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Inter Parfums Inc. Reports Operating Results (10-Q)

August 08, 2012 | About:
10qk

10qk

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Inter Parfums Inc. (IPAR) filed Quarterly Report for the period ended 2012-06-30.

Inter Parfums, Inc. has a market cap of $520.2 million; its shares were traded at around $17.07 with a P/E ratio of 14.6 and P/S ratio of 0.9. The dividend yield of Inter Parfums, Inc. stocks is 1.9%. Inter Parfums, Inc. had an annual average earning growth of 13.2% over the past 10 years. GuruFocus rated Inter Parfums, Inc. the business predictability rank of 3.5-star.

Highlight of Business Operations:

Net sales for the three months ended June 30, 2012 increased 20% to $145.6 million, as compared to $121.1 million for the corresponding period of the prior year. At comparable foreign currency exchange rates, net sales increased 29% for the period. Net sales for the six months ended June 30, 2012 increased 22% to $310.9 million, as compared to $254.4 million for the corresponding period of the prior year. At comparable foreign currency exchange rates, net sales increased 27% for the period. The strength of the U.S. dollar has had, and is expected to continue to have, a significant effect on reported sales. The dollar/euro exchange rate for the three and six months ended June 30, 2012 was 1.28 and 1.30, respectively, as compared to 1.44 and 1.40 for the corresponding periods of the prior year.

European based prestige product sales increased 18% for the three months ended June 30, 2012 and 19% for the six months ended June 30, 2012, as compared to the corresponding periods of the prior year. The positive trends of the first quarter continued into the second quarter with strong performances across our brand portfolio. In euros, the local currency of our European segment, Burberry sales rose 34% for the current second quarter and 21% for the first half on strong growth of established fragrances, including Burberry Body, which launched in late 2011. While there were no major launches this year, Lanvin fragrance sales increased 13% for the quarter and year-to-date due to continuing gains by Eclat d’Arpège and the 2012 introductions of Avant Garde and Jeanne Couture. With Montblanc Legend as the catalyst, Montblanc brand sales rose 72% in the second quarter and 75% through the first half. The positive momentum of Jimmy Choo fragrances that began in 2011 with the Eau de Parfum, continued in 2012 with the Eau de Toilette, resulting in a 13% and 42% increase in brand sales for the second quarter and first half, respectively. Some of the smaller brands in our portfolio are also generating significant year-to-date gains, including Boucheron, which had a more than fivefold increase in sales, and S.T. Dupont with a 48% sales increase compared to the first half of 2011.

Promotion and advertising included in selling, general and administrative expenses aggregated $30.4 million and $57.1 million for the three and six-month periods ended June 30, 2012, respectively, as compared to $22.5 million and $40.9 million for the corresponding periods of the prior year. Promotion and advertising represented 21% and 18% of net sales for the three and six months ended June 30, 2012, as compared to 19% and 16% of sales for the corresponding period of the prior year. The global launch of Burberry Body continues to be supported by strong visuals on a scale without precedent. Although the level of spending is not near what we incurred during the third and fourth quarters of 2011, we significantly increased our overall advertising budget for all brands to maintain the positive sales momentum which we believe will contribute to sustained growth in market share.

Royalty expense included in selling, general and administrative expenses aggregated $12.4 million and $26.1 million for the three and six-month periods ended June 30, 2012, respectively, as compared to $10.8 million and $22.3 million for the corresponding periods of the prior year. As a percentage of sales, royalty expense represented 8.5% and 8.4% of net sales for the three and six months ended June 30, 2012, as compared to 8.9% and 8.8% of sales for the corresponding period of the prior year. In addition, service fees relating to the activities of our distribution subsidiaries aggregated $5.2 million and $10.9 million for the three and six-month periods ended June 30, 2012, respectively, as compared to $4.4 million and $9.2 million for the corresponding periods of the prior year.

As a result of the above analysis, income from operations increased 16.4% to $12.6 million for the three-month period ended June 30, 2012, as compared to $10.8 million for the corresponding period of the prior year. Income from operations increased 22% to $44.4 million for the six month period ended June 30, 2012, as compared to $36.4 million for the corresponding period of the prior year. Operating margins were 8.7% and 14.3% of net sales for the three and six month periods ended June 30, 2011, respectively, as compared to 9.0% and 14.3% for the corresponding periods of the prior year.

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