New York-based Inter Parfums recorded a 6.8% decrease in earnings for its fiscal 2011 second quarter, but looks to the upcoming launch of Burberry Body to jumpstart its performance for the year.

In fact, “2011 is on track to be our best year ever,” Executive Vice President and CFO Russell Greenberg asserts in the firm’s Aug. 9 release.

For the quarter, net income dropped to $5 million from $5.4 million in the second quarter in 2010, and earnings per share declined 11.1% to $0.16, the firm reported Aug. 9. The decrease was attributed to lower-than-expected sales and higher costs associated with the opening of a new distribution center outside of Paris.

“Should consumers receive the new launch favorably, as they have done with recent Burberry launches in prior years, this could represent an important catalyst for shares of IPAR,” Wedbush Securities analyst Rommel Dionisio wrote in an analyst note.

In the company’s release, chairman and CEO Jean Madar notes, however, that Burberry Body will be the largest global Burberry fragrance launch in history.

The fragrance’s “quite daring” ad campaign will feature model/actress Rosie Huntington-Whiteley “strategically wrapped in the iconic Burberry trench coat,” the firm says. Huntington-Whiteley starred in the summer blockbuster “Transformers 3: Dark of the Moon” and was previously a Victoria’s Secret model.

Madar told investors during an Aug. 10 call that Inter Parfums aims to make an immediate impact with Burberry Body, launching it simultaneously Sept. 1 in 120 countries, rather than undertaking the usual “measured rollout” it does for most fragrances.

Burberry is the firm’s flagship franchise, with sales of $245 million in 2010 and a compounded annual growth rate of 8.5%, according to an investor presentation on Inter Parfums’ website.

The Burberry fragrance family makes up approximately half of the firm’s annual sales, Wedbush Securities analyst Rommel Dionisio points out in an Aug. 11 research note.

“Should consumers receive the new launch favorably, as they have done with recent Burberry launches in prior years, this could represent an important catalyst for shares of IPAR,” the analyst wrote.

Last year, the firm’s Burberry Sport introduction was received favorably. Its launch helped lift Burberry sales 26% in the first half of 2010 without cannibalizing sales of existing Burberry scents (Also see "Inter Parfums Plans "Brisk" Second-Half Launch Schedule After Record Q2" - HBW Insight, 16 August, 2010.).

Greenberg said the firm also plans to expand distribution of Burberry’s cosmetics line during the second half of the year, which launched in 2010 in 30 doors worldwide.

Sales In Europe Up, But Below Expectations

Inter Parfums posted net sales of $121.1 million for the second quarter, a 12.3% increase compared with the same quarter last year. Sales from the firm’s European operations rose 15.9% to $106.5 million, while U.S.-based sales dropped 8.2% to $14.6 million.

Despite the positive achievements in Europe, the sales there were below the firm’s expectations, according to Greenberg.

The exec attributed the shortfall to “unforeseen transitional issues” related to the new distribution center near Paris, which caused some product shipments slated for Q2 to be delayed until the third quarter.

The firm’s Jimmy Choo scents did well during the quarter, and “continue[s] to exceed our expectations,” while Lanvin sales were down slightly, according to Greenberg.

In addition to Burberry Body, other second-half launches planned include Betsey Johnson Too Too and bebe Gold.

“In general, the second half of the year is typically stronger than the first half due in part to holiday sales,” Madar says in the release.

Inter Parfums projects full-year sales of approximately $550 million and net income of approximately $32.5 million. In 2010, Inter Parfums recorded $460.4 million in sales and net income of $26.6 million.

The firm lowered its earnings per share guidance to $1.05 from $1.10, “roughly the magnitude of the Q2 earnings miss,” Dionisio wrote.

Looking ahead to 2012 and beyond, the firm recently signed license agreements with designer Anna Sui and couture design house Balmain, with the intent to launch new scents in fall 2012 and 2013, respectively (Also see "In Brief" - HBW Insight, 4 July, 2011., and Also see "In Brief" - HBW Insight, 25 July, 2011.).

“We are very optimistic with respect to the future of the brands that we have,” Greenberg concluded.

By Lauren Nardella

Inter Parfums Eagerly Anticipates Burberry Body, Brand’s Largest-Ever Launch

More from Archive

More from HBW Insight