Executives at Elizabeth Arden Inc. said the company’s fiscal year sales would linger around the low end of previous estimates as weak department store sales have taken a toll on results. The lower-than-expected sales were mainly a result of the dismal performance of beauty products in U.S. department stores, according to Arden executives. Department stores have struggled to hold on to market share as consumers defected to lower-priced retailers in the slumping economy.
For fiscal 2003, which ends this month, the company said it now expects net sales of $735-745 million, down from the previous estimate of $735-775 million. Earnings before interest, taxes, depreciation and amortization should range between $95-100 million, lower than previous high-end estimates by $5 million.
However, third quarter earnings increased, helped by an “open sell” format which allows customers to purchase makeup and fragrances without sales assistance. For the third quarter ended Oct. 26, 2002, the company reported earnings of $37.7 million, compared with $33.4 million in the year-ago period.
“If the department store business is weak, Elizabeth Arden loses market share, but that’s been more than offset by strength in mass and mid-tier retailers,” said Gary Giblen, research director at C.L. King and Associates.