. For the fourth quarter, the business posted a 111.2 percent jump in net income to $3.9 million (up from $1.9 million in the prior-year period), with net sales of $134.8 million, up 13.9 percent from $118.3 million year-over-year. EPS was 13 cents, up 116.7 percent from the year-ago period. The company’s sales were up in all markets except Eastern Europe, which was hurt by conditions in Russia that executives categorized as “the end consumer buying less” in part because prices are high. To counter that going forward, the company plans to increase advertising spending.
Inter Parfums is forecasting net sales for 2017 between $550 million and $560 million, with EPS between $1.20 and $1.24 per diluted share. The company also said it continues to consider making future acquisitions, especially in the high-margin prestige fragrance business.
Going forward for the year, the business has scheduled a bunch of fragrance launches.
It’s launching its first scent for Rochas — Mademoiselle Rochas — in 12 markets, including Spain, France, Portugal, Saudi Arabia, Dubai, Kuwait, Argentina and Brazil. For Jimmy Choo, the company is launching one new men’s and one new women’s fragrance (called Jimmy Choo L’Eau, launching this quarter). The men’s scent is slated for the third quarter.
The business is also rolling out its first Coach men’s fragrance, a women’s version of Abercrombie & Fitch’s First Instinct and Wave 2 (a Hollister brand extension duo). Montblanc is adding a third pillar to its Legend family, called Legend Night; Lanvin’s Modern Princess is expanding internationally; a six-scent Boucheron collection is going into select distribution, and Oscar de la Renta is launching Bella Blanca.
Inter Parfums executives also noted that the fragrances are doing well in specialty retail over midtier U.S. department stores. “Our business in department stores is following the trend,” said Madar. “It’s quite challenging but of course, the business at Ulta [Beauty] and Sephora is growing at a very fast pace, especially with Ulta more than Sephora.”