Sales for the quarter fell by 10.6 percent, from $99.1m to $88.6m, a figure that nevertheless beat analysts’ expectations, with a Thomson Reuters poll revealing an average forecast of $83.8m.
The company says it will publish the full company results on August 10.
The performance reveals just how hard hit the market for luxury fragrances has been under the pressure of the economic downturn, but the analysts’ estimates indicate that the sales results could have been worse.
Strength of dollar hits European sales
The company said that the fall in sales was partly due to a 3 percent hit from currency translation, attributable to its performance in the European market, where the US dollar continued to be strong throughout the period.
In Europe net sales fell from $83.9m in the corresponding quarter last year, to $79.4m, whereas the fall in US sales was even more pronounced, down from $14.2m to $9.2m, a drop of over 35 percent.
This meant that sales for the first six months of the year were down by 19.4m, at $179.0m.
US sales hit by retail downturn
CEO Jean Madar pointed out that the big drop in US sales was largely attributable to an unfavorable comparison with the corresponding quarter for 2008, adding that pipeline distribution of Gap and Banana Republic fragrances and personal care products had increased sales by 23 percent.
“In light of the worldwide decline in consumer spending and the corresponding destocking of fragrance inventories by distributors and retailers, our 10.6 percent decline in net sales is rather modest and considerably less than many of our peers,” said Madar.
The company also drew attention to the fact that its Lanvin fragrance brand, the company’s second biggest seller, had managed to remain ‘somewhat resilient’ to the economic downturn and generally poor retail environment.
“Our plans for the second half of 2009 include new product launches for Brooks Brothers and Banana Republic as well as the initial launch of bebe fragrance in both domestic and international markets,” said Madar.
The new launches are aimed at specifically stemming the decline in the troubled US market.