Beauty products maker Elizabeth Arden Inc. (RDEN) reported fiscal fourth-quarter results yesterday after the closing bell. The company recorded a narrower GAAP net loss of $3.6 million, compared to a loss of $10.4 million in year-ago period.
Excluding restructuring and certain other expenses, loss per share came in at 7 cents per share, which squeezed past the Zacks Consensus Estimate by a penny.
Elizabeth Arden is a global prestige beauty products company with a portfolio of brands sold in over 100 countries. The company’s portfolio comprise of Elizabeth Arden skincare, color, and fragrance products, Prevage anti-aging treatments, celebrity and designer fragrance brands. In May last year, the company signed a deal with Liz Claiborne (LIZ) to make, distribute and market the latter’s fragrance brands.
The Miramar, FL-based company’s recorded a 10% year-over-year decline in sales to $212.6 million as performance was adversely affected by weak discretionary spending environment and inventory de-stocking by retailers. The company said that North American fragrances, which accounts for two-thirds of revenues, dipped 14.5% year over year to $116.4 million, while international sales contracted 7.3% to $85.2 million.
Elizabeth Arden’s gross profit grew nearly 2% year over year $91.9 million, while margin expanded 510 basis points (bps) to 43.2%. The margin growth was driven by the company’s global efficiency re-engineering initiative, which included efforts to reduce inventories and improve cost structure related to supply chain and logistics.
The company expects gross margin to grow by 200 bps to 250 during the fiscal year 2010 on savings from the re-engineering initiative and improved sales dilution.
Operating expenses decreased 11.4% year over year to $91.9 million due to the company’s cost-cutting efforts, partially offset by expenses to support brand launches and the Liz Claiborne’s fragrance brands. Accordingly, the company posted a narrower operating loss of $38,000, against a loss of $13.7 million in the year-ago quarter.
Elizabeth Arden ended the quarter with operating cash flow of $37 million helped by a $90 million reduction in inventories to $318.5 million. Days Sales Outstanding (DSOs) improved by 4 days, compared to the prior year quarter to 64 days. Total debt decreased by $5 million to $338.9 million, causing the debt-to-capitalization ratio to reduce by 40 bps to approximately 50.2%.
Looking ahead, the company sees performance in the fiscal year 2010 to be affected by continued paring of inventories by retailers. Revenue is expected to grow by 2.0% to 3.5%, which comes to approximately $1.09 billion to $1.11 billion, while earnings is expected to range between 50 cents and 65 cents per share.
The earnings guidance is in-line with the Zacks Consensus Estimate of 58 cents per share, which has moved down by 14 cents, or 19.4%, over the past week.
Meanwhile, larger rival Estee Lauder Companies Inc. (EL) reported fiscal fourth-quarter earnings of 20 cents per share yesterday, matching the Zacks Consensus Estimate, even as sales slipped 16% year over year to $1.68 billion. The company offered a lackluster fiscal 2010 outlook with sales expected to remain flat or grow by 2% in constant currency terms.
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