PARIS — Puig posted practically flat sales and profits in 2014, but the Spanish fragrance and fashion company said it expects to increase organic revenues 33 percent by 2017.
This story first appeared in the April 17, 2015 issue of WWD. Subscribe Today.
Marc Puig, company chief executive officer, acknowledged the firm’s growth had stalled recently.
“The initiatives we are going to take will probably affect our profitability over the next two years,” he told WWD, referring primarily to the integration of the Jean Paul Gaultier fragrance business, which will cost tens of millions of euros.
Negotiations have finished with Shiseido to sell the intellectual property rights of the Gaultier fragrance products and its activity that Beauté Prestige International, the Japanese beauty giant’s fragrance arm, had been managing. The transfer will take place on Jan. 1, said Puig, although the integration should begin sooner and therefore impact results this year.
Puig, which became the majority shareholder of Gaultier’s fashion house in 2011, is to manage the label’s fragrance business itself.
Despite the added cost, the executive maintained the company is to return to a growth track quickly. By 2017, Puig’s overall profit margin should be about on a par with this year’s, which is 16 percent.
Puig said Thursday that its 2014 net profits rose 0.8 percent to 177 million euros, or $235.3 million at average exchange. Pre-tax income, excluding extraordinary expenses related to the company’s 100th anniversary in 2014, dipped 1.3 percent to 245 million euros, or $325.7 million.
The company reported sales for the year improved 0.6 percent to 1.51 billion euros, or $2 billion, negatively impacted by the devaluation of emerging-market currencies against the euro in the first half. On a like-for-like basis, the firm’s revenues gained 4.2 percent.
By region, 86 percent of Puig’s sales were generated abroad and 46 percent in emerging markets — outside of the European Union and North America. In two years’ time, about half of its sales should be generated in emerging markets.
The company’s three production facilities in Spain manufacture more than 67 percent of Puig products; its factory in Chartres, France, is responsible for 31 percent.
For 2015, Puig expects moderate single-digit growth, spurred by the launches of fragrances such as Nina Ricci’s L’Extase and Paco Rabanne’s Olympéa.
When asked whether Puig is gearing up to make more acquisitions following its buy of L’Artisan Parfumeur and Penhaligon’s earlier this year, the executive said there is no need to rush.
“If we find opportunities that suit us we will be proactive,” he explained.
Puig said the pair of fragrance brands purchased has relatively small businesses sales-wise, but noted the time is right to be a player in the niche fragrance category, which has grown significantly over the past few years.
By 2020, Puig’s aim is to place third in the fragrance sector versus its estimated sixth rank today.
The company has a combination of owned brands, such as Carolina Herrera and Nina Ricci, and licensed fragrance labels like Prada, Valentino and Comme des Garçons.