US. Inter Parfums has reported its fifth consecutive year of record sales, net income and earnings per share within its financial results for the fourth quarter and year ended 31 December 2004.
Highlights of Fourth Quarter 2004 Compared with Fourth Quarter 2003
– Net sales rose +30% to US$63.8 million from US$49.2 million; at comparable foreign currency exchange rates, net sales were up +25% for the period;
– Gross margin was 57% compared to 50%;
– Income from operations rose +5% to US$7.5 million from US$7.1 million;
– Net income declined -6% to US$3.5 million from US$3.7 million; and,
– Diluted earnings per share were $0.17 as compared to $0.18 in the fourth quarter of 2003.
2004 Full Year Results
For full year 2004, Inter Parfums reported sales of US$236.0 million, up +27% from US$185.6 million in 2003. At comparable foreign currency exchange rates, net sales for 2004 were up +22% compared with the previous year. Net income rose +13% to US$15.7 million compared with US$13.8 million for 2003. Diluted earnings per share was $0.77 in 2004, up +12% from $0.69 in 2003. For the year as a whole, the company’s 2004 operating and net margins approximated 13.8% and 6.7%, respectively, compared with 14.0% and 7.5% for 2003.
Chairman and CEO Jean Madar commented: “Fourth quarter and full year results were in line with expectations. As we reported in January, fourth quarter sales growth was primarily due to the excellent performance by Burberry Fragrances with gains stemming from Burberry Brit, the brand’s fragrance leader, and solid results from Burberry London, Burberry Weekend and Burberry Touch.
“The increase in gross margin percentage, which continues the trend of the entire year, related primarily to product mix as prestige product sales have been growing while mass market sales have been declining. In addition, we are beginning to see the impact of the increased distributor prices put into effect during the fourth quarter of 2004.”
On the subject of new product launches for 2005 Madar added: “Our new Celine fragrance line for men and women called Fever is being launched in France, the Middle East, Russia and the UK this month and April. The roll-out to the rest of Western Europe will take place from May through year-end, and we have Asian distribution planned for late 2005. Later this summer, a new Christian Lacroix fragrance family with products for men and women will debut. Additionally, we expect to introduce our first new Lanvin fragrance, Arpege for men, in the fall of 2005.”
He continued: “As previously mentioned, initial steps, most notably higher selling prices to distributors, have been taken to partially offset the higher royalty and marketing costs under the terms of the new Burberry license. Supplier price concessions are also in the works. In our opinion the most productive step will be the formation of joint ventures or company-owned subsidiaries within key markets to handle Burberry fragrance distribution. Next week, Marcella Cacci, who was in charge of Burberry’s global licensing operations, joins our company to head the Burberry Fragrances business, and we believe that we have a great new asset on the team.”
Madar concluded: “Having made two acquisitions in 2004, the Lanvin fragrance license and the majority stake in Nickel, acquisitions are clearly an important ingredient in our growth strategy. Our approach to acquisitions is very disciplined, with valuation, growth potential and return on investment guiding our decision making. Brand extension has been and will likely continue to be the foundation of our growth strategy. In addition to fragrance, we believe that several of our brands may be well suited to skin care and cosmetics programs, both of which we are now exploring.”
Executive Vice President and CFO Russell Greenberg was similarly upbeat. “As previously reported, we are looking for 2005 sales to come in at US$280 million and net income and diluted earnings per share to approximate 2004 levels. Our financial position remains strong.
“At 31 December 2004, working capital aggregated US$130 million and we had a working capital ratio of 3.4 to 1. Cash and cash equivalents aggregated US$41.0 million. We ended the year with only a +9% increase in accounts receivables and a +13% increase in inventory, both of which are reasonable in light of the +27% increase in sales for the year.”
MORE STORIES ON INTER PARFUMS
Inter Parfums restructures; creates two new divisions for its fragrance portfolio – 03/03/05
Lanvin and Inter Parfums seal fragrance licensing deal – 16/06/04
Lanvin and Inter Parfums poised for fragrance deal – 07/06/04