In the more than 30 years since its founding, Inter Parfums Inc. (IPAR, Financial) has been selected as the fragrance and beauty partner for a growing list of brands that include Abercrombie & Fitch (ANF, Financial), Agent Provocateur, Anna Sui, Balmain, Banana Republic, bebe (BEBE, Financial), Boucheron, Coach (COH, Financial), Dunhill, Hollister, Jimmy Choo (CHOO, Financial), Karl Lagerfeld, Lanvin, Montblanc, Oscar de la Renta, Paul Smith, Repetto, Rochas, 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 more than 100 countries worldwide.
The company reported strong third-quarter results with rising sales. It is currently focused on building success in prestige fragrances and pursuing new licenses and acquiring new brands to strengthen its position in the prestige beauty market.
Strong third quarter
Net sales increased by 3.5% and were $138.9 million (which was $134.2 million during the prior year quarter). At comparable foreign currency exchange rates, consolidated third quarter net sales increased by 11.4%.
Sales by European-based operations increased by 6.5% and were $110.1 million (which was $103.4 million during the prior year quarter). At comparable foreign currency exchange rates, net sales increased by 16.8%.
U.S.-based operations generated net sales of $28.8 million, which marked a decrease of 6.5% from the prior year quarter. It was $30.8 million during the prior year quarter.
Gross margin was 61.8% of net sales during the third quarter (which was 56.1% in the prior year quarter).
S, G&A expense as a percentage of net sales was 41.9%, which was 42.2% during the prior year quarter.
Operating income increased by 48% and was $27.6 million, which was $18.7 million in the prior year quarter.
Net income attributable to Inter Parfums Inc. increased by 28% and was $14.2 million or 46 cents per diluted share, which was $11.1 million or 36 cents per diluted share in the prior year quarter.
Guidance for 2016
The company expects the following:
- Net sales to be in the range of $500 million to $510 million.
- Net income attributable to Inter Parfums Inc. to be in the range of $1.05 to $1.10 per diluted share.
Positive attributes of the company
- Portfolio of well-recognized fashion brands.
- Ongoing brands delivering excellent growth.
- Top-line growth in all the geographic markets.
Current focus
- Appeal to a wide range of consumers in an emerging middle market.
- Solidify its position in the fragrance industry.
- Striving for greater industry exposure.
- New product launches.
Global fragrance industry
The world fragrance and perfume industry is expected to exceed $36 billion in 2017, according to research from Global Industry Analysts. Market growth is fueled by demand from emerging markets and consumer lifestyle trends granting an increasingly central place to grooming. Market growth is, however, inconsistent across various geographic zones because growth in any one geographic zone depends on the living standards, disposable income and GDP of the country. Consumer demand for cosmetics and toiletry products is largely dependent on demographics and lifestyle trends, in particular the importance of luxury and status.
(Source: http://www.reportlinker.com/ci02149/Fragrance.html)
On a concluding note
The company has a lot of room to grow in the future. The world perfume industry is booming. Rising levels of disposable income have led to this trend. The company is enthusiastic in growing business with creative discipline, planting new roots on which to extend its reach while nurturing the continued growth of its well-established names. It is on the lookout for additional suitable brands and related opportunities.
Over the last decade, the company built a strong portfolio of well-known prestige brands through acquisitions and new license agreements.
Disclosure: I do not hold any position in the company.
