Elizabeth Arden profit up, keeps 2008 profit view
U.S. cosmetics company Elizabeth Arden Inc reported a higher quarterly net profit on Thursday, as international demand boosted its overall sales, and it stood by its fiscal 2008 profit outlook. But U.S. holiday sales were weak, Arden said, as it continued to suffer from flagging sales at U.S. department stores - trouble it expects will persist for the rest of its fiscal year. Strong international sales would offset softness in the U.S. market, Arden noted.
Beauty companies like Arden and its peer Estee Lauder have taken a hit from U.S. sales in the past, hurt by fewer department store outlets and persistent cutbacks in consumer spending that has left several retailers worrying about their profits. But Arden has turned to its international business, cut costs and added to its fragrance lineup with acquisitions like Hummer Fragrance for Men, the Badgley Mischka perfume, and launched the M by Mariah Carey line, to boost its sales.
Net earnings came to $33.8 million, or $1.15 a share for the fiscal second quarter that ended December 31, versus $25.9 million or 91 cents a share in the year-ago quarter. Its profit was in line with analysts' average expectations, according to Reuters Estimates.
Sales at Arden, known for the Britney Spears perfume and its namesake skin care products, rose 2.8 percent to $422.4 million, helped by a rise in international sales and the launch of the Mariah Carey perfume. Chief Executive Scott Beattie singled out the Britney Spears perfume line in a conference call, and said its sales had not been hurt by the troubled pop star's erratic behavior. If anything, the publicity had only helped, Beattie said, noting that Spears' Curious and Fantasy perfumes were ranked in the top 10 perfumes of 2007 in the mass channel.
Arden stood by its full-year, per-share profit outlook of $1.65 to $1.75, but cut its sales forecast to a rise of 3 percent to 4 percent. It had previously forecast an increase of 5 percent to 7 percent. Efforts to improve operating margins, and cost savings initiatives from its supply chain plus its international business would offset slower sales growth, Arden said.
The fiscal 2008 forecast called for an earnings forecast of 47 cents to 57 cents a share for the second half of the year, the company said. For the current third quarter, Arden expects sales to rise in the low-single-digit and per-share earnings of 4 cents to 8 cents a share. Analysts expect Arden to earn $1.69 a share for the year and 19 cents a share in the current quarter.
The company plans to launch a Hilary Duff perfume and an exclusive Mariah "Gold" perfume over the next two quarters. Other product launches include a skin whitening line in the Asia Pacific region, and its Prevage Anti-aging night cream in international markets.
Arden shares were up 1.4 percent to $20.34 in after-hours trade from a closing price of $20.05 on Nasdaq. (Reuters)
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