Product Launches Aid Inter Parfums (IPAR), High Costs Ail
Inter Parfums, Inc. IPAR appears well-positioned in the booming fragrance market. The company is expanding its market share with solid brands and product launches. The provider of fragrances and related products is on track to expand its business through new licenses or acquisitions. However, the company is not immune to a rising cost environment.
Let’s delve deeper.
What’s Driving Inter Parfums Growth?
The Zacks Rank #3 (Hold) company is witnessing continued traction of its legacy scents courtesy of innovative extensions. Strength in the newer brands has been a catalyst.
The company is witnessing increased market share owing to new product launches and brand extensions. The company boasts an impressive pipeline of fragrances planned like a new pillar of launch for GUESS and GUESS Sexy Skin metallic for 2024. Management is on track to launch a new blockbuster fragrance for DKNY during the upcoming summer. Inter Parfums plans to introduce new products for Ferragamo in 2024.
Inter Parfums is on track to expand its business through new licenses or acquisitions. The company entered into an 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.
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.
Image Source: Zacks Investment Research
Hurdles on the Way
Inter Parfums has been grappling with higher SG&A expenses for a while. During the third quarter of 2023, SG&A expenses were $147.8 million, up 25.9% from the $117.4 million reported in the year-ago quarter. We note that the company is undertaking heightened investments in advertising, promotion and structural investments to support the newly acquired licenses.
Management continues to make significant investments in advertising and promotion. The company plans to allocate 21% of its annual net sales to advertising and promotion, reiterating its aggressive approach to drive sell-through. Although such investments are likely to contribute to growth, they might put pressure on profits in the near term.
The company’s shares have dropped 0.2% in the past three months compared with the industry’s 10.2% decline.
Solid Staple Bets
MGP Ingredients, Inc. MGPI produces and markets ingredients and distillery products to the packaged goods industry. The company currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for MGP Ingredients’ current financial year sales and earnings suggests growth of 6% and 14.2%, respectively, from the year-ago reported figures. MGPI has a trailing four-quarter earnings surprise of 16.2% on average.
Celsius Holdings CELH, which offers functional drinks and liquid supplements, currently carries a Zacks Rank #2. CELH delivered an earnings surprise of 81.6% in the third quarter of 2023.
The Zacks Consensus Estimate for Celsius Holdings’ current financial year sales and earnings suggests growth of 98.5% and 184.1%, respectively, from the year-ago reported numbers.
Vital Farms Inc. VITL offers a range of produced pasture-raised foods. It currently has a Zacks Rank #2. VITL has a trailing four-quarter earnings surprise of 145% on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales suggests growth of 29.4% from the year-ago reported figure.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Inter Parfums, Inc. (IPAR) : Free Stock Analysis Report
MGP Ingredients, Inc. (MGPI) : Free Stock Analysis Report
Celsius Holdings Inc. (CELH) : Free Stock Analysis Report
Vital Farms, Inc. (VITL) : Free Stock Analysis Report
