Sales in U.S. surprise Ipar
Gross margin was 61.9% of net sales compared to 56.9%.
Jean Madar, Chairman & CEO of Inter Parfums, Inc. noted, “As we reported last month, the comparable quarterly decline in sales by our European-based operations was primarily due to two factors. One was the nearly 20% depreciation of the euro versus the dollar, which concealed meaningful gains by two of our largest brands, Montblanc and Jimmy Choo, where in local currency brand sales rose 19% and 52%, respectively. In dollars however, Montblanc brand sales declined 2% while Jimmy Choo brand sales rose only 25%. The second factor was last year’s launch of Karl Lagerfeld’s signature scents for men and women, which produced more than $13 million in brand sales in the first quarter of 2014 compared to $2.5 million in the current first quarter. Offsetting some of the sales decline by our European-based operations was the 16% increase by our U.S.-based operations, which unveiled two new products during the quarter, Extraordinary by Oscar de la Renta and Icon by Dunhill, and sales of both have surpassed our expectations.”
On the subject of new product launches for European operations slated for the year, Mr. Madar noted, “The new fragrance line-up is rich in 2015 and has already begun with a men’s and women’s fragrance, Boucheron Quatre. There will also be a women’s version of Emblem by Montblanc, a new Jimmy Choo women’s scent called Blossom, Repetto Eau Florale, and still another for Van Cleef & Arpels. New entrants for men are also in the works.»
We will be unveiling one for Balmain, the first new men’s scent created by Inter Parfums, and one each for men and women for Lanvin. Also planned is Private Klub by Karl Lagerfeld, a fragrance duo, with a scent for both men and women. For U.S. operations, in addition to the continuing geographic rollout of Extraordinary by Oscar de la Renta and Icon by Dunhill, we have Romantica by Anna Sui launching in the fall. The Silk Road Collection by Shanghai Tang just had its official launch with rollout ensuing in different regions throughout the summer and early fall.”Mr. Madar said.
He went on to say, “We already have 2016 in our sights. In addition to product launches in the pipeline for our existing brands, we are also developing programs and business plans for the four new brands that have or soon will be joining our portfolio: Abercrombie & Fitch, Hollister, Rochas and Coach. We continue to expect to close on the Rochas acquisition mid-year.”
Discussing factors impacting profitability, Russell Greenberg, Executive Vice President and CFO of Inter Parfums, Inc. again stated, “For our European operations, a strong U.S. dollar has a positive effect on our gross margin while a weak U.S. dollar has a negative effect. The average dollar/euro exchange rate for the three months ended March 31, 2015 was 1.13, as compared to 1.37 for the 2014 period, and this resulted in a 64.7% gross profit margin for European operations, compared to 59.6% in last year’s first quarter. With selling, general and administrative expense as a percent of sales equal to last year’s first quarter, 2015 first quarter operating income rose 21%. However, due to the recent and exceptional volatility in currency exchange rates, in the current first quarter, foreign currency losses aggregated $2.0 million versus a negligible gain in the same period one year earlier. The loss incurred for the three months ended March 31, 2015, primarily represents losses from intercompany accounts between our majority owned subsidiary, Interparfums SA, and its other foreign subsidiaries, which were not hedged by the use of foreign currency forward exchange contracts.”
Mr. Greenberg pointed out, “We closed the quarter with working capital of $356 million, including approximately $243 million in cash, cash equivalents and short-term investments, and no long-term debt.”
Mr. Greenberg concluded by saying, “We are once again affirming our current 2015 guidance with net sales of approximately $470 million and net income per share attributable to Inter Parfums, Inc. in the range of $0.98 to $1.00 per diluted share. Our guidance for 2015 assumes the dollar remains at current levels and does not include any potential sales of Coach or Rochas branded products.” The Company’s regular quarterly cash dividend of $0.13 per share will be paid on July 15, 2015 to shareholders of record on June 30, 2015.
In the more than 30 years since its founding, Inter Parfums, Inc. has been selected as the fragrance and beauty partner for a growing list of brands that include Abercrombie & Fitch, Agent Provocateur, Anna Sui, Balmain, Banana Republic, bebe, Boucheron, Dunhill, Gap, Hollister, Jimmy Choo, Karl Lagerfeld, Lanvin, Montblanc, Oscar de la Renta, Paul Smith, Repetto, Shanghai Tang, S.T. Dupont and Van Cleef & Arpels. Inter Parfums is known for innovation, quality and its ability to capture the genetic code of each brand in the products it develops, manufactures and distributes in over 100 countries worldwide.