Net sales for the three months ending June 30th fell to $191.7m, compared to a figure of $201.2m in the corresponding period last year, a decrease of 24.8% when factoring in the negative impact of currency translations.
The company said it had expected weaker sales because of a low level of fragrance launches, but said the forecast was exacerbated due to lower celebrity fragrance sales, specifically its top-selling Justin Bieber and Taylor Swift brands.
Inventory destocking also continued to impact the performance, as it had in the third quarter, while measures to tighten global distribution of Elizabeth Arden branded products and key fragrances.
Financial world reacts negatively
The results were also below analysts’ expectations, with Moodies downgrading its rating from Ba3 to B1, while also putting the company on review for a further downgrade.
Referring the weak performance, CEO Scott Beattie said that the problems in the most recent two quarters were mainly attributable to the company’s restructuring program.
“Most of the changes to our organizational structure were implemented in the third and fourth quarters of fiscal 2014, which should position the Company for improved performance in fiscal 2015,” he said.
Full year results
A stronger start to the year means that the full year results look stronger, with net sales for the 12 months coming in at $1.64bn, a decrease of 13.4% compared to the same period last year, and a figure that was down by 12.1% on adjusted basis.
Unadjusted net losses for the fourth quarter were $155.50m a big increase on losses of $5.0m in the corresponding period last year, reflecting significant costs incurred due to restructuring.
For the full year unadjusted net losses came in at $147.20m, compared to losses of $40.71m in the previous year.
Outlook
The company says that looking ahead to the 2015 financial year the business will be focused on stabilization and rebuilding profitability, although the first quarter of the year is expected to be challenging.
Beyond that first quarter, the performance is expected to pick up in the second half of the year, when net sales are expected to increase compared to the corresponding period as new product launches come through and the benefits of improved pricing are felt.
Profitability is also expected to improve as the restructuring program should bring about lower selling, general and administrative expenses.