PERFUMANIA TO JETTISON FRAGRANCE FOR INTERNET
Byline: Thomas Cunningham
NEW YORK — Perfumania Inc. announced a dramatic change in direction Monday, saying it would spin off its retail and wholesale fragrance operations and focus its efforts on developing Internet businesses.
Reflecting the new strategy, the Miami-based firm also said it would change its name to Ecomv Inc. — short for Electronic Commerce Ventures Inc. The announcement caps a busy year for the company that included the creation — and later spinoff — of an online subsidiary Perfumania.com, the purchase of electronic greeting card company PostAcard.com and the introduction of the Nitro For Men fragrance under license from World Championship Wrestling.
Ilia Lekach, Perfumania chairman and chief executive, said in a statement, “We undertake these steps as we believe our stock price to be undervalued relative to our sales growth and future prospects.”
The company said that a key element of the program would be the creation of a strong Internet marketing subsidiary. Perfumania also said it would acquire interests in Internet-related companies. The company did not specify how the fragrance operation would be spun off and to whom.
To help implement the plan, Perfumania intends to establish favorable bank lines and upgrade its management and systems infrastructure, the company said.
Perfumania’s shares gained 3/16 to close at 4 3/16 in over-the-counter trading Monday. That is substantially below January’s 52-week high of 13 15/16 reached after Perfumania announced plans to sell from its Web site, Perfumania.com. Perfumania’s 52-week low of 1 7/8 was reached last December.
Perfumania has failed to make money so far this year. For the 26 weeks ended July 31, Perfumania losses widened to $4.1 million from $4 million. Sales picked up 9.2 percent to $85.4 million from $78.2 million. Retail sales picked up 16 percent on an 8 percent same-store sales gain. Wholesale volume fell 6.3 percent.
Separately, Perfumania also said Monday it granted options to European investment firm Alta Limited, along with other parties, to buy 2.5 million shares of Perfumania.com at prices from $6 to $8 a share.