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Inter Parfums' IPSA Buys Stake in Owner of Origines-parfums

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Inter Parfums, Inc. IPAR has been focused on expanding business through effective product launches and prudent alliances. The company’s majorly owned subsidiary — Interparfums SA or IPSA — recently inked a deal to acquire 25% of Divabox’s capital. Notably, Divabox is the owner of Origines-parfums, which is a renowned French company in the online beauty market.

The deal is likely to enhance IPSA’s fragrance line and product range alongside pushing its digital development, courtesy of Origines-parfums’ solid customer expertise. Also, Origines-parfums is expected to gain from IPSA’s resources, which will help the former solidify its footing and elevate its online existence.

Notably, online sales for cosmetics and perfumes have been rising every year. In fact, the role of the e-commerce platform has become all the more important in the face of the coronavirus pandemic, wherein social distancing has caused customers to stay indoors and resort to more online shopping. Thus, IPSA’s agreement with Divabox appears to be a deemed fit at the current juncture, which is likely to enhance Inter Parfums’ business.

COVID-19 Hurts Inter Parfums’ Q1 Show

Unfortunately, the company’s bottom line slumped 46.7% year over year in first-quarter 2020. Net sales in the quarter declined 18.7%. The metric fell across both U.S. and Europe-based operations during the first quarter. First-quarter results were hampered by the coronavirus outbreak, as operations were hurt by the pandemic-led hurdles for most part of the quarter. Inter Parfums saw a short-term suspension at its distribution facilities for the safety of employees.

Further, retail outlet closures in most parts of the world affected the company’s sales. Moreover, the company has been battling major supply-chain hiccups. In fact, in its first-quarter conference call, management stated that it expects to see a sharp sequential as well as a year-over-year decline in second-quarter sales. Moreover, the company had said that it doesn’t expect normal air travel to resume anytime soon, which is likely to continue hurting the travel retail business in the near term.

Growth on Track

Nonetheless, the company is making several efforts to revive sales and profits. Last month itself, the company’s IPSA penned a worldwide license deal with Moncler SpA. Per the deal, IPSA will make perfumes and other fragrance-related products to distribute them in Moncler mono brand stores, certain department stores, specialty stores as well as duty-free shops. The first fragrance line is likely to be launched by the first quarter of 2022 and the deal will last till Dec 31, 2026, with a possible extension of five years.

With bans being lifted, businesses have been opening up gradually. Toward the end of March and the beginning of April, many parts of Asia had reopened stores, led by China. Various countries in Europe and the Middle East have also reopened stores. Apart from this, efforts to expand in the online channel surely bode well for Inter Parfums.  Shares of this Zacks Rank #3 (Hold) company have gained 13.2% in the past three months compared with the industry’s growth of 26.7%.

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