New launches to accelerate growth of Elizabeth Arden

04 Nov '09

4 min read

Elizabeth Arden, Inc, a global prestige beauty products company, announced financial results for its first fiscal quarter ended September 30, 2009.

For the quarter ended September 30, 2009, the Company reported net sales of $265.2 million, a decrease of 6.7%, as compared to the first quarter of the prior fiscal year. Excluding the unfavorable impact of foreign currency translation, net sales decreased by 5.0%.

Net income per diluted share for the first fiscal quarter ended September 30, 2009 was $0.00, as compared to a net loss per diluted share of $0.45 for the prior year period. Excluding restructuring and other expenses associated with the Company's Global Efficiency Re-engineering initiative, net income per diluted share for the three months ended September 30, 2009 was $0.05, as compared to net income per diluted share of $0.11 for the prior year period. The prior year period also excludes expenses and non-cash charges related to the Liz Claiborne license agreement. A reconciliation between GAAP and adjusted results can be found in the tables and footnotes to this press release.

E. Scott Beattie, Chairman, President and Chief Executive Officer of Elizabeth Arden, Inc., commented, "We are encouraged by our first quarter results, with each of our business units generally performing as we had expected. Sales results were at the high end of our expectations, and earnings exceeded prior guidance, aided by improved trends in the travel retail and distributor markets and more favorable foreign currency rates. We are particularly pleased with the progress we continue to make with our Global Efficiency Re-engineering initiative. Gross margins increased by 90 basis points this quarter, and we were able to reduce inventory by $105 million from September 2008 levels, resulting in a $92 million reduction in credit line and accounts payable balances."

Mr. Beattie continued, "There are signs that economic conditions are beginning to improve, and, while early, we are expecting good performance from our new launches for the holiday season. We are still not yet seeing, however, a return to normalized replenishment by our retailers, particularly in our North America fragrance business. While we expect the gap between retail sales and inventory replenishment to improve, it is difficult to predict the timing and magnitude of any improvement. We remain confident that with the success of our operational initiatives, an improvement in retailer replenishment should lead to accelerated growth in earnings and return on invested capital."

Outlook
For the second quarter of fiscal 2010, the Company expects net sales of $380 million to $390 million and net income per diluted share of $0.65 to $0.75. The net sales guidance for the second fiscal quarter assumes a favorable impact from foreign currency translation of approximately 2.5% as compared to the prior year period.

The Company is updating its annual netsales and earnings guidance for the fiscal year ending June 30, 2010, and now expects a net sales increase of 2.5% to 3.5%, as compared to the prior fiscal year, and earnings per diluted share to be in the range of $0.55 to $0.65.

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