Inter Parfums Inc. converted an 18.6 percent increase in sales in the fourth quarter into a return to profitability and provided guidance for higher profits for 2015 than originally projected.
In the three months ended Dec. 31, the New York-based fragrance firm recorded net income of $3.3 million, or 11 cents a diluted share, versus a net loss of $4.2 million, or 13 cents, in the year-ago quarter. Analysts on average expected EPS of 9 cents in the most recent period.
Revenues rose to $125.1 million from $105.5 million, with sales up 25 percent at constant currency. Included in the revenue increase were a 19.3 percent sales gain, to $93.6 million, in European-based operations, and a 16.4 percent rise in U.S. based operations, to $27.1 million.
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Gross margin expanded to 59.4 percent in the quarter from 57.3 percent a year ago.
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Jean Madar, chairman and chief executive officer, attributed the revenue improvement to “a steady stream of product launches, the contribution of our new brands and the staying power of our best-sellers. In fact, in 2014, ongoing brand sales were ahead in all regions.”
He said Inter Parfums’ three largest markets – Western Europe, North America and Asia – had sales growth of 14.4, 13.6 and 9.2 percent, respectively, for the company’s “ongoing” brands.
Among the launches scheduled for 2015 are Extraordinary, its first new scent for Oscar de la Renta, and Icon for Dunhill, which recently launched at Harrods in London to a strong sales reception, Madar said.
Despite “increasingly strong currency headwinds towards the end of the year,” the firm remains optimistic about its sales prospects. But with the dollar continuing to gain ground against the euro, the company reduced its sales guidance for the year to $470 million.
Earnings guidance, however, was raised to a range of 98 cents to $1 a share from between 95 and 98 cents as 40 percent of net sales from European operations are denominated in U.S. dollars while virtually all costs from European activities are incurred in euros.
In January, Inter Parfums lowered 2015 sales guidance to between $480 million and $500 million while saying that it expected to lift earnings guidance from the existing range of between 95 and 98 cents when it reported fourth-quarter and full-year results. Analysts earlier expected EPS of $1 on sales of $494.2 million in 2015.
Shares of Inter Parfums fell 0.7 percent to $27.65 in early after-hours trading after rising 0.2 percent to $27.84 during the regular trading session.
For the full year, net income declined 32.7 percent to $7.9 million, or 95 cents a diluted share, from 2013 profits of $11.8 million, or $1.27. Revenues fell 11.4 percent to $499.3 million from $563.6 million.