Major launches mean major promotional spending for Inter Parfums Inc.
The company spent much of its earnings call Tuesday justifying its anticipated 21 percent advertising and promotional spend (based on revenues), which includes advertising as well as in-store displays, to Wall Street analysts.
So far, the company’s A&P spend has hovered around 19 percent, said chief executive officer Russell Greenberg. But in the second half, Inter Parfums expects that figure to jump to 23 percent, because of planned spending on big launches for Montblanc, Coach for Men, and other new pillars. That is expected to leave full-year spending at around 21 percent.
“It’s key to keep increasing the spending for A&P because this is the future of our sales,” said Inter Parfums chief executive officer Jean Madar. “So, at 21 percent, I’m comfortable, if sales continue to grow.”
“The best investment we can make for the future of our business is to increase our ad spending … these are dollars we spend in advertising and marketing and promoting product,” Greenberg said. Upcoming launches for the company also includes a new duo for Karl Lagerfeld called Les Parfums Matières.
“It’s not only advertising; [it’s] promotion, presence in point of sales, how we look and activities to animate the business,” Madar continued.
Inter Parfums executives were speaking on the company’s call after it reported a 15.7 percent uptick in net income for its second quarter, with $6.7 million. Net sales were $129.1 million, up 10.2 percent year-over-year from $117.2 million. Earnings per share were 22 cents.
U.S. sales were down 21.7 percent to $22.4 million because of a difficult comp from the prior-year period, when Abercrombie & Fitch’s First Instinct and Hollister’s Wave Duo launched. Net sales from European-based operations were up 20.5 percent to $106.7 million.
The U.S. division may be able to surpass Europe’s growth for the second quarter, Madar and Greenberg said Tuesday.
“U.S. operations’ growth rate should outpace slightly the European growth rate in the last half of the year,” Greenberg said.