Inter Parfums (IPAR) Thrives on Favorable Demand, Brand Strength
Inter Parfums, Inc. IPAR appears to be blossoming, driven by the favorable demand for fragrances and the company’s focus on product launches and licensing deals with renowned brands.
These upsides boosted the company’s second-quarter 2023 results, wherein the top and bottom lines increased year over year. Also, earnings surpassed the Zacks Consensus Estimate. Following second-quarter numbers, management raised its earnings per share (EPS) view for 2023 while reaffirming its net sales guidance.
The Zacks Consensus Estimate for 2023 earnings per share (EPS) has gone up from $4.50 to $4.55 per share over the past 30 days. This Zacks Rank #1 (Strong Buy) stock has surged 72.8% in the past year against the industry’s decline of 25.7%.
Inter Parfums, Inc. Price, Consensus and EPS Surprise
Inter Parfums, Inc. price-consensus-eps-surprise-chart | Inter Parfums, Inc. Quote
Factors Working Well
Inter Parfums has been on track with product launches. In its second-quarter sales release, the company stated that it expects gift sets to play a key role in the third quarter of 2023. Management is on track to release various extensions, including Ferragamo, Donna Karan/DKNY and GUESS brands for U.S.-based operations. For Europe-based operations, IPAR expects to introduce new entries for the Karl Lagerfeld Les Parfums Matieres collection.
It will also debut a new member of the Van Cleef & Arpels Collection Extraordinaire. Inter Parfums is planning to distribute the well-known scent, Abercrombie & Fitch Fierce, across a few chosen markets.
Inter Parfums has been expanding its business through new licenses or acquisitions. Recently, the company unveiled its 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. The company remains on track to prepare for acquiring the Lacoste fragrance business in January 2024, exploring new growth avenues with its scale and robust market position.
In earlier developments, Inter Parfums became the exclusive worldwide license for the Donna Karan and DKNY fragrance brands (July 2022) through a deal with G-III Apparel Group. In October 2021, Inter Parfums finalized the agreement with Salvatore Ferragamo S.p.A to hold the exclusive worldwide license for the production and distribution of Salvatore Ferragamo brand perfumes. The company has been gaining from its strategic partnerships with Origines-parfums as well as Moncler SpA.
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Regional Strength in Q2
Inter Parfums posted second-quarter earnings of $1.09 per share, up 26.7% from the year-ago quarter’s level. The metric surpassed the Zacks Consensus Estimate of 89 cents per share. Quarterly net sales rallied 26% to $309 million compared with $245 million reported in the year-ago quarter.
Europe-based product sales came in at $198 million, up 19% from the 2022 levels. U.S.-based product sales amounted to $111 million, increasing 42% from the second-quarter 2022 figure. In the company’s European operations, the net sales increase was backed by the three largest brands. Coach, Jimmy Choo and Montblanc delivered sales growth of 28%, 21% and 16%, respectively, in the second quarter. In addition, the company’s fragrance "jewels" — Van Cleef & Arpels and Boucheron and fashion houses — Rochas and Kate Spade performed well.
Growth in U.S. operations was fueled by the solid performance of key brands in the portfolio. The company remains impressed by the continued success of GUESS brands’ fragrances, up 30% year over year. The company also saw solid sales of Ferragamo fragrances and Oscar de la Renta. Additionally, Donna Karan/DKNY brands are performing well and have gone up to become the company’s second-largest U.S.-based brand.
Wrapping Up
Inter Parfums has been reaping the benefits of favorable trends and momentum in the fragrance market. The company is growing its market share with innovative programs. It raised its 2023 EPS guidance to $4.55 compared with $4.25 projected earlier. The outlook reflects growth of 20% from $3.78 reported in 2022. IPAR expects 2023 net sales to be $1.3 billion, implying 20% growth from the reported figure in 2022.
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