ELIZABETH ARDEN, INC.
[Red Door Logo]
FOR IMMEDIATE RELEASE
ELIZABETH ARDEN, INC. ANNOUNCES CONSOLIDATION OF ITS U.S.
WAREHOUSE OPERATIONS
~ Consolidating Into a Single U.S. Distribution Facility ~
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New York, New York (November 3, 2003) Elizabeth Arden, Inc. (NASDAQ:
RDEN), a global prestige fragrance and beauty products company, today
announced that it is consolidating its U.S. distribution operations into a
single facility in Roanoke, Virginia by March 2004.
The consolidation is designed to reduce supply chain, logistics and
corporate overhead expenses and to improve working capital efficiency by
centralizing the U.S. logistics and fulfillment functions into one facility.
The single transportation hub is expected to result in lower freight expenses
as well as lower labor, insurance and other overhead expenses. This
consolidation is part of the continuous effort by the Company to rationalize
its cost structure globally since acquiring the Elizabeth Arden business in
January 2001. Since that time, the Company has streamlined its facilities,
including closing its Edison, New Jersey warehouse facility in 2002, and
reduced its fixed overhead structure, while, at the same time, increasing its
operating capacity.
To accomplish the consolidation, the Company is planning on transitioning
all of its U.S. distribution and warehouse operations to its existing facility
in Roanoke, Virginia by March 2004. During the past year, Elizabeth Arden
expanded and upgraded the facility, adding over 130,000 square feet, which
more than tripled storage capacity and reduced the need for overflow warehouse
space. Along with these improvements, the Company has been enhancing its
materials handling equipment and enterprise application systems to provide for
higher throughput capacity, more rapid response times, improved customer
service and increased inventory turns. The physical expansion of the Roanoke
facility was completed in September 2003 and was operational during the peak
shipping month of October. The equipment upgrade will be completed in
February 2004. Both projects were financed with minimal capital outlays.
As part of this restructuring initiative, the Company will close and sell
its Miami Lakes distribution center and relocate its Miami Lakes corporate
offices to another location in the area. The proceeds from the sale of the
building are expected to be more than adequate to repay the mortgage and all
of the one-time severance and restructuring costs related to the
consolidation. To ensure no disruption of customer service, the Company will
continue shipping activities from the Miami Lakes facility until January 31,
2004 and move any remaining inventory to the Roanoke location following that
date. Once the inventory is consolidated into one facility, it is expected
that there will be a reduction in the total level of inventory required to
support the business.
In connection with the facility consolidation, the Company expects to
realize estimated savings of approximately $2 million to $4 million during the
fiscal year ended January 31, 2005, and approximately $4 million to $6 million
on an annual basis for the fiscal years thereafter. The U.S. workforce will be
reduced by approximately 10%.
The Company expects to incur pre-tax charges of approximately $3.5 million
related to severance benefits, including severance pay, outplacement services
and health insurance assistance for affected employees, training and
relocation costs that will be incurred by March 2004, with approximately $2.0
million to $2.5 million expected to be incurred in the fourth quarter of
fiscal 2004. The consolidation will have no impact on the financial results
for the third quarter of fiscal 2004. The Company intends to provide further
details on the expense savings and charges when it reports its third quarter
results in December 2003.
Scott Beattie, Chairman and Chief Executive Officer of Elizabeth Arden,
Inc., commented, "While there is a clear economic rationale for consolidating
our distribution facilities, it was an extremely difficult decision given the
dedication and support of our people in Miami Lakes. Many of the affected
employees have been instrumental in building our business and we are forever
grateful for their dedication and service. We hope that the measures we have
put in place to provide assistance will help them transition to their next
opportunity.
Mr. Beattie added, "We also want to stress that Elizabeth Arden remains
committed to South Florida, as it will remain the home of our corporate
headquarters. In addition to accommodating our corporate offices, our South
Florida location will include certain sales, marketing, finance and other
corporate functions."
Elizabeth Arden is a global prestige fragrance and beauty products company.
The Company's portfolio of leading brands includes the fragrance brands Red
Door, Red Door Revealed, Elizabeth Arden green tea, 5th Avenue, ardenbeauty,
Elizabeth Taylor's White Diamonds, Passion, Forever Elizabeth and Gardenia,
White Shoulders, Geoffrey Beene's Grey Flannel, Halston, Halston Z-14,
Unbound, PS Fine Cologne for Men, Design and Wings; the Elizabeth Arden skin
care line, including Ceramides and Eight Hour Cream; and the Elizabeth Arden
cosmetics line.
Company Contact: Marcey Becker
Senior Vice President, Finance
(203) 462-5809
Investor Contact: Cara O'Brien/Lila Sharifian
Press: Stephanie Sampiere
Financial Dynamics
(212) 850-5600
In connection with the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995, Elizabeth Arden, Inc., is hereby providing
cautionary statements identifying important factors that could cause our
actual results to differ materially from those projected in forward-looking
statements (as defined in such act). Any statements that express, or involve
discussions as to, expectations, beliefs, plans, objectives, assumptions or
future events or performance (often, but not always, through the use of words
or phrases such as "will likely result," "are expected to," "will continue,"
"is anticipated," "estimated," "intends," "plans" and "projection") are not
historical facts and may be forward-looking and may involve estimates and
uncertainties which could cause actual results to differ materially from those
expressed in the forward-looking statements. Accordingly, any such statements
are qualified in their entirety by reference to, and are accompanied by, the
following key factors that have a direct bearing on our results of operations:
our substantial indebtedness and debt service obligations; our ability to
successfully and cost-effectively integrate acquired businesses or new brands;
our absence of contracts with customers or suppliers and our ability to
maintain and develop relationships with customers and suppliers; international
and domestic economic and business changes that could impact consumer
confidence; our customers' financial condition; our ability to access capital
for acquisitions; the assumptions underlying our critical accounting
estimates; the retention and availability of key personnel; changes in the
retail, fragrance and cosmetic industries; our ability to launch new products
and implement our growth strategy; the impact of competitive products and
pricing; changes in product mix to less profitable products; risks of
international operations, including foreign currency fluctuations; economic
and political consequences of terrorist attacks and political instability in
certain regions of the world; diseases affecting customer purchasing patterns
including the Severe Acute Respiratory Syndrome (SARS) epidemic, delays in
shipments, inventory shortages and higher costs of production due to
interruption of operations at key manufacturing or fulfillment facilities
that, after consolidations of manufacturing and fulfillment locations,
manufacture or provide logistic services for the majority of our supply of
certain products; changes in the legal, regulatory and political environment
that impact, or will impact, our business, including changes to customs or
trade regulations or accounting standards; legal and regulatory proceedings
that affect, or will affect, our business; and other risks and uncertainties.
We caution that the factors described herein could cause actual results to
differ materially from those expressed in any forward-looking statements we
make and that investors should not place undue reliance on any such
forward-looking statements. Further, any forward-looking statement speaks
only as of the date on which such statement is made, and we undertake no
obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made or to reflect the
occurrence of anticipated or unanticipated events or circumstances. New
factors emerge from time to time, and it is not possible for us to predict all
of such factors. Further, we cannot assess the impact of each such factor on
our results of operations or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements.