Inter Parfums (IPAR) Up 0.6% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Inter Parfums (IPAR). Shares have added about 0.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Inter Parfums due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Inter Parfums' Q1 Earnings Beat Estimate, Sales Rise Y/Y
Inter Parfums delivered first-quarter 2023 results, with the top and bottom lines increasing year over year. Earnings surpassed the Zacks Consensus Estimate. Management reaffirmed its 2023 net sales and earnings per share (EPS) guidance.
Results in Detail
Inter Parfums posted first-quarter earnings of $1.68 per share, up 52% from the year-ago quarter’s level. The metric surpassed the Zacks Consensus Estimate of $1.39 per share and our estimate of $1.31 per share.
Quarterly net sales increased 24% to $311.7 million compared with $250.7 million reported in the year-ago quarter. In an earlier press release, management highlighted that at comparable foreign currency rates, first-quarter net sales increased 27% year over year. Inter Parfums’ Europe-based product sales came in at $230 million, up 26% from 2022 levels. U.S.-based product sales amounted to $82 million, increasing 19% from first-quarter 2022.
In the company’s European operations sales increased 29% at constant currency or cc, with its three largest brands delivering impressive growth. Jimmy Choo, Montblanc and Coach brand sales increased 63%, 28% and 24%, respectively. Sales of its various mid-sized brands like Karl Lagerfeld, Boucheron and Rochas generated double-digit sales growth, courtesy of the robust performance of its established lines. IPAR launched several brand extensions, namely Jimmy Choo Blossom, Montblanc Signature Absolue and Eau de Rochas Citron Soleil, among others across its European operations.
Growth in its U.S. operations was fueled by the addition and extension of Donna Karan and DKNY to the company’s portfolio. Double-digit growth for Ferragamo and Oscar de la Renta was an upside. Management also launched brand extensions for established lines like Abercrombie & Fitch and MCM. However, the implementation of ERP put pressure on the company’s quarterly performance, which impacted the GUESS brand.
The company’s three largest markets, namely North America, Western Europe and Asia/Pacific, saw sales growth of 36%, 21% and 8%, respectively. Sales in Central and South America, Eastern Europe and the Middle East were increased 43%, 25% and 5%, respectively. IPAR’s travel retail business picked up on resumption of international travel.
Inter Parfums’ first-quarter gross profit margin was 65.1%, up 180 basis points from 63.3% reported in the year-ago quarter. The company’s gross margin for European operations increased to 67.8% from 66.8% reported in the year-ago quarter. For United States operations, quarterly gross profit margin increased to 57.6% from 53.9% reported in the year-ago quarter.
Quarterly operating margin came in at 29%, up 460 basis points reported in the year-ago quarter on reduced spending. SG&A expenses in the first quarter amounted to $112.7 million, up from $97.4 million reported in the year-ago quarter.
Other Financial Aspects
Inter Parfums ended the quarter with cash and cash equivalents of $149.1 million, long-term debt (excluding the current portion) of $145.1 million and total equity of $849.6 million.
Inter Parfums announced a dividend of 62.50 cents, payable on Jun 30, 2023, to shareholders of record as of Jun 15.
During the first quarter of 2023, IPAR initiated a share buyback plans of 166,060 shares. During the quarter, management repurchased 43,060 shares worth $5.58 million. The company is likely to keep repurchasing shares during 2023.
Inter Parfums unveiled that Abercrombie & Fitch granted it the right to distribute its number one men’s fragrance, Fierce, in few markets. The first phase of the agreement, which will become effective on Sep 1, 2023 will cover Fierce distribution across certain key markets.
Guidance
Management reaffirmed its 2023 guidance. The company highlighted that it began 2023 on a solid note, a trend which continued in April. IPAR expects 2023 net sales to come in at $1.25 billion. The company anticipated earnings per share (EPS) of $4.25. The guidance is based on the assumption of no major resurgence in coronavirus cases and the current level of the average dollar/euro exchange rate.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -20.59% due to these changes.
VGM Scores
At this time, Inter Parfums has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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 is part of the Zacks Cosmetics industry. Over the past month, Helen of Troy (HELE), a stock from the same industry, has gained 4.4%. The company reported its results for the quarter ended February 2023 more than a month ago.
Helen of Troy reported revenues of $484.58 million in the last reported quarter, representing a year-over-year change of -16.7%. EPS of $2.01 for the same period compares with $2.51 a year ago.
For the current quarter, Helen of Troy is expected to post earnings of $1.45 per share, indicating a change of -39.8% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Helen of Troy has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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