Net Sales Grow for Arden in First Quarter

Elizabeth Arden, Inc., reported financial results for the three months ended Sept. 30, 2004. The company also issued guidance for its second fiscal quarter ending Dec. 31, 2004.

For the three months ended Sept. 30, net income increased to $4.8 million, compared with $1.3 million a year ago. The increase in earnings was partly attributed to gross margin expansion of about 300 basis points, from 42.2% a year earlier to 39.3% in the current first quarter. The growth reflects a higher proportion of net sales of owned and licensed brands, as well as a continuation of the benefits of the company’s warehouse consolidation, executives said. Better-than-expected earnings were achieved despite a 16.% increase in selling, general and administrative expenses over the prior year period, driven by a continued increase in advertising and marketing expenses.

E. Scott Beattie, Chairman and Chief Executive Officer of Elizabeth Arden, Inc., said, “Our business is experiencing a great deal of momentum as we head into the holiday season. The Britney Spears’ Curious fragrance was launched in U.S. department stores in September and has exceeded both retailer and industry expectations. It is currently the number one ranked fragrance in U.S. department stores, and while it is early, we anticipate this fragrance will continue to perform well for the remainder of the year. Additionally in September, we launched Elizabeth Arden Provocative Woman in our international and travel retail markets, and based on both retail results thus far and a strong advertising campaign, we are looking forward to good holiday season results.

“Operationally, we are pleased to report that we are currently tracking ahead of our planned full year savings related to the consolidation of our distribution facilities. Also, despite an increase in our advertising and marketing investments of over 40%, we experienced an eight-fold increase in earnings per share during the first quarter.”

Based on the success of the Arden’s planned promotional activities and performance of new products, the company currently anticipates a net sales increase of 8-10% for the second fiscal quarter ending Dec. 31, 2004 over the prior year period. In the prior year period, net sales were $296.3 million. The company is maintaining its annual guidance for net sales of $900-$910 million and earnings a diluted share of $1.24-1.28. For the second half of the year, the company expects net sales of $365-$375 million and earnings a diluted share of $0.06-0.10. The guidance for the second quarter and the balance of the year reflects the new product launch plan, including Britney Spears’ Curious, which is being rolled out internationally and in travel retail in the third quarter, as well as the new Color Intrigue color program and the increased investment in the second quarter to support these launches.

First quarter net sales grew to $212.2 million from $199 million for the prior year period, an increase of 6.6%. The net sales increase was led by the launch of the Britney Spears’ Curious fragrance in U.S. department stores, the performance of the Elizabeth Arden Provocative Woman fragrance and continued improvement in the travel retail and Canadian markets over the prior year. Net sales were impacted by hurricanes that affected retailers in the southeast region of the U.S. during the quarter, which should not affect full year results, company executives said. Excluding the impact of foreign currency translation, net sales grew 4.1%.