IPAR - Earnings call transcript Q2 2018

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Operator

Ladies and gentlemen, greetings, and welcome to Inter Parfums 2018 Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Russ Greenberg, CFO, and Executive Vice President. now may you you, begin. Thank

Russell Greenberg

and Thank XXXX Welcome our morning. quarter you, conference operator second call. to good

As usual, take CEO, I overview, will After and start the call upcoming our Jean current recent plans. our some our of and we with Madar, Chairman questions. discuss and will will that, business, developments your then a financial

with intend include, not projected results. as headings are talking Prestige wholly-owned through the These XX.X%. by $XX.X to may We Prestige based are to Factors on operations, Securities When based margin to, known to proceeding operations States sales as and discussed. we a to we from by the percentage to cause to other sales million. XX.X% French XX.X%, risks contain currency rates, At and net $XXX.X expenses to from foreign increased discuss XX.X%. XX%-owned compared and forward-looking may Statements compared uncertainties further, factors primarily X.X% performance, second exchange sales in $XX.X $XXX.X the U.S. and income to we as conference million. our this When to was Operating time-to-time XX.X% per Gross income Exchange update attributable but under Summarizing million, XX.X%, XX-K conducted subsidiaries. Commission. from attributable duty, million. to through our The million call $XX.X refer Inc. and not XX.X%, sales million, be from to $X.XX Inc. to were of Annual Report were income reports margin rose XX.X% XX%. to we million, European Form share I limited rose based increased Operating SG&A from XX.X% $XXX.X compared compared Parfums, Before discussed results our uncertainties, million net sales And Risk to and of net information which actual based net want increased the quarter $XX.X no and to subsidiary, from United involve do materially SA. XX% we per conducted compared up Forward-Looking file and diluted the that factors million. Net risks, European our about undertake to rose products, Intra XX.X%. InterParfums XX.X% sales to million was our up $X.XX. to effective income sales Fragrance are referring $XXX.X operations $XX.X to of share that rate net remind domestic listeners operations, comparable Parfums, from Inter XX.X%. unknown statements, products Fragrance rose $X.X different primarily tax Net

the quarter, second As as $X.XX compared to yesterday, we in quarter And dollar during result to XXXX. reported exchange X% to XXXX euro average U.S. the as the quarter rate of second a when $X.XX increased margin operations our first average dollar rate in had sales the much an increased impact XX%. gross our less from the on exchange European and U.S. euro based than profit XXXX of

and the of last U.S. contributed margin corresponding second increase to SG&A higher sales, license. awareness. product period the spending consistent launches support of year from the in the store million as brand products as sales quarter, rate to quarter. heavily than new prior XX.X% invest margin. represented year's of to due promotional grew operating and our advertising current for gross and at well $XX.X the or That performance, slightly sales and down in included build up operating of was European margin sales quarter, net XXXX. continue million compared from income second maintain Gross XX% the in expense the For second sales operations XX.X% was $XX.X XX% in second profit net XX.X%, quarter, to in for said, and second a the In of Prestige was margin SG&A that operations quarter we under which as in substantial in slower momentum to increased Promotion XX.X%, aggregated

same have of in We we we in second XX% expect approximate percent balance the effective for programs items in was XXXX XXXX. Two a last XX% in had compared quarter. $X.X advertising on quarter second foreign sales, promotion quarter second operating million that's XXXX. non-operating significant full to supplemented planned a and current our and that year gain on And expense performance. the We second XX% of to promotion to the of advertising net loss quarter are tax rate continue the excellent to quarter $X.X compared in the as million and XXXX. our second year's currency currency had foreign as And

capital working strong second working $XXX including of almost equivalents $XXX as and is cash ratio a with in capital to closed and the We ever. Our approximately as X.X short-term investments quarter had of cash million, million financial and position X.

include we that noticed product of GUESS year-end plus licensee. the course and products levels from variety are inventory approximately up and XX% this purchased GUESS to of levels second reflects former that new sales goods expectations, inventory from the half component have may support a needed launches finished which the You

achieve sales As Inter attributable Parfums, income share goals around we million are for net diluted to which $XXX reported on Inc. and we per of call at come approximately to share. per net XXXX, for track in our $X.XX to

remains Jean, dollar assumes levels. guidance current at course please Of the continue. that

Jean Madar

morning, the not are a Regions that was worldwide the are I'm one. By across second and terrific every doing Thank map, were you especially anemic blossoming. XXXX measure more and go we of pleased so business. everyone. quarter and longer Russ more good that

of same half XX%, XX% year, goal our reported to size sales next South by X% Western and we period. ranked respective for and the Asia three six first months our through grown a XXXX. North were markets sales that three XX% largest Central America, the East, and compared As XX%, and Middle shift of the yesterday, by of America Europe have Eastern the XX% first and Europe markets half Similarly,

While things we at any facing do positive not headwinds present trend. can see this change,

let finished we and bring We shape, months. produce to license our The stuck next to two components GUESS our you up starting taken from three to in on be components planned infrastructure new received coming or me with starting GUESS, to the licensee having has we're in date. Moving of - the our sell goods. former to are were producing business own

October. shipments September season and Christmas planned We for are geared up major for the with

which on of planned efforts first come existing and and working focused and promotion, one our of for In extension and At on advertising most one XXXX version. terms men's two XXXX. the women's major XXXX we're time, XXXX for indigo, is are recent in blockbuster we additional same a scents, both the flankers have the

worldwide quite and course as Our enthusiastic U.S. of brand, it a of Much we American huge Western network distributor Asia. outside focused of is recognition the as Europe our great about with on Eastern GUESS, and are view efforts

open. going desirable conference As for I our where GUESS, being is last and big stores a highly are market mentioned call, brand to Russia is be GUESS the new on

in top XX from be goal years is two Russia fragrance to today. in Our a about

the strong Asia the is recognition, another big in brand China. where has opportunity especially fragrance for

Coach beginning the new half to September. last launches Fragrant at European month, Choo in Éclat number Foundation we Also of second in to the Lanvin. July flank Award Annual rollout and works. the launching year, Men and we choice debuted shelves product have Coach won Fever renew which scheduled in June we de operations, France prize on in have by in in U.S. first consumers unveiled Nuit Turning for we have be for Jimmy Platinum September come July the for which the of a category. way, a From the And in is

our scent Moving for men October, will debut. first along under new Rochas label the Moustache in

For we're a new U.S. for [indiscernible]. fragrance operations, introducing

Instinct We Also Howard will last this adds duty to Century was market. fragrance women global we at and Hollister, entirely duo called Fitch new and to summer, fragrance portfolio the for & rollout exclusively come and for is Abercrombie have Dunhill stood call the an Century, which Vibes, new Blue First have its for also Festival underway. now Dubai a free month pillar

plans still entirely not Although finalized. are

with our current share thinking year. me for Let you next

conference last well multi-scent will just call. mentioned, XXXX towards fragrance a mid-year, With Next new a Coach year Montblanc has new Well, Coach the will men. on having as a works the expect as GUESS third have to our women been newer women as And have be men's Graff that other Montblanc of strong a Lanvin, with in launch to launching for as potential we business next I we XXXX the to and as not home brands, collection of year. Coach, brand there call, a to has stated as Dunhill conference Coach for Sui. very our important we entirely year, about brand business a Coach our be to of largest remind just Anna have extension, for ground. became and plans advantage line have respect On for I next large a Rochas for say our we to end

me Let close presentations. formal my

we couldn't co-brands IPAR perpetual who Russ of take following your is the balanced in variability more. and a IPAR as performers see maintains Before portfolio company that value, of in compounder note, by analyst, a our the of one wrote a despite I research quoting compounder I brand. consistent fragrance of questions recent and well agree periods

excelled under to leveraged fragrance attention significant business. has scaling brands million large While, $XX scale the generate to identifying sector brands at $XXX fragrance licensing IPAR and within million them

and to assure or We we with two be over or that one its further any brand acquired. you future years course next enhance acquisitions. company expect license cannot strategic And the portfolio brands licensees the will of

open question. the So our for lines operator, can you now

Operator

Linda Thank we'll Q&A Our first you the question Bolton session. conducting ladies Instructions] and from comes of our from [Operator now Davidson. line D.A. be Weiser gentlemen

is line now live. Your

Linda Weiser

Hi.

So, congratulations on strong profitability.

down even and gross the first year-over-year in though quarter. down was the margin So was last it it

can could that year-over-year that think Thanks. gross maybe should in the as on as margin next comment FX to I you kind not strong that. euro situation. to that the the So, your was And few assume due it's of quarters we improve, continue

Jean Madar

you, question. Russ. Thank for the Linda Hello?

Russell Greenberg

hovering is question. right right $X.XX, second you, the is rate Thank Linda quarter. close around the $X.XX, I The were we which throughout exchange that sorry. to very now I where average appreciate I'm appreciate,

really gross see margin. fluctuations to significant So with any don't correct, respect to I expect

stays current as rate along exchange So levels. this

Linda Weiser

that year. Thanks. profitability guidance quarter, feel the your for EPS surprising And guess, I then, the the strength a little didn't raise you need given to the it's of in the

and some you color quarter is it second half a promotion? be season that's to is because So, Can the going on your I try there would with little your of some holiday really weighted. of advertising to you're going give spending fourth to then where more and assume during drive plans weighted A&P just demand

Jean Madar

to I don't you want Russ add.

Russell Greenberg

don't I problem. a have Yeah.

Jean Madar

ahead Recurring mean, and EPS, I'll you answer. go I first complete can then your

Russell Greenberg

The with tax a respect few course of are Not rate. versus changes benefits and be rate The a currency tax the from the a the pennies factor gain that throughout it as the of problem. lot of second to non-operating on a last of of projective a consistent foreign this and year. quarter will been comparison remainder result there standpoint year, probably - did has

was for the it expecting. a the From the in pretty target the right we're year. bit as quarter compared now an light much is right on as of EPS what little advertising promotion prior to and with So standpoint, second year

fact for quarter we're expect XX% was fourth second year's going in the that last X% it the that usually with than going percentage is of Jean down second concentrated this spent we we've points, versus we about second to is advertising, quarter the of in two matter weighted indicated quarter. around year's end far be total in it at year. a is half third Clearly up quarter. Because - more heavily XX% As and to else? anything the sales

Jean Madar

and shape of that business quarter, question, I month middle is level we the is do in to July, is estimate. the already store quite good tell low. at inventory third always it's level had the the of in we're a is a you important what But we maintain very distributor at Yes, good think

don't the business but in Business maybe U.S. is market been these market our business Asia, expectation. in reasonable to doing didn't because the good shape are more. in have say We we share. is been rushing good have which quarters good conservative, department terms has where I only know could last stores two the good want produce we as lost not we're business you see in we inventory, is But of enough signs. for some actually it We but gaining fine, to in like stay, have to but

Renta. Choo, Jimmy for Montblanc, For de la for Oscar

positive there our all doing brands are So results. is - having

We check continue in great. XX% on so it results I And Anna Sui. business - our see Last have think doors to time was all we extraordinary China not some opened is it yet. up was the I

of lot quarter. So pockets in as and of will growth and know the we new pillars have the fourth the blockbuster a But you - in coming main happen largest launches the new XXXX. third

Linda Weiser

in year the last note several plan a XXXX be things. X major quite that with Thanks. early of Jimmy what listed And then catch launch would I finally, is XXXX, you on year? that in part later and the didn't or there

Russell Greenberg

think respect to Jimmy have set a X don't date Jean, know yet. With I if the Yes, don't launch, that. heard we you I

Jean Madar

a We date. don't have set

for launch have big Actually have And brands in launch XXXX. very, big be will Montblanc, the a [ph]. starting a launch Sonowa which beginning a XXXX. blockbuster will we will launch While all have of very will our

Russell Greenberg

remarks small look went I that, through to in his it. really to a what just And XXXX with into add was want just respect Linda John

these we it that's for expectations able when schedules place. will take you when be you what are much and As and seasons and to when let we be That's were that know, set, we'll to won't our long launches quarters mid-November until what are our announce know pretty XXXX. the different expect guidance

Linda Weiser

much. very you Great, thank

Russell Greenberg

No problem. you. Thank

Operator

you. Thank

question from comes Joe line next Altobello Raymond James. from of Our

is line live. Your

Joseph Altobello

is spend question Thanks, Linda's hey so guidance going to be or for ad regarding guys is line. half more the sales heavy good Follow-up the you Russ on morning. that second fairly on mentioned in the the guide you imply and of strong your increase inventory last part a of second second But in saw half seems in quarters anticipation that of the a that slowdown. half. couple to the

on were despite and X% easier is first I rollout continued for half easier a for constant you're sales GUESS. I think currency half. second basis, for the looking the this in in the guess of up compares compares XX% growth Choo, Jimmy Lanvin, And

sort headwind of that you that in expecting? So expect guys preparing just kind launches Or for is there you some early you're of major XXXX. the

Russell Greenberg

in to in blockbuster launches launching I start connection brands. I'll you when it really in the mind first. XXXX, have you're interesting you of think It's year, keep that with don't you're have any comparing with pillars these any that last new where

simple So a launch, when or little those the programs, bit to fit look We're you may without at. growth comparison. that it we are that we show blockbuster may at of the it appear But major anticipating. think comparisons, that to new pillar you that can major does And it's a comparisons we that's going looking advertising difficult. we're a so maintain what kind a

the looking right with at are. what expectations are trends things But line are I expectations far really so are, think are the likely to what we along again, continue. our

forward So to a in We the guidance moves visibility raising this see as there at time. was point bit at quarter really start no evaluate that we'll want and and time. more reason point in little on to third push

Joseph Altobello

Okay, you the that's And quarters number. here. Rochas, gave sure a not you helpful. been But quarter for guys like brand on that's this sales last very I'm were then strong down looks few mid-teens a

the guys of expansion contemplating geographic see that are brand? for impact So we start to when the that you

Russell Greenberg

have again key is relatively comparison off of we that think we prior The have year. from Well, difficult the I coming seen a we're you're it.

X% approximately it's six the months X%. look we just the down you When on full business. month three up the Rochas For period, at were

year against comparing major launch. last had a where you You're

Jean Madar

the months that quarter is really cannibalization interesting the sales think increase existing we means demand able launching. no six is that quite first this Because and it's with quite are which which remarkable year and I in is like to the XX% Really XXXX there a without is for blockbusters [ph] year. remarkable are or - products, there to we flankers XX%

ourselves be more of and we quite where preparing XXXX in it's it's for terms will So, ambitious growth.

Joseph Altobello

active is last these just new your trademarks. could, market Got Are I across more And licenses books days? how desk for it. getting if you curious coming the what one or

Russell Greenberg

enough that opportunities answer Graff. GUESS it to projections signed see delivered you able far deal fortunate other closed two we're we've until of to is mean sealed very difficult signed, the been our course we any Yes, this There within announcements. it's I of are and that exploring with we to hope deal that and make and discuss addition we openly. closed, and won't yes. to deals. is, the year a of couple so But,

Joseph Altobello

guys. you Okay, great, thank

Russell Greenberg

problem. you, Joe. No Thank

Operator

Thank you.

line Our following of from the question Jefferies. from Steph Wissink comes

live. now are You

Stephanie Wissink

everyone. Thanks, morning good

Just detail all ups already. two the and follow thanks for

first The is this for you. question, Jean and maybe

overall Just related category to innovation.

We another about to the bit brands coming and some of or you have more of seen word some the that where innovation beyond you? be some little and use. that heard retail goods that opportunity may market branded the with newer experimentation licensed a a indication category provide Talk is might craft we for

Jean Madar

participate We in recognition. license stronger sometime portfolio after our we have brand in we niche or do like - the brands don't sometimes Where jewelry. that to or all recognition fashion sense get our regional worldwide today have not brands

are higher looking brands that at are design recognition type design with work, brand public. doing are especially art I art future all large we not from mean, in the but I of we'll in stores, well So, for understand we in be that the brands

Stephanie Wissink

AMP little the your about incremental mix about curious you you've course what finding efficiency spending last of it Are return a so the And generating. to couple like the if what superior helpful. if past. margins I improved talked bit your the that has of experienced Russ, a you, actually shifting how is then based would AMP some around. years, spending spending actually that on of be you behind question and are seem talk may of over the the you're has evolved for you looks am Okay, finding you can that generating that's spending a AMP little in

Russell Greenberg

I in don't Parfums even And, overall mentioned all to trend allocated really of growth platform as moneys buy expenditures. is has the and is other around going of reach much. really not see historically that media social would than into that key The level product. is the of The territories dollars where changed AMP in money prior the Inter a type expect spent are consumers spent had our to not world money has it. lot a that conference we Jean calls, that the will been have more

to you're to protect those watch going territories. sales positions, your without spend your continue to money protecting need You territories decline. those in those in positions Because to

goal be proper kind of our of XX% really our up of that are we think maintain We to to it about what that the is around So, sales mix. levels to now sales our from used XX% is bringing at. a

We But, is media. we've around think positions that and the allocation we media are a social that in level consumer level had tweaking the you're and have a overall, that good the that can so working market the and maintain the between enough world. actual we I level higher

Stephanie Wissink

to terms question, half the Anything of end seeing in into back helpful Can And would the helpful. and you the we think opportunity about Very just retail the that about us update then channel level you think last mix? is What on XXXX? you're markets. inventories? be retail an set give one as talk

Jean Madar

last on I ship good sign stores. before, started is We my gift of level basis say in is inventory us. set the That's to the couple worldwide is weeks. the a for that monitor can low, retail always which reasonable. Christmas I a inventory said very answer. We As level from

Stephanie Wissink

Thank you.

Russell Greenberg

Steph. you, Thank

Operator

next of Instructions] [Operator comes from you. Thank from question Hamed line the Khorsand Our BWS.

now Your line live. is

Hamed Khorsand

Hi.

channel of the question and would the as own first would margin that was, your sales your distribution what be my benefit in about networks talk how you gross of just Just parties. impact could or And going forward? third far sourcing second the half as out mix

Russell Greenberg

increased reasons the XXXX, has sales overall of would has the was fairly XXXX. not party for of significant as for as gone that percentage additional would has been network. we there effect, might is Usually margin going sales versus product distribution there through third as and product a any profit we have XXXX, six been months a an gross increase if not of far that a consistent that or on through one first decreased. there far significant the gross therefore effect usually or for impact an So But meaningful that is numbers distribution. that profit those the of direct so it's for had mention distribution percentage margin of because Normally of that have

Hamed Khorsand

Okay. mostly up far that far mix seeing as market? you you're And you're holiday the in as holiday that coming a season. then on or as shopping for sets just that Is are the change mass seeing in seeing as in the Prestige

Russell Greenberg

slightly sets correct Jean, is for of if marked year. gift prior the of we the wrong. me think level But just that distribution have than XXXX in I I'm that higher year

Jean Madar

Online, I would online. say

Russell Greenberg

Yes, think to don't fluctuations selling that a well into we is be the expect any as percentage there marketplace. I as in what of significant

Hamed Khorsand

the what's then inventory? mix And as mass build far in that goes, and how change up Prestige market being as any between

Russell Greenberg

in high-XX% business market time so our of overall the the far Inter we business Mass are probably as market. point insignificant in is almost for Prestige At is as in this Parfums. the

Hamed Khorsand

Okay, you. great. Thank

Russell Greenberg

Okay. Hamed. you, Thank

Jean Madar

Thank you.

Operator

time. I'd Thank to turn like you. questions Ladies queue and gentlemen further this in over the to for at have closing. no back management floor we

Russell Greenberg

much. Thank on you Thank call. the you in. for conference being very tuning you for And thank all

you do day. you office. a any have further if my usual contact questions, can great Have me Bye. at As

Inter Parfums (IPAR) 12 Aug 182018 Q2 Earnings call transcript