U.S. Markets closed

Elizabeth Arden Down on Bleak Q2 View

Zacks Equity Research

Share prices of cosmetics products company Elizabeth Arden Inc. (NASD:RDEN) tumbled 18.9% on Jan 17, 2013 after the company reported bleak second-quarter preliminary results and withdrew its previously provided fiscal 2014 guidance on the previous day. The company is scheduled to report its second quarter fiscal 2014 results (ended Dec 31, 2013) on Feb 5, 2014.

Weaker-than-expected holiday sales prompted management to lower its top and botoom line forecast for the second quarter. Elizabeth Arden expects to report net sales between $415 million and $418 million versus a range of $450 million to $475 million guided earlier. Like Elizabeth Arden, many U.S.-based retailers like Fred’s Inc. (NASD:FRED), Gap Inc. (NYSE:GPS) and Ross Stores Inc. (NASD:ROST) have witnessed weakness during the latest holiday season which was highly promotional

The company expects earnings per share to range between $1.05 and $1.08 lower than previously announced guidance range of $1.30 to $1.60.

The guidance excludes repositioning and restructuring costs of 27 cents per share and a one-time gain of 35 cents per share related to the reversal of a contingent liability associated with an acquisition. Management also blames increased promotional activity to be responsible for lower earnings during the second quarter.

For the first half of fiscal 2014, North America's net sales declined 9%, worse than the 1% net sales drop in other international markets. Elizabeth Arden-branded product sales climbed 2% but fragrances sales slid about 10%.

Fiscal 2014 Outlook Withdrawn

Elizabeth Arden also expects fiscal 2014 earnings and sales to be below prior guidance range. In the first quarter conference call, Elizabeth Arden said that sales are expected to grow between 3.0% and 5.0% year over year for fiscal 2014. Earnings were expected to be in the range of $2.15 to $2.30, representing approximately 4% growth at the mid-point.

However, in the light of the prelimiray results of second quarter, Elizabeth Arden now decided to withdraw its previously provided fiscal 2014 guidance and will not provide any guidance in its second-quarter conference call. The stock carries a Zacks Rank #5 (Strong Sell).

Read the Full Research Report on RDEN
Read the Full Research Report on GPS
Read the Full Research Report on ROST
Read the Full Research Report on FRED

Zacks Investment Research