Inter Parfums (IPAR) Up More Than 25% in 3 Months: Here's Why
Inter Parfums, Inc. IPAR is on track with effective product launches and strategic partnerships to boost growth. The provider of fragrances and related products is benefiting from solid brand performance. These upsides have boosted third-quarter 2022 results, with the top and the bottom line increasing year over year. The solid performance prompted management to raise its 2022 view. Besides, the company recently unveiled its bright expectations for 2023.
The Zacks Rank #1 (Strong Buy) company’s stock has rallied 29.1% in the past three months against the industry’s 7.2% decline. The stock has comfortably outperformed the Zacks Consumer Staples sector’s 7.6% growth.
Let’s discuss this in detail.
Solid Performance
Inter Parfums’ third-quarter 2022 earnings came in at $1.30 per share, which increased 8% from $1.20 per share reported in the year-ago quarter. Quarterly net sales increased 7% to $280 million compared with $263 million reported in the year-ago quarter. At comparable foreign currency rates, third-quarter net sales rose 12%.
In the company’s U.S. operations, new brands like Ferragamo, Donna Karan and DKNY generated 41% gains during the quarter. Organic growth from established brands like GUESS?, Oscar de la Renta, Hollister and Abercrombie & Fitch also contributed to the upside. Management highlighted that sales of its European operations increased 12% in euro, with the three largest brands, Montblanc, Jimmy Choo and Coach, outperforming by 11%, 32% and 3% year over year, respectively.
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Bright View
Considering a solid year-to-date performance and robust projections for the rest of the year, management raised its 2022 view at the time of the third-quarter earnings release. The company is optimistic about its business prospects and continues investing to gain market share and long-term growth. Management expects 2022 net sales of $1.025 billion, up from previous guidance of $1 billion. Earnings per share (EPS) are anticipated to come in at $3.40, higher than the earlier guidance of $3.25.
For 2023, management anticipates net sales of $1.11 billion, which will likely result in earnings per diluted share of $3.70. This indicates net sales and earnings per diluted share growth of 8% and 9%, respectively, from the 2022 guided figures of $1.025 billion (net sales) and $3.40 (earnings per diluted share). Excluding certain one-time items, management expects 12% earnings per diluted share growth in 2023.Inter Parfums expects growth in 2023 to be driven by its solid brand portfolio and global distribution network. Further, sales growth will likely be backed by product launches. Management expects to gain from sustained travel retail business growth, a more streamlined supply-chain structure and modest pricing actions (which are likely to be undertaken in 2023 beginning).
Factors Driving Growth
Inter Parfums is well-positioned to cater to elevated demand in the fragrance space. During 2022, the company introduced several scents, namely Montblanc Legend Red, CoachWild Rose, Coach Dreams Sunset, Coach Open Road, GUESS Uomo and Kate Spade Sparkle, among others. The company also launched brand extensions and flankers for several brands. In addition, the company unveiled Moncler’s debut scents at the beginning of 2022.
For the next year, the company’s new product pipeline for U.S. brands consists of new pillars for the Hollister and MCM brands. The product pipeline is dominated by brand extensions and flankers. Management is on track with major launches for Ferragamo, Donna Karan and DKNY brands for 2024. In European operations, the company will launch a new fragrance for Kate Spade in 2023.
Inter Parfums is on track to expand its business through new licenses or acquisitions. The company is optimistic about the partnership with well-established fragrance brands like Donna Karan and DKNY. In December 2021, Inter Parfums, through its subsidiary Interparfums Italia signed a 10-year exclusive global licensing agreement with Emanuel Ungaro. In October 2021, Inter Parfums finalized the agreement with Salvatore Ferragamo S.p.A. Per the agreement, Inter Parfums holds the exclusive worldwide license for the production and distribution of Salvatore Ferragamo brand perfumes.
We believe that well-chalked growth endeavors like strategic alliances, product launches and brand strength will likely keep IPAR’s growth story going.
3 Solid Staple Picks
Some top-ranked stocks are e.l.f. Beauty ELF, The Chef's Warehouse CHEF and General Mills GIS.
e.l.f. Beauty, a cosmetic company, currently sports a Zacks Rank #1 (Strong Buy). ELF has a trailing four-quarter earnings surprise of almost 92.8%, 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 sales and EPS suggests growth of 24.5% and almost 33.3%, respectively, from the year-ago period’s reported figures.
The Chef's Warehouse, which distributes specialty food products, currently sports a Zacks Rank #1. Chef's Warehouse has a trailing four-quarter earnings surprise of 93.8%, on average.
The Zacks Consensus Estimate for CHEF’s current financial-year sales suggests growth of 46.5% from the year-ago reported number, while earnings indicate significant growth.
General Mills, which manufactures and markets branded consumer foods, carries a Zacks Rank #2 (Buy) at present. General Mills has a trailing four-quarter earnings surprise of 6.1%, on average.
The Zacks Consensus Estimate for GIS’ current financial year sales and earnings suggests growth of 2.7% and 3.8%, respectively, from the year-ago reported numbers.
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