[French Fragrances, Inc. logo]
French Fragrances, Inc.
14100 NW 60 Avenue
Miami Lakes, Florida 33014
FOR IMMEDIATE RELEASE:
FRENCH FRAGRANCES REPORTS FIRST QUARTER RESULTS
AND ANNOUNCES STOCK REPURCHASE PROGRAM
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MIAMI, FLORIDA (May 18, 1999) -- French Fragrances, Inc. (NASDAQ NM:
FRAG), a leading manufacturer and marketer of prestige fragrances,
today reported operating results for the first quarter ended April 30,
1999.
Net sales for the quarter rose 24% to $57.5 million, compared to $46.6
million for the corresponding period last year. Gross profit
increased 29% to $17.2 million, from $13.3 million, while EBITDA
(earnings before interest, taxes, depreciation and amortization)
declined 9% to $5.1 million, from $5.6 million, during the first
quarter last year. For the current period, there was a net loss of
approximately $1.4 million, or $.10 per share, compared to net income
of $304,000, or $.02 per share, in last year's first quarter.
The increases in net sales and gross profit reflect continued growth
in both the Company's controlled and distributed brands. The reduced
EBITDA and the net loss are attributable primarily to increases in
sales and marketing expenses associated with the integration of the
business of Paul Sebastian, Inc., which the Company acquired at the
end of January 1999. The expenses consisted of the additional sales
force and promotional and marketing expenses related to the Paul
Sebastian and Nautica prestige fragrance lines. Because of the
depleted inventory stocks of Paul Sebastian at the time of
acquisition, the Company did not derive any significant sales or gross
margin benefits from the acquisition during the first quarter.
French Fragrances reported continued improvement in its working
capital utilization. During the three months ended April 30, 1999,
the Company generated $13.5 million of cash from operations, compared
to using $40.4 million of cash from operations during last year's
first quarter. On April 30, 1999, accounts receivable balances were
$46.5 million and inventory balances were $123.8 million, compared to
$51.8 million and $133.3 million, respectively, at January 31, 1999.
Cash on hand at April 30, 1999 approximated $12.6 million and no
amounts were outstanding under the bank credit facility.
"We are pleased with our continued sales growth across our business
and that we attained results consistent with analysts' expectations"
said E. Scott Beattie, President and Chief Executive Officer. "We
also are satisfied with our continued progress in working capital
utilization. The integration of the Paul Sebastian business is
complete, and we are very excited about the contribution this
acquisition will have to our business, both in terms of financial
results for the balance of the year, and in positioning the Company to
continue to acquire additional brands and distribution relationships."
The Company also reported that its Board of Directors authorized
yesterday a stock repurchase program which will allow the Company to
initially buy up to $5 million of its common stock. Under the terms
of the program, which has no expiration date, the Company expects to
buy stock, from time to time in the open market, depending on
market conditions and other factors.
Following are unaudited consolidated income statement data for the
three months ended April 30, 1999 and 1998, and unaudited balance
sheet data at April 30, 1999, January 31, 1999 and April 30, 1998.
"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995: The statements contained in this release which are not
historical facts are forward-looking statements that are subject to
risks and uncertainties that could cause actual results to differ
materially from those set forth in or implied by forward-looking
statements, including supply constraints or difficulties; the
substantial indebtedness of the company; the impact of competitive
products and pricing; the company's ability to successfully integrate
acquired companies and new brands into the company; changes in the
retail industry; the effect of business and economic conditions; and
other risks and uncertainties. Readers are cautioned not to place
undue reliance on these forward-looking statements which speak
only as of the date hereof. The Company assumes no responsibility to
update or revise forward-looking statements contained herein to
reflect events or circumstances following the date hereof.
# # #
Investor Contact: William J. Mueller, Chief Financial Officer
(305) 818-8102
Press Contact: Steven Anreder/Larry Hirschhorn
Anreder Hirschhorn & Silver
(212) 532-3232
FRENCH FRAGRANCES, INC.
CONSOLIDATED INCOME STATEMENT AND BALANCE SHEET DATA
(Unaudited)
(In thousands, except percentages and per share data and current ratio)
Three Months Ended
April 30,
1999 1998
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Net Sales $57,532 $46,546
Gross Profit 17,214 13,317
Gross Profit Percentage (a) 29.9% 28.6%
Warehouse and Shipping Expenses 2,893 1,889
Selling, General and Administrative
Expenses 9,239 5,857
Depreciation and Amortization 2,773 1,596
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Total Operating Expenses 14,905 9,342
Interest Expense 4,567 3,566
Interest and Other Income 7 77
(Loss) Income Before Income Taxes (2,251) 487
Provision for Income Taxes (879) 183
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Net (Loss) Income $(1,372) $ 304
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Net Income Percentage (a) (b) 0.7%
Basic Earnings per Share $(.10) $.02
Diluted Earnings per Share $(.10) $.02
Primary Share Equivalents 13,812 13,669
Diluted Share Equivalents 15,212 17,618
EBITDA 5,082 5,572
EBITDA Percentage (a) 8.8% 12.0%
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(a) Based on the percentages of Net Sales for the periods.
(b) Not Applicable.
As of
April 30, January 31, April 30,
1999 1999 1998
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Cash $ 12,593 $ 6,112 $ 4,930
Accounts Receivable, Net 46,534 51,796 66,756
Inventories 123,776 133,306 112,448
Property and Equipment 19,227 19,021 20,053
Brand Licenses and Trademarks 53,992 55,658 41,936
Total Assets 286,173 294,708 273,111
Short-Term Debt -- 5,639 1,743
Current Liabilities 39,935 47,069 34,752
Long-Term Liabilities 176,130 176,159 178,719
Shareholders' Equity 70,108 71,480 59,641
Working Capital 158,272 157,457 159,856
Current Ratio 4.96 4.35 5.60