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Inter Parfums (IPAR) Q2 Earnings Top, Sales Up on Robust Demand
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Inter Parfums, Inc. (IPAR - Free Report) posted impressive second-quarter 2024 results, with the bottom line increasing year over year and surpassing the Zacks Consensus Estimate. Quarterly sales increased owing to strength in U.S.-based and Europe-based operations.
Sales benefited from continued momentum in the fragrance market, the strength of its legacy brands, the rapid ramp-up of its new brands, effective advertising and promotional efforts and its extensive global distribution network. IPAR's strategic approach to balancing product launches with advertising and promotional investments is proving effective and management expects continued momentum in the second half of the year. Management reaffirmed its 2024 guidance.
Inter Parfums, Inc. Price, Consensus and EPS Surprise
Inter Parfums posted earnings of $1.14 per share, up 5% from the year-ago quarter’s figure. The metric surpassed the Zacks Consensus Estimate of $1.07 per share.
Quarterly net sales reported an 11% year-over-year increase, reaching $342 million. In an earlier press release, the company announced that the U.S.-based net sales amounted to $120 million, up 8% from second-quarter 2023 levels. Inter Parfums’ Europe-based net sales came in at $226 million, up 14% from the year-ago levels.
Sales growth in the Europe-based operations was predominantly fueled by Jimmy Choo, which registered a 31% increase in sales. In the second quarter, Montblanc brand sales saw a slight decline. The Montblanc Explorer line and the new Legend Blue (launched in early 2024) are performing well. Demand remained strong for the Coach brand's established lines. Several Inter Parfums’ medium-sized brands had a strong second quarter, with Karl Lagerfeld and Rochas recording a 13% increase in fragrance sales each.
Growth in its U.S. operations was driven by strong performances from the company’s two largest brands, GUESS and Donna Karan/DKNY. In the quarter, the Ferragamo brand saw minimal growth in sales as the company expanded the Signorina line with Signorina Unica. MCM achieved strong double-digit growth, driven by the successful launch of MCM Crush. The company's latest additions, Lacoste and Roberto Cavalli, met management's expectations.
Costs & Margins
Coming back to the current release, IPAR’s consolidated gross margin came in at 64.5%, up 360 basis points (bps) from 60.9% reported in the year-ago quarter. For European operations, the gross margin expanded by 570 bps on the back of a favorable mix of segments, geographies, and channels, along with a one-time charge for inventory reserves recorded in 2023. Excluding this inventory reserve, the gross margin grew by 250 bps. For its U.S.-based operations, the gross margin declined to 56.5% in second-quarter 2024, down from 57.2% in the same period of 2023, due to a slightly less favorable brand mix.
Inter Parfums’ SG&A expenses were $155.9 million, up from the $133.4 million reported in the year-ago quarter. SG&A expenses, as a percentage of net sales, were 45.6% in the second quarter, up from 43.1% in the same period of 2023. This increase was primarily due to higher promotional and advertising costs, which accounted for 19.4% of quarterly net sales. Advertising and promotional expenditures are expected to form nearly 21% of net sales in full-year 2024.
The company’s operating income came in at $65 million, up from the $55 million reported in the year-ago quarter. The operating margin came in at 18.9% compared with the 17.8% reported in the year-ago quarter.
Other Financial Aspects
Inter Parfums ended the quarter with cash and cash equivalents of almost $39 million, long-term debt (excluding the current portion) of $108.5 million and total equity of $901.2 million.
Inter Parfums announced a regular dividend of 75 cents per share, payable on Sep 30, 2024, to shareholders of record as of Sep 13.
Image Source: Zacks Investment Research
Product Launches on Track
For the remainder of 2024, Inter Parfums will introduce a range of new fragrance variations for U.S. operations, including GUESS Elements and Uomo Intenso, DKNY 24/7, a Just Cavalli extension for Roberto Cavalli, Sweet Ferocious and the Wild Heart duo for men and women.
For European operations, the company will launch Ciel d’Hiver, a new addition to the Moncler Les Sommets line, an extension of Lanvin Modern Princess and the international debut of Lacoste Original for men.
Looking ahead to 2025, the company is actively planning new fragrances for Coach, GUESS Iconic for men, a new collection for MCM, and additional extensions of the classic Lacoste scent. Management is working on new offerings for Montblanc Explorer, Jimmy Choo Man and I Want Choo, among other exciting developments.
Interparfums SA and Van Cleef & Arpels signed a 12-year license agreement in 2006, extended until Dec 31, 2024. Discussions for renewal began in 2023, aiming to strengthen global distribution with a new nine-year agreement starting Jan 1, 2025.
Guidance
Despite the global fragrance market's continued vibrancy and strong demand for IPAR's products, sell-in is growing more slowly than sell-out, and the company is still facing challenges in Eastern Europe. Given the dynamic backdrop and despite its record second-quarter sales and strong earnings, management is reaffirming its 2024 guidance, which projects net sales of $1.45 billion and earnings per diluted share of $5.15.
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Inter Parfums (IPAR) Q2 Earnings Top, Sales Up on Robust Demand
Inter Parfums, Inc. (IPAR - Free Report) posted impressive second-quarter 2024 results, with the bottom line increasing year over year and surpassing the Zacks Consensus Estimate. Quarterly sales increased owing to strength in U.S.-based and Europe-based operations.
Sales benefited from continued momentum in the fragrance market, the strength of its legacy brands, the rapid ramp-up of its new brands, effective advertising and promotional efforts and its extensive global distribution network. IPAR's strategic approach to balancing product launches with advertising and promotional investments is proving effective and management expects continued momentum in the second half of the year. Management reaffirmed its 2024 guidance.
Inter Parfums, Inc. Price, Consensus and EPS Surprise
Inter Parfums, Inc. price-consensus-eps-surprise-chart | Inter Parfums, Inc. Quote
Results in Detail
Inter Parfums posted earnings of $1.14 per share, up 5% from the year-ago quarter’s figure. The metric surpassed the Zacks Consensus Estimate of $1.07 per share.
Quarterly net sales reported an 11% year-over-year increase, reaching $342 million. In an earlier press release, the company announced that the U.S.-based net sales amounted to $120 million, up 8% from second-quarter 2023 levels. Inter Parfums’ Europe-based net sales came in at $226 million, up 14% from the year-ago levels.
Sales growth in the Europe-based operations was predominantly fueled by Jimmy Choo, which registered a 31% increase in sales. In the second quarter, Montblanc brand sales saw a slight decline. The Montblanc Explorer line and the new Legend Blue (launched in early 2024) are performing well. Demand remained strong for the Coach brand's established lines. Several Inter Parfums’ medium-sized brands had a strong second quarter, with Karl Lagerfeld and Rochas recording a 13% increase in fragrance sales each.
Growth in its U.S. operations was driven by strong performances from the company’s two largest brands, GUESS and Donna Karan/DKNY. In the quarter, the Ferragamo brand saw minimal growth in sales as the company expanded the Signorina line with Signorina Unica. MCM achieved strong double-digit growth, driven by the successful launch of MCM Crush. The company's latest additions, Lacoste and Roberto Cavalli, met management's expectations.
Costs & Margins
Coming back to the current release, IPAR’s consolidated gross margin came in at 64.5%, up 360 basis points (bps) from 60.9% reported in the year-ago quarter. For European operations, the gross margin expanded by 570 bps on the back of a favorable mix of segments, geographies, and channels, along with a one-time charge for inventory reserves recorded in 2023. Excluding this inventory reserve, the gross margin grew by 250 bps. For its U.S.-based operations, the gross margin declined to 56.5% in second-quarter 2024, down from 57.2% in the same period of 2023, due to a slightly less favorable brand mix.
Inter Parfums’ SG&A expenses were $155.9 million, up from the $133.4 million reported in the year-ago quarter. SG&A expenses, as a percentage of net sales, were 45.6% in the second quarter, up from 43.1% in the same period of 2023. This increase was primarily due to higher promotional and advertising costs, which accounted for 19.4% of quarterly net sales. Advertising and promotional expenditures are expected to form nearly 21% of net sales in full-year 2024.
The company’s operating income came in at $65 million, up from the $55 million reported in the year-ago quarter. The operating margin came in at 18.9% compared with the 17.8% reported in the year-ago quarter.
Other Financial Aspects
Inter Parfums ended the quarter with cash and cash equivalents of almost $39 million, long-term debt (excluding the current portion) of $108.5 million and total equity of $901.2 million.
Inter Parfums announced a regular dividend of 75 cents per share, payable on Sep 30, 2024, to shareholders of record as of Sep 13.
Image Source: Zacks Investment Research
Product Launches on Track
For the remainder of 2024, Inter Parfums will introduce a range of new fragrance variations for U.S. operations, including GUESS Elements and Uomo Intenso, DKNY 24/7, a Just Cavalli extension for Roberto Cavalli, Sweet Ferocious and the Wild Heart duo for men and women.
For European operations, the company will launch Ciel d’Hiver, a new addition to the Moncler Les Sommets line, an extension of Lanvin Modern Princess and the international debut of Lacoste Original for men.
Looking ahead to 2025, the company is actively planning new fragrances for Coach, GUESS Iconic for men, a new collection for MCM, and additional extensions of the classic Lacoste scent. Management is working on new offerings for Montblanc Explorer, Jimmy Choo Man and I Want Choo, among other exciting developments.
Interparfums SA and Van Cleef & Arpels signed a 12-year license agreement in 2006, extended until Dec 31, 2024. Discussions for renewal began in 2023, aiming to strengthen global distribution with a new nine-year agreement starting Jan 1, 2025.
Guidance
Despite the global fragrance market's continued vibrancy and strong demand for IPAR's products, sell-in is growing more slowly than sell-out, and the company is still facing challenges in Eastern Europe. Given the dynamic backdrop and despite its record second-quarter sales and strong earnings, management is reaffirming its 2024 guidance, which projects net sales of $1.45 billion and earnings per diluted share of $5.15.
This Zacks Rank #3 (Hold) stock has gained 5.6% in the past three months against the industry’s decline of 22.4%.
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Philip Morris (PM - Free Report) , a tobacco company, has a trailing four-quarter earnings surprise of 1.8%, on average. PM currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Philip Morris’ current financial-year sales and earnings indicates growth of 5.8% and almost 7%, respectively, from prior-year reported levels.
Colgate-Palmolive (CL - Free Report) , which manufactures and sells consumer products, currently carries a Zacks Rank #2. CL delivered an earnings surprise of 4.8% in the trailing four quarters, on average.
The Zacks Consensus Estimate for Colgate-Palmolive’s current fiscal-year sales and earnings suggests growth of 3.8% and nearly 10.5%, respectively, from the year-ago reported numbers.