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Corornavirus-Led Store Closures Hurt Inter Parfums' Q2 Sales

Zacks Equity Research
·3 min read

Inter Parfums, Inc. IPAR released sales numbers for second-quarter 2020. For the three months ended Jun 30, 2020, net sales amounted to $49.5 million, down 70.2% (down 69.8% at constant currency) from $166.2 million reported in the year-ago quarter.

The company’s Europe-based operations registered net sales of $39.4 million in the second quarter, which declined 68.6% year over year. In U.S.-based operations, net sales slumped 75.2% to $10.1 million during the quarter.

For the six months ended Jun 30, net sales amounted to $194.3 million, down 43.6% from $344.5 million reported in the year-ago period. Sales in the Europe and U.S.-based operations declined 43% and 41.6%, respectively, during six months ended Jun 30.

Second-quarter sales were hampered by the coronavirus outbreak, as operations were hurt by the pandemic-led hurdles. Retail outlet closures in many parts of the world affected the company’s sales in the second quarter, which declined across all brands and geographic locations. Moreover, management expects these headwinds to linger all through 2020. Also, Inter Parfums continues to witness sluggishness in its travel retail segment which used to contribute 15-20% to the overall business in the past. Following the news, shares of Inter Parfums dropped 1.3% in the aftermarket trading session on Jul 22. Further, shares of the company have plunged 39.1% so far this year compared with the industry’s decline of 31.3%.


 

Nevertheless, Inter Parfums, which shares space with Coty COTY, began reopening stores in various markets since May as restrictions imposed to check the spread of coronavirus are being lifted. Moreover, the company is witnessing sales improvement in these reopened stores compared with drab sales in April. Also, it is undertaking several stringent cost-containment actions to preserve cash flow amid the pandemic. Incidentally, management postponed several advertising and promotion costs to 2021. Further, Inter Parfums lowered bonuses, ceased hiring and curtailed several non-essential expenses amid the crisis.

Apart from this, this Zacks Rank #3 (Hold) company has been undertaking certain strategic partnerships to drive growth. In this regard, the company inked a deal to acquire equity stake in Origines Parfums during the second quarter. Also, management signed a license agreement with renowned luxury brand, MonclerSpA in the quarter.

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