Why Is Inter Parfums (IPAR) Down 4.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Inter Parfums (IPAR). Shares have lost about 4.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Inter Parfums due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Inter Parfums Lags Q4 Earnings Estimate, Sales Rise Y/Y
Inter Parfums delivered fourth-quarter 2023 results, with the bottom line declining year over year and missing the Zacks Consensus Estimate. Nevertheless, the top line increased from the year-ago quarter’s reported figure. Management hiked its annual dividend rate.
Sales benefited from the continued demand for the company’s brands and solid holiday season sell-through. Inter Parfums is reaping benefits from strength in the fragrance industry and healthy retailer inventories. Taking into account the uncertainty associated with the political environment in the Middle East and Eastern Europe, management reaffirmed its 2024 guidance.
Inter Parfums posted fourth-quarter earnings of 32 cents per share, down 37% from the year-ago quarter’s figure. The metric lagged the Zacks Consensus Estimate of 35 cents per share.
Quarterly net sales increased 6% to $329 million compared with $311 million in the year-ago quarter. In an earlier press release, the company highlighted that its robust performance is indicative of its strategic market positioning and sustained growth momentum.
European-based product sales contributed significantly to Inter Parfums' success, up 2% in the fourth quarter. Notable contributors to this upside include a 17% rise in Coach brand sales during the fourth quarter. Despite anticipated declines in Jimmy Choo and Montblanc sales in the fourth quarter, overall European operations remained resilient.
In the fourth quarter, European-based product sales reached a total of $200 million, underscoring the sustained demand and market strength. This robust performance solidifies Inter Parfums' position in the European market, showcasing its ability to navigate challenges and capitalize on growth opportunities.
Inter Parfums' U.S.-based operations witnessed a remarkable 13% sales growth in the fourth quarter, reaching $128 million. The upside was primarily driven by Donna Karan/DKNY, with comparable quarter sales advancing 21%. GUESS and Ferragamo also experienced mid-single-digit growth during the quarter.
Inter Parfums’ fourth-quarter gross profit came in at $212.7 million, up from $200.1 million reported in the year-ago quarter. The gross margin was 64.7%, up 30 basis points (bps) from the 64.4% reported in the year-ago quarter. We had expected gross margin to come in at 56.3%.Inter Parfums’ SG&A expenses were $193.8 million, up from the $169.1 million reported in the year-ago quarter.
The company’s operating income came in at $19 million, down 19% from the $23 million reported in the year-ago quarter. The operating margin came in at 5.7%, down 170 bps from the 7.5% reported in the year-ago quarter. We had expected the metric to be 9.5% in the fourth quarter of 2023.
Other Financial Aspects
Inter Parfums ended the quarter with cash and cash equivalents of $88.5 million, long-term debt (excluding the current portion) of $127.9 million and total equity of $892.2 million.
Inter Parfums announced a 20% hike in its annual dividend to $3.0 per share. The company will now pay a quarterly dividend of 75 cents per share, payable on Mar 29, 2024, to shareholders of record as of Mar 15. In 2023, management repurchased 116,860 shares worth $15.4 million. The company is likely to keep repurchasing 130,000 shares during 2024.
Guidance
For full-year 2024, the company anticipates net sales of $1.45 billion and earnings of $5.15 per share. This guidance suggests 10% growth in net sales and an 8% improvement in the bottom line from 2023 levels.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Inter Parfums has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Inter Parfums has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Inter Parfums belongs to the Zacks Cosmetics industry. Another stock from the same industry, Nu Skin Enterprises (NUS), has gained 11.1% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Nu Skin reported revenues of $488.64 million in the last reported quarter, representing a year-over-year change of -6.5%. EPS of $0.37 for the same period compares with $0.89 a year ago.
For the current quarter, Nu Skin is expected to post earnings of $0.05 per share, indicating a change of -86.5% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Nu Skin. Also, the stock has a VGM Score of B.
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