Inter Parfums, Inc. IPAR delivered lower than-expected earnings when it reported third-quarter 2019 results. Nevertheless, the top and the bottom line rose year on year. Sturdy brand performances across the European and U.S. operations fueled results. Further, the company raised its earnings view for 2019 and authorized a hike in quarterly dividend rate.
Consistent growth across the company’s operational segments, backed by the presence of strong brands has been working in favor of this Zacks Rank #2 (Buy) stock. Shares of the company have returned 19.6% in the past three months compared with the industry’s rise of 2.2%.
Quarter in Details
The company posted earnings per share of 66 cents, which fell short of the Zacks Consensus Estimate by a penny. The bottom line rose 10% year on year.
Net sales for the quarter amounted to $191.23 million, up 7.9% on a year-over-year basis. At comparable currency exchange rates, net sales improved 9.7%. Growth across the European and U.S. operations boosted sales in the reported quarter.
Inter Parfums, Inc. Price, Consensus and EPS Surprise
Inter Parfums, Inc. price-consensus-eps-surprise-chart | Inter Parfums, Inc. Quote
In U.S. based operations, net sales increased 20.7% to $47.6 million. The GUESS? brand continues to be one of the key growth catalysts in this unit. Other brand banners depicting growth include The Oscar de La Renta, Abercrombie & Fitch, Hollister and Anna Sui.
Net sales in the European-based operations amounted to $143.6, up 4.2% year on year. Strong growth across brands such as Montblanc, Coach and Jimmy Choo have been supporting the unit’s growth.
Gross profit amounted to $114.4 million, up nearly 5% year on year. However, gross margin was 59.8%, down 180 bps.
SG&A expenses amounted to $77.8 million, up 4.9% year on year. As a percentage of net sales, SG&A expenses were 40.7%. The metric declined from 41.9% in the prior-year quarter.
Operating income came in at $36.6 million, up 4.8% year on year. Operating margin was 19.2%, down 50 bps.
The company raised its quarterly dividend from 27.5 cents to 33 cents, reflecting a hike of 20% year on year. The dividend will be paid out on Jan 15, 2020 to shareholders on record as on Dec 31, 2019.
Other Financial Aspects
The company ended the quarter with cash and cash equivalents of $138.4 million, long-term debt (excluding current portion) of $10.6 million and total shareholder equity of $ 593.4 million. Inter Parfums closed the quarter with working capital of $375 million and working capital ratio of more than 3.2 to 1.
The company continues to expect net sales for 2019 at $712 million. Additionally, the company raised its bottom-line expectations. It now projects earnings to be $1.90 compared with $1.88 anticipated earlier. The Zacks Consensus Estimate for 2019 earnings is currently pegged at $1.89. In 2018, the company’s reported earnings were $1.71.
Management plans to release the initial guidance for 2020 on Nov 20, 2019.
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