Inter Parfums (IPAR) Gains on Solid Brands & Product Launches
Inter Parfums, Inc. IPAR is reaping the benefits of momentum in the fragrance market courtesy of a solid brand portfolio. The company is witnessing increased market share stemming from new product launches. The provider of fragrances and related products is on track to expand its business through new licenses or acquisitions.
These factors continued in third-quarter 2023 — with net sales and earnings rising year over year and surpassing the Zacks Consensus Estimate. Inter Parfums is well-positioned for 2023 in the booming fragrance market.
Let’s delve deeper.
Q3 Results Solid, Bright View
In the third quarter of 2023, Inter Parfums’ net sales rallied 31% year over year to $368 million. At comparable foreign currency rates, quarterly consolidated net sales rallied 27%. North America remained Inter Parfums' most significant market, witnessing a 29% sales increase. Following closely behind, Western Europe displayed a 24% growth in sales. Asia, constituting its third-largest market, delivered a strong performance, with net sales increasing 20% in the same period.
Inter Parfums appears well-positioned in the booming fragrance market. The company is witnessing continued traction of its legacy scents courtesy of innovative extensions. Strength in the newer brands has been a catalyst. Management expects 2023 earnings per share (EPS) of $4.75, indicating growth of 26% from the $3.78 reported in 2022. IPAR expects 2023 net sales of $1.3 billion, suggesting 20% growth year over year.
Image Source: Zacks Investment Research
Strategic Partnership Holds the Key to Growth
Inter Parfums is on track to expand its business through new licenses or acquisitions. The company entered into an exclusive worldwide fragrance license for the prestigious Roberto Cavalli brand, which became effective on Jul 6, 2023. In December 2022, Inter Parfums’ majority-owned Paris-based subsidiary, Interparfums SA, signed a license agreement with Lacoste — a well-known fashion sports brand. Management anticipates witnessing benefits from these acquisitions starting in 2024.
Product Launches on Track
Inter Parfums is witnessing increased market share stemming from new product launches and brand extensions. The company boasts an impressive pipeline of fragrances planned like a new pillar of launch for GUESS and GUESS Sexy Skin metallic for 2024. Management is on track to launch a new blockbuster fragrance for DKNY during the upcoming summer. Inter Parfums plans to introduce new products for Ferragamo in 2024.
High Costs A Woe
The company has been grappling with higher SG&A expenses for a while. During the third quarter of 2023, SG&A expenses were $147.8 million, up 25.9% from the $117.4 million reported in the year-ago quarter. Management continues to make significant investments in advertising and promotion. The company plans to allocate 21% of its annual net sales to advertising and promotion, reiterating its aggressive approach to drive sell-through. Although such investments are likely to contribute to growth, they might put pressure on profits in the near term.
That being said, the aforementioned upsides are likely to keep narrating Inter Parfums’ growth story. The Zacks Rank #3 (Hold) company’s shares have rallied 31.4% year to date against the industry’s 35.7% decline.
3 Solid Picks
e.l.f. Beauty ELF, operating as a cosmetic and skin care products provider, currently sports a Zacks Rank of 1 (Strong Buy). ELF has a trailing four-quarter earnings surprise of almost 105% 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 financial year’s sales and earnings suggests growth of 39.1% and 69.1%, respectively, from the prior-year reported numbers.
Lamb Weston LW, which offers frozen potato products, sports 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 financial-year sales and earnings suggests growth of 28.3% and 24.8%, respectively, from the year-ago reported numbers.
The Kraft Heinz Company KHC, a food and beverage product company, currently carries a Zacks Rank #2 (Buy). KHC has a trailing four-quarter earnings surprise of 9.9% on average.
The Zacks Consensus Estimate for Kraft Heinz’s current fiscal year sales suggests growth of 1.2% from the corresponding 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
Kraft Heinz Company (KHC) : Free Stock Analysis Report
e.l.f. Beauty (ELF) : Free Stock Analysis Report
Lamb Weston (LW) : Free Stock Analysis Report
