CEO of the fragrance company Neil Katz believes the arrangement, which was put together with Shawn ‘Jay-Z’ Carter for Iconic Fragrances, is different from all others in the fragrance category at the moment.
“We wanted these celebrities to be associated not just with the successful sales of their own brands but also with the profits their brands yield for the company and the resulting share value,” he told CosmeticsDesign.com.
The celebrities will be paid royalties, take a share in the profits and will also be issued warrants for the purchase of shares in Parlux at a strike price of $5.00 per share.
Shares, if price rises above $5
“We have set the warrant price at five dollars so they can buy, and sell, shares only if the price goes above 5 dollars. This morning Parlux shares were less than a dollar,” he explained.
For Katz, this represents a real partnership where the stars are fully implicated in the success of company.
For Rihanna, and Kanye West (and for Jay-Z and a fourth female singer whose deal rests on further shareholder approval), the arrangement will see them gain financially if they can bring significant business to the company.
“It was Jay-Z’s belief, who put together the deal, that they can create business for Parlux that can create high share value from which they themselves can profit,” said Katz.
This confidence is shared by the Florida-based company: “We believe that its implementation, combined with the success of our core brands, will allow us to significantly increase revenues and improve our bottom line.”
Parlux’s bottom line was not looking healthy for the third quarter ending December 31 as the company made an operating loss of $9.6m in comparison to a profit of $3.9m in last year’s corresponding quarter.
The company blamed the result on an aggressive and costly marketing campaign, which in the context of an unstable global economy, weighed heavily on the bottom line.