Elizabeth Arden revenues dive on poor sales in China and a decline in celebrity fragrances

Net sales for the quarter were $346.2m on an adjusted basis, which represented a decrease of 17.2% and a fall of 16.0% at a constant currency rate, compared to the same period last year.

For the six months representing the company’s first two quarters, the results showed an 18.7% decline in sales on an adjusted basis, to $619.2m.

The second quarter traditionally represents the cosmetic and fragrance player’s biggest quarter, as it encompasses the all-important holiday season, when many of its lines have traditionally flown off the shelves as gifts.

Private equity investor makes it mark​

Private equity company Rhone Group took a 7% share in the Elizabeth Arden business in 2014 and made an offer to increase that investment to 20% in August last year.

As a consequence, the Elizabeth Arden executive board now has had the addition of M. Steven Langman and Franz-Ferdinand Buerstedde, co-founder and managing director, and managing director of RhôneGroup, respectively, sitting on the board of directors since late October last year.

“Our management team, with the full engagement of our Board of Directors and Rhone Capital, is focused on repositioning our brand portfolio and cost structure to return our business to sustainable growth and profitability,”​ said E. Scott Beattie, Elizabeth Arden CEO.

“Fiscal 2015, as we have stated, is a transitional year as we work to set a strong foundation for the future. In China, we are making tough decisions in support of a new distribution strategy to drive a healthier and more profitable business. Aside from this market and the continued decline in sales of our celebrity fragrances, the remainder of our business, by and large, performed as expected during the quarter.”​

International market outlook brighter​

Looking ahead to the next six months and the company's full financial year, it believes that gains will be seen in its international markets at constant currency rates.

However, it is expected that some of these gains will be counterbalanced by the continued decline in sales of celebrity fragrances in the North American market.

Adding to the mix, the company pointed out that gross margin expansion should be driven by an improved pricing, better product mix, lower discounting and reduced production costs, which should contribute to improved EBITDA margins.