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Inter Parfums (IPAR) Stock Up on Solid Q1 Sales & Raised View

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Shares of Inter Parfums, Inc. IPAR rose 4.4% in the after-market trading session on Apr 20, as it came out with impressive sales numbers for the first quarter of 2021, which was followed by a raised guidance for 2021. Management noted that the company continued its revival trend, which was witnessed in the second half of 2020. A robust first-quarter performance despite major travel retail hurdles raises optimism about the ongoing year.

Courtesy of steady orders, existing inventory levels and some better visibility into the future, management now anticipates 2021 net sales to be nearly $700 million, while net income per share is expected to be $1.65. On its fourth-quarter earnings call, management projected net sales in the range of $650-$660 million and net income in a band of $1.40-1.45 per share. We note that the latest view is based on the assumption of no major resurgence in coronavirus cases and the current level of the average dollar/euro exchange rate.

Q1 Sales Numbers

Net sales for the three months ended Mar 31, 2021, surged 37.1% to $198.5 million compared with $144.8 million recorded in the year-ago period. At comparable exchange rates, consolidated net sales advanced 32.7%. Markedly, first-quarter 2021 sales also exceeded first-quarter 2019 sales by 11.4%, which indicates a better performance from the pre-pandemic level. During the first quarter of 2021, European product sales surged 40% to $159.7 million and U.S.-based product sales soared 26.2% to $38.8 million from the year-ago period.

In European operations, Montblanc, Jimmy Choo, Coach, and Lanvin brands registered sales growth of 27.4%, 66.7%, 8.8% and 91.2%, respectively. Sales at Montblanc and Lanvin brands were backed by strength in legacy scents, with the latter seeing solid growth in key markets — Asia and Eastern Europe. Sales growth at the Coach brand resulted from favorable currency movements as well as higher sales volumes. Jimmy Choo sales were aided by robust sales of established Jimmy Choo scents, together with the successful launch of I Want Choo in the quarter under review. Apart from these, impressive initial sales of Kate Spade New York and Rochas Girl also backed first-quarter sales.

Moving to the U.S. operations, which also recorded robust growth in the quarter under review, the company’s largest brand, GUESS, continued gaining on legacy fragrance sales as well as the initial distribution of Bella Vita. Moreover, solid replenishment orders for Abercrombie & Fitch’s Authentic Night duo, which debuted last year, aided growth. Sales of the Hollister brand were led by Canyon Escape duo shipments. Additionally, the Dunhill brand delivered a strong show, thanks to its new signature scent. The debut of MCM signature scent toward the end of the first quarter also led to the upside. We note that the global rollout of the product is now underway.

In U.S. operations, the Anna Sui brand witnessed a sequential sales decline, as the launch of Sky in the fourth quarter of 2020 largely boosted sales in that quarter. Also, Anna Sui sales were hurt by the soft travel retail/duty-free market. Nonetheless, the company has considerable Anna Sui open orders and remains well placed for improved sales in the brand as the year proceeds.

Wrapping Up

Inter Parfums has been benefiting from its assortment strength, courtesy of its focus on innovation and product launches. Other cosmetic companies gaining on portfolio strength include The Estee Lauder Companies EL, Coty, Inc. COTY and Nu Skin Enterprises NUS. As for Inter Parfums, management said that other than the ongoing rollouts of its newer programs in European operations, it has a new Lanvin women’s line coming up, together with brand extensions for Montblanc Explorer, Jimmy Choo Urban Hero and Coach Dreams. In U.S. operations, the company plans shipments of a new duo for the Abercrombie & Fitch brand, as well as Dunhill’s new Driven collection for men, in the second quarter of 2021.

Shares of the Zacks Rank #3 (Hold) company have surged 67.6% in the past six months compared with the industry’s growth of 32.1%.

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