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Inter Parfums Leverages Fragrance Market Growth Despite High Costs
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Inter Parfums, Inc. (IPAR - Free Report) seems to be thriving in the fragrance industry, benefiting from strong momentum and an expanding market share. As a leading provider of fragrances and related products, the company is making significant strides with successful brand expansions and new product launches. Management is actively pursuing growth opportunities through new licenses and strategic acquisitions. However, it’s important to note that the company faces challenges from a rising cost environment.
IPAR's Growth Boosted by Favorable Market Trends
Inter Parfums is capitalizing on positive market trends in the fragrance industry, with strong sales from new licenses such as Roberto Cavalli and Lacoste driving its success. The company's growth is further supported by its established brands, targeted advertising campaigns and a broad global distribution network. Inter Parfums' strategic balance of product launches and marketing investments is proving effective, contributing to notable growth. The travel retail sector’s expansion, driven by increased leisure and business travel, also plays a critical role.
In the second quarter of 2024, Inter Parfums reported a 5% year-over-year increase in earnings, exceeding the Zacks Consensus Estimate. Quarterly net sales rose 11% to $342 million, which reflected the company's strategic approach. European net sales reached $226 million, up 14% from 2023, attributed to a 31% surge in sales from Jimmy Choo. Robust demand for Coach brands and a 13% sales increase for medium-sized brands like Karl Lagerfeld and Rochas further boosted performance. Net sales in the United States totaled $120 million, an 8% increase year over year, driven by strong performances from GUESS and Donna Karan/DKNY, with MCM achieving double-digit growth thanks to the successful MCM Crush launch.
This Zacks Rank #3 (Hold) company is expanding its market share with exciting new product launches and brand extensions. For the remainder of 2024, the company will debut fragrances like GUESS Elements and Uomo Intenso in the United States, and Ciel d’Hiver and Lacoste Original in Europe. Plans for 2025 include new fragrances for Coach, GUESS Iconic and MCM, along with a luxury collection, Solferino Paris, featuring 10 scents. Apart from these, the company is advancing the development of Solferino Paris, a luxury fragrance collection by Inter Parfums S.A., set to launch in 2025, featuring 10 fragrances.
Strategic partnerships are also crucial to Inter Parfums' growth. 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. Other licenses include Lacoste (December 2022), Donna Karan and DKNY (July 2022), and Salvatore Ferragamo (October 2021). Inter Parfums is also benefiting from partnerships with Origines-parfums and Moncler SpA.
Understanding the Roadblocks for IPAR
Inter Parfums is experiencing a rise in SG&A (Selling, General & Administrative) expenses, which reached $155.9 million in second-quarter 2024, up from $133.4 million year over year. SG&A expenses as a percentage of net sales increased to 45.6% from 43.1% in the same period of 2023. This rise is caused by higher promotional and advertising costs, which made up 19.4% of quarterly net sales and are projected to reach nearly 21% in the full year. Although these investments, which are expected to drive growth, may pressure profits in the short term. SG&A expenses are anticipated to rise 13.9% in third-quarter 2024, with the percentage of sales increasing 50 basis points to 40.7%.
Despite the robust demand in the global fragrance market, Inter Parfums is facing challenges as its sell-in growth lags behind sell-out performance. Trade destocking and geopolitical uncertainties, such as the conflict in Eastern Europe, have led the company to adopt a cautious approach for the remainder of 2024.
IPAR’s shares have gained 3% in the past three months against the industry’s 22.8% decline.
Top-Ranked Staple Stocks
Here, we have highlighted three better-ranked food stocks, namely, The Chef's Warehouse (CHEF - Free Report) , Pilgrim’s Pride (PPC - Free Report) and Ollie's Bargain Outlet (OLLI - Free Report) .
CHEF has a trailing four-quarter earnings surprise of 33.7%, on average. The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal year sales and earnings each indicates growth of 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Ollie's Bargain, the extreme-value retailer of brand-name merchandise, currently carries a Zacks Rank #2 (Buy). OLLI has a trailing four-quarter earnings surprise of 7.9%, on average. The Zacks Consensus Estimated figure for Ollie's Bargain’s current financial-year sales and earnings each indicates a rise of around 8.7% and 12.7%, respectively, from the year-earlier figures.
Flowers Foods, one of the largest producers of packaged bakery foods in the United States, currently carries a Zacks Rank #2. FLO has a trailing four-quarter earnings surprise of 1.9%, on average. The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales and earnings each implies growth of around 1.1% and 4.2%, respectively, from the year-ago reported numbers.
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Inter Parfums Leverages Fragrance Market Growth Despite High Costs
Inter Parfums, Inc. (IPAR - Free Report) seems to be thriving in the fragrance industry, benefiting from strong momentum and an expanding market share. As a leading provider of fragrances and related products, the company is making significant strides with successful brand expansions and new product launches. Management is actively pursuing growth opportunities through new licenses and strategic acquisitions. However, it’s important to note that the company faces challenges from a rising cost environment.
IPAR's Growth Boosted by Favorable Market Trends
Inter Parfums is capitalizing on positive market trends in the fragrance industry, with strong sales from new licenses such as Roberto Cavalli and Lacoste driving its success. The company's growth is further supported by its established brands, targeted advertising campaigns and a broad global distribution network. Inter Parfums' strategic balance of product launches and marketing investments is proving effective, contributing to notable growth. The travel retail sector’s expansion, driven by increased leisure and business travel, also plays a critical role.
In the second quarter of 2024, Inter Parfums reported a 5% year-over-year increase in earnings, exceeding the Zacks Consensus Estimate. Quarterly net sales rose 11% to $342 million, which reflected the company's strategic approach. European net sales reached $226 million, up 14% from 2023, attributed to a 31% surge in sales from Jimmy Choo. Robust demand for Coach brands and a 13% sales increase for medium-sized brands like Karl Lagerfeld and Rochas further boosted performance. Net sales in the United States totaled $120 million, an 8% increase year over year, driven by strong performances from GUESS and Donna Karan/DKNY, with MCM achieving double-digit growth thanks to the successful MCM Crush launch.
Image Source: Zacks Investment Research
Product Launches & Strategic Partnerships Fuel IPAR’s Growth
This Zacks Rank #3 (Hold) company is expanding its market share with exciting new product launches and brand extensions. For the remainder of 2024, the company will debut fragrances like GUESS Elements and Uomo Intenso in the United States, and Ciel d’Hiver and Lacoste Original in Europe. Plans for 2025 include new fragrances for Coach, GUESS Iconic and MCM, along with a luxury collection, Solferino Paris, featuring 10 scents. Apart from these, the company is advancing the development of Solferino Paris, a luxury fragrance collection by Inter Parfums S.A., set to launch in 2025, featuring 10 fragrances.
Strategic partnerships are also crucial to Inter Parfums' growth. 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. Other licenses include Lacoste (December 2022), Donna Karan and DKNY (July 2022), and Salvatore Ferragamo (October 2021). Inter Parfums is also benefiting from partnerships with Origines-parfums and Moncler SpA.
Understanding the Roadblocks for IPAR
Inter Parfums is experiencing a rise in SG&A (Selling, General & Administrative) expenses, which reached $155.9 million in second-quarter 2024, up from $133.4 million year over year. SG&A expenses as a percentage of net sales increased to 45.6% from 43.1% in the same period of 2023. This rise is caused by higher promotional and advertising costs, which made up 19.4% of quarterly net sales and are projected to reach nearly 21% in the full year. Although these investments, which are expected to drive growth, may pressure profits in the short term. SG&A expenses are anticipated to rise 13.9% in third-quarter 2024, with the percentage of sales increasing 50 basis points to 40.7%.
Despite the robust demand in the global fragrance market, Inter Parfums is facing challenges as its sell-in growth lags behind sell-out performance. Trade destocking and geopolitical uncertainties, such as the conflict in Eastern Europe, have led the company to adopt a cautious approach for the remainder of 2024.
IPAR’s shares have gained 3% in the past three months against the industry’s 22.8% decline.
Top-Ranked Staple Stocks
Here, we have highlighted three better-ranked food stocks, namely, The Chef's Warehouse (CHEF - Free Report) , Pilgrim’s Pride (PPC - Free Report) and Ollie's Bargain Outlet (OLLI - Free Report) .
The Chef’s Warehouse, which engages in the distribution of specialty food products, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CHEF has a trailing four-quarter earnings surprise of 33.7%, on average. The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal year sales and earnings each indicates growth of 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Ollie's Bargain, the extreme-value retailer of brand-name merchandise, currently carries a Zacks Rank #2 (Buy). OLLI has a trailing four-quarter earnings surprise of 7.9%, on average. The Zacks Consensus Estimated figure for Ollie's Bargain’s current financial-year sales and earnings each indicates a rise of around 8.7% and 12.7%, respectively, from the year-earlier figures.
Flowers Foods, one of the largest producers of packaged bakery foods in the United States, currently carries a Zacks Rank #2. FLO has a trailing four-quarter earnings surprise of 1.9%, on average. The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales and earnings each implies growth of around 1.1% and 4.2%, respectively, from the year-ago reported numbers.