Arden Misses the Mark

Elizabeth Arden Inc. reported a worse-than-expected loss and sales decline in the fourth quarter ended June 30, but the company boasted that sales within its flagship unit were on the rise. Q4 sales fell to $175.5 million from $191.7 million, as a 14% drop in North America sales offset a 4% increase in international sales. Adjusted sales declined 6.2% to $188.7 million. Analysts' consensus was for revenue of $188 million. For fiscal 2016, the beauty products company expects net sales to increase over 2015.


The stock, which was halted for news dissemination, has tumbled 52% year to date, while the S&P 500 has gained 2%. Still Chairman and CEO E. Scott Beattie remained upbeat, citing cost cutting measures and new leadership.


“This is the second consecutive quarter of sales growth for the Elizabeth Arden brand. The 7% constant currency increase this quarter is on top of a 9% constant currency increase in the third fiscal quarter,” he said in a statement. “This gives us confidence as we head into the launch of the new Elizabeth Arden brand marketing campaign this fall, which is accompanied by a richer innovation pipeline.”


According to Beattie, EA's balance sheet and cash flow metrics also continued to improve, and the company finished the fiscal year ahead of plan, resulting in $54 million in operating cash flow for fiscal 2015. Performance improvement initiatives continue to drive down costs and improve efficiencies in the business, he maintained.


“We have completed a meaningful series of business changes over the past year, including most recently significant changes to our leadership and organizational structure that we announced in July. Our appointment of JuE Wong as president, Elizabeth Arden brand, and Joel Ronkin as president, global fragrances, should better align our sales and marketing organizations to improve the commercial execution of the business and deliver our financial metrics. With a stronger innovation pipeline, across both the Elizabeth Arden brand and our core fragrances, improved go-to-market capabilities, and reinvestment of savings from our performance improvement initiatives, we expect to return to consistent sales growth and margin expansion in fiscal 2016.”


Net sales for the fiscal year ended June 30, 2015, were $971.1 million. On an adjusted basis, net sales were $999.3 million, a decrease of 14.9% from the prior year, or 13.1% at constant foreign currency rates.