Inter Parfums (IPAR) Beats on Q3 Earnings, Ups FY23 EPS View
Inter Parfums, Inc. IPAR delivered impressive third-quarter 2023 results, with the top and bottom lines increasing year over year. Also, both metrics comfortably surpassed the Zacks Consensus Estimate. While management reaffirmed its 2023 net sales guidance, it raised the earnings per share (EPS) view.
Inter Parfums, Inc. Price, Consensus and EPS Surprise
Inter Parfums, Inc. price-consensus-eps-surprise-chart | Inter Parfums, Inc. Quote
Q3 Results in Detail
Inter Parfums posted third-quarter earnings of $1.66 per share, up 28% from the year-ago quarter. The metric surpassed the Zacks Consensus Estimate of $1.27 per share.
Quarterly net sales rallied 31% to $368 million compared with $280 million in the year-ago quarter. The metric surpassed the Zacks Consensus Estimate of $357 million. The company has been reaping the benefits of the favorable trends and the momentum in the fragrance market. IPAR is growing its market share with innovative programs. At comparable foreign currency rates, third-quarter consolidated net sales rallied 27% year over year.
North America remained Inter Parfums' most significant market, witnessing a 29% sales increase in the third quarter from the prior-year period. Following closely behind, Western Europe displayed 24% growth in sales.
Asia, constituting the company's third-largest market, also delivered a strong performance, with net sales increasing 20% in the same period. Notably, the company achieved higher sell-out rates in China, particularly on Coach, Montblanc, and Ferragamo, resulting in more efficient stock-in-trade management, which is expected to yield favorable results in 2024.
Regarding the recent license acquisitions of Roberto Cavalli and Lacoste, the company anticipates deriving benefits from these acquisitions starting in 2024. Shipments of Roberto Cavalli fragrance products are scheduled to commence in January 2024, with plans for further extensions in mid-summer of the same year. The Lacoste license will come into effect in January 2024, and the company is well-prepared to launch corresponding strategies and innovative products.
IPAR's continued commitment to significant investments in advertising and promotion is aimed at ensuring strong sell-out performance at the retail level, building brand awareness and sustaining growth. It plans to allocate 21% of its annual net sales to advertising and promotion, reiterating its aggressive approach to drive sell-through.
Meanwhile, Inter Parfums’ third-quarter gross profit came in at $235 million, up 29% from the $181.9 million reported in the year-ago quarter. The gross margin was 63.9%, down 100 basis points (bps) from the 64.9% reported in the year-ago quarter. We had expected a gross margin contraction of 250 basis points.
The company’s operating income came in at $87.2 million, up 35% from the $64.5 million reported in the year-ago quarter. The operating margin came in at 23.7%, up 70 bps from the 23% reported in the year-ago quarter. We had expected the metric to be 18.5% in the third quarter of 2023.
Inter Parfums’ SG&A expenses were $147.8 million, up 25.9% from the $117.4 million reported in the year-ago quarter.
SG&A, as a percentage of sales, experienced a decline of 170 bps, reaching 40.2%. This reduction can be attributed to the substantial increase in third-quarter sales, enabling a more efficient absorption of fixed expenses compared to the previous year. This positive outcome was achieved despite heightened investments in advertising, promotion and the structural investments made to support the newly acquired licenses.
Image Source: Zacks Investment Research
Other Financial Aspects
Inter Parfums ended the quarter with cash and cash equivalents of $79.8 million, long-term debt (excluding the current portion) of $129 million, and total equity of $876.9 million.
Inter Parfums announced a dividend of 62.50 cents, payable Dec 31, 2023, to shareholders of record as of Dec 15.
In the first nine months of 2023, management repurchased 85,060 shares worth $11.3 million. The company is likely to keep repurchasing shares during 2023.
Guidance
Management reaffirmed its 2023 net sales guidance. IPAR expects 2023 net sales of $1.3 billion, suggesting 20% growth from the 2022 reported figure. The company raised its 2023 EPS guidance to $4.75 from the $4.55 stated earlier. The outlook indicates growth of 26% from the $3.78 reported in 2022.
The Zacks Rank #2 (Buy) stock has gained 60.4% in the past year against the industry’s 29.7% decline.
Some Other Top-Ranked Staple Bets
Here, we have highlighted three other top-ranked stocks, namely e.l.f. Beauty, Inc. ELF, Lamb Weston Holdings, Inc. LW and Vital Farms Inc. VITL.
e.l.f. Beauty operates as a cosmetic company. Its cosmetic category primarily consists of face makeup products. The company currently sports a Zacks Rank #1 (Strong Buy). ELF has a trailing four-quarter earnings surprise of 90.1% on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for e.l.f. Beauty’s current fiscal-year sales and earnings suggests growth of 58.1% and 50.6%, respectively, from the year-ago reported figures.
Lamb Weston is a leading global manufacturer, marketer and distributor of value-added frozen potato products. The company currently flaunts a Zacks Rank #1. LW has a trailing four-quarter earnings surprise of 46.2%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and earnings suggests growth of 28.3% and 24.8%, respectively, from the year-ago reported figures.
Vital Farms offers a range of produced pasture-raised foods. The company currently sports a Zacks Rank #1. VITL has a trailing four-quarter earnings surprise of 132.5%, on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales suggests growth of 29.4% from the year-ago reported figure.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Inter Parfums, Inc. (IPAR) : Free Stock Analysis Report
e.l.f. Beauty (ELF) : Free Stock Analysis Report
Lamb Weston (LW) : Free Stock Analysis Report
Vital Farms, Inc. (VITL) : Free Stock Analysis Report
