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Inter Parfums (IPAR) Gains on the Burgeoning Fragrance Market
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Inter Parfums, Inc. (IPAR - Free Report) appears well-positioned buoyed by robust momentum in the fragrance space. The provider of fragrances and related products is expanding its market share with solid brands and product launches. Management is keen on growing its business through new licenses or acquisitions. That being said, the company is not immune to a rising cost environment.
Let’s discuss this in detail.
Brand Strength Boost Growth
The fragrance market stays vibrant, with major brands consistently experiencing robust sell-out rates and receiving positive feedback from retailers and consumers. Continued momentum in the fragrance market and the successful initial shipments of Lacoste and Cavalli fragrances drove the company's second-quarter 2024 sales. Quarterly net sales moved up 4% year over year, reaching $324 million on strength in U.S.-based operations.
Quarterly sales in the United States surged to $96 million, up 18%. The upside was propelled by the exceptional performance of Donna Karan/DKNY and GUESS fragrances. The successful launch of Roberto Cavalli, combined with the distribution of European-based brands by the Italian subsidiary, contributed to this upside. Travel retail has seen a resurgence, with a significant 12% growth in this quarter.
Management is confident about the resilience of the fragrance market and its strategies to gain market share effectively. For 2024, the company anticipates net sales of $1.45 billion and earnings of $5.15 per share. This guidance suggests 10% growth in net sales and an 8% improvement in the bottom line from 2023 levels.
Image Source: Zacks Investment Research
Product Launches & Partnerships
Inter Parfums is on track to expand its business through new licenses or acquisitions. The company entered into an exclusive worldwide fragrance license for the prestigious Roberto Cavalli brand, which became effective on Jul 6, 2023. In December 2022, IPAR’s majority-owned Paris-based subsidiary, Interparfums SA, signed a license agreement with Lacoste — a well-known fashion sports brand. The company became the exclusive worldwide license for the Donna Karan and DKNY fragrance brands (July 2022) through a deal with G-III Apparel Group
The company is witnessing increased market share stemming from new product launches and brand extensions. During first-quarter 2024, several new fragrances were launched, including Montblanc Legend Blue, Donna Karan Cashmere Collection and Van Cleef & Arpels Encens Précieux, among others.
Looking at the rest of 2024, the company has solid innovation plans, including flagship fragrances for DKNY and Lacoste and line extensions for Jimmy Choo's I Want Choo and Roberto Cavalli's Signature lines, among others. Despite challenges in certain regions and shifts in sales timing, Inter Parfums is focused on optimizing product launches throughout the year for a more balanced distribution.
Will Hurdles be Countered?
The company has been grappling with higher selling, general and administrative (SG&A) expenses for a while. During first-quarter 2024, the company’s SG&A expenses were $134.4 million, up from the $112.7 million reported in the year-ago quarter. As a percentage of sales, SG&A increased to 41.5% from the 36.1% reported in the year-ago period. This was a result of increased advertising and promotional investments. Advertising and promotional expenditures are expected to form nearly 21% of net sales in 2024.
That being said, Inter Parfums is optimistic about favorable market conditions and anticipates the positive trends to outweigh any challenges.
The Zacks Rank #3 (Hold) company’s shares have inched up 1.1% in the past three months against the industry’s 15.6% decline.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings indicates growth of 24.8% and 177.1%, respectively, from the prior-year reported level.
BRF (BRFS - Free Report) is engaged in raising, producing and slaughtering poultry and pork for processing, production and sale of fresh meat, processed products, pasta, margarine, pet food and other products. The stock currently sports Zacks Rank #1.
The Zacks Consensus Estimate for BRF’s current financial-year sales and earnings suggests growth of 7.5% and 210%, respectively, from year-ago reported figures.
Treehouse Foods (THS - Free Report) is a manufacturer of packaged foods and beverages. The company currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Treehouse Foods’ current financial-year sales and earnings indicates a decline of 1.6% and 8.5%, respectively, from the prior-year reported level. THS has a negative trailing four-quarter average earnings surprise of 4.5%.
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Inter Parfums (IPAR) Gains on the Burgeoning Fragrance Market
Inter Parfums, Inc. (IPAR - Free Report) appears well-positioned buoyed by robust momentum in the fragrance space. The provider of fragrances and related products is expanding its market share with solid brands and product launches. Management is keen on growing its business through new licenses or acquisitions. That being said, the company is not immune to a rising cost environment.
Let’s discuss this in detail.
Brand Strength Boost Growth
The fragrance market stays vibrant, with major brands consistently experiencing robust sell-out rates and receiving positive feedback from retailers and consumers. Continued momentum in the fragrance market and the successful initial shipments of Lacoste and Cavalli fragrances drove the company's second-quarter 2024 sales. Quarterly net sales moved up 4% year over year, reaching $324 million on strength in U.S.-based operations.
Quarterly sales in the United States surged to $96 million, up 18%. The upside was propelled by the exceptional performance of Donna Karan/DKNY and GUESS fragrances. The successful launch of Roberto Cavalli, combined with the distribution of European-based brands by the Italian subsidiary, contributed to this upside. Travel retail has seen a resurgence, with a significant 12% growth in this quarter.
Management is confident about the resilience of the fragrance market and its strategies to gain market share effectively. For 2024, the company anticipates net sales of $1.45 billion and earnings of $5.15 per share. This guidance suggests 10% growth in net sales and an 8% improvement in the bottom line from 2023 levels.
Image Source: Zacks Investment Research
Product Launches & Partnerships
Inter Parfums is on track to expand its business through new licenses or acquisitions. The company entered into an exclusive worldwide fragrance license for the prestigious Roberto Cavalli brand, which became effective on Jul 6, 2023. In December 2022, IPAR’s majority-owned Paris-based subsidiary, Interparfums SA, signed a license agreement with Lacoste — a well-known fashion sports brand. The company became the exclusive worldwide license for the Donna Karan and DKNY fragrance brands (July 2022) through a deal with G-III Apparel Group
The company is witnessing increased market share stemming from new product launches and brand extensions. During first-quarter 2024, several new fragrances were launched, including Montblanc Legend Blue, Donna Karan Cashmere Collection and Van Cleef & Arpels Encens Précieux, among others.
Looking at the rest of 2024, the company has solid innovation plans, including flagship fragrances for DKNY and Lacoste and line extensions for Jimmy Choo's I Want Choo and Roberto Cavalli's Signature lines, among others. Despite challenges in certain regions and shifts in sales timing, Inter Parfums is focused on optimizing product launches throughout the year for a more balanced distribution.
Will Hurdles be Countered?
The company has been grappling with higher selling, general and administrative (SG&A) expenses for a while. During first-quarter 2024, the company’s SG&A expenses were $134.4 million, up from the $112.7 million reported in the year-ago quarter. As a percentage of sales, SG&A increased to 41.5% from the 36.1% reported in the year-ago period. This was a result of increased advertising and promotional investments. Advertising and promotional expenditures are expected to form nearly 21% of net sales in 2024.
That being said, Inter Parfums is optimistic about favorable market conditions and anticipates the positive trends to outweigh any challenges.
The Zacks Rank #3 (Hold) company’s shares have inched up 1.1% in the past three months against the industry’s 15.6% decline.
Key Staple Picks
Freshpet, Inc. (FRPT - Free Report) , a pet food company, has a trailing four-quarter earnings surprise of 118.2%, on average. FRPT currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings indicates growth of 24.8% and 177.1%, respectively, from the prior-year reported level.
BRF (BRFS - Free Report) is engaged in raising, producing and slaughtering poultry and pork for processing, production and sale of fresh meat, processed products, pasta, margarine, pet food and other products. The stock currently sports Zacks Rank #1.
The Zacks Consensus Estimate for BRF’s current financial-year sales and earnings suggests growth of 7.5% and 210%, respectively, from year-ago reported figures.
Treehouse Foods (THS - Free Report) is a manufacturer of packaged foods and beverages. The company currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Treehouse Foods’ current financial-year sales and earnings indicates a decline of 1.6% and 8.5%, respectively, from the prior-year reported level. THS has a negative trailing four-quarter average earnings surprise of 4.5%.