IPAR - Earnings call transcript Q3 2018

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Operator

Greetings, and welcome to Inter Parfums Third Quarter 2018 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to Russell Greenberg, Executive Vice President and Chief Financial Officer of Inter Parfums. Mr. Greenberg, you may now begin.

Russell Greenberg

Devon. you, Thank welcome and XXXX quarter third Good to call. conference morning, our discuss call will our financial will recent I again plans. with and Chairman current upcoming development start CEO, Madar, Once Jean the a business, then overview, and our and your will After take that, questions. we

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

impact Our Inc. our $X.XX. the for in to income to at effective $XX.X Currency came to income tax in last in $X.XX income compared $XX.X fluctuation XX.X% little on net per XX.X%. in was rate X.XX margin rose average to share euro million, year. gross period compared same increased diluted dollar European third Inc. very operations profit as X.X% the the to X.XX to had from and InterParfums XX.X% the million attributable Net InterParfums versus rates third quarter attributable current quarter exchange

the rate average And the for there of year. dollar last for However, for period exchange X.XX that was gross margin nine-month general selling, period as as as growth the operations percentage the in the European sales quarter, of as year. X% for compared year-to-date about European same sales. about result XXXX decline U.S. dollar period versus administrative and In operations weaker same in third to a small rate same was or in X.XX euro expenses the last a that a rose

the strictly a SG&A promotional result XX% while SG&A rose expense last royalty a increased. year's has the to in higher in This expense gross net as of and margin percentage increase that sales is from of third quarter, The by sales gross for margin increased operations and of was dominated SG&A year's business brands margin expenses. operations Now third prestige license in XX% of last XX% XX% the from quarter. U.S. is U.S. our up sales,

and advertising brands in last our of promotion spent different approximately and third quarter XX% the XX% the in of year's all support to quarter. much sales, amounted continue from net ample productive not current third We to that with and

targeted for sales have year. expense XX% We of net for and promotion aggregate full the our advertising

year, in quarter. last With case the advertising code current bottom reduction Act loss rates on from compared U.S. expect foreign $X.X should to the the XX% made was in nonoperating federal of and the Tax influenced corporate Jobs XX%. many a quarter significant currency tax fourth line of was in quarter changes increase million a third you Cuts including loss the expense a currency regard that The foreign XXXX. to items as tax on $X.X third there million So the to the to in U.S.

XX% in a in enacted In beginning the rate to approximately lower income government addition over early XXXX. to from a XX% period XXXX, plan the five-year corporate tax French

As September our was XXXX for prior a period effective XX% result, for the of months XX, nine tax to rate corresponding compared the as the ended XX% year.

maturities sheet outlook, capital Our is X. million. including of Directors Board of our $XXX the had and favorable including cash financial million quarter investments strength working of strong cash, Based a authorized closed and in million approximately working dividend. ever. short-term upon aggregated our to increase and position cash of we third as business $XXX current X.X a with equivalents ratio the as capital debt nearly annual XX% We Long-term XX in our balance

the rate $X.XXX share. dividend now at quarterly annual of paid $X.XX share is current per per Our

to ever achieve InterParfums which sales track of sales. we XXXX the are as be for last guidance our announced we $X.XX year month, best our And will We of guidance diluted for XXX attributable per approximately to in for net terms income increased year. to our on Inc. million share

announcing the remains XXXX we continue. after market our at guidance next Monday the be usual close. Jean levels current please will dollar guidance and As assumes

Jean Madar

to and year. Russ very morning another good turning productive into and Thank all. XXXX you, you is successful

profits launch absence We the major year. have been a our all the impressive and more sales of growing this in

we among partners. and to our added footprint our and enterprise we We and reputation also our enhance direct-to-consumer, overall have continue expanded new the potential within initiated e-commerce brands, geographic have industry

the growth X%, to XX%, three months year, Western our and nine Asia XXXX. As the America, XX% the first of for for markets respectively we first yesterday months as nine are of compared Asia, which largest achieved of North Europe and reported sales

start In America, East and sales operations. with coming with Eastern Central addition in approximated respectively, and a grown along last time year. And the our XX% sales will news this South Europe, we while will have for talk in XX% by and change U.S. newest year. worthy I the Middle brands about and our for plans I now

and shipping quarter. components to on As have finished began second GUESS we products were we from sell initially goods. the We relying former of licensee produce the reported, end towards the

with and components shipments and September stock we in now of season many October of are holiday own our We GUESS merchandise. in major made

which in for These as have a new by the just fall with pillar in supported pillars mentioned that have XXXX. beginning started year, Next year will seductive be we'll for we extensions in and we'll new Angeles. called extension domestic XXXX, GUESS fresh, the it's have the before, major a course spring in rollout Seductive We'll fragrance and expand Los campaign. XXXX was further a Eau, we advertising in will later XXXX. international blockbuster And shot called new, brand also week product of called in of the followed distribution existing the by brand promotional last

had Anna Another several winner patient were endured Anna Sui the in the brand Anna very difficult and and sales. strong and but years Sui, we we general XX% that with refreshed line, market gratifying And sales advertising Sui old in maintained Sui Asia, doubled. story for our we had the marks of continually budgets, almost Throughout us our years confident this where does share. product paid-off. expanded especially those was are all we Anna Year-to-date, a and for has promotional maintained

Sui forward a regard licenses, which four a has exquisite newest ready which joined by being Mermaid. and year. edition family scents women's venues, Anna of to amenities, both Graff, year been exquisite to along of collection, late our which of with including gear are most will fragrances the with moving travel and the recent one next for hotels of we're Fantasia last With next We huge be hit have Fantasia,

have While Dunhill. the multi-scent most product for & existing Fitch, extensions Abercrombie new pillar, our for new of with fragrance debuting we for collection men's and a brand the do launches reveal duo

year, continued the to launched comparable men Platinum by ago, year-to-date and the of biggest year-to-date terms for the in which winner for success as comparable year. this plus because quarter operation, and of at XX% market two European Coach to women well our sales and and popularity XXX%. the for on as was scents Floral the up years of the we're flankers, signature last Coach new Coach introduced driven is Coach the Moving growth at quarter came we're signature for line sales

year gap XXXX. Fever along Choo helped with During sales of this for of signature with brand the staying the Jimmy XXXX scents, bridge brand's third introduction with power between

and in we also we Montblanc, For Jimmy Rochas, Explorer, Choo. we will a January rollout during recently and introduced men's called Moustache for new early blockbuster a launch we'll scents will for new XXXX, launch men - fragrance

into for also Lanvin. each and entering women two We Coach scents have one fall, the for

busy XXXX So will year. be a

develop brand announced Finally client IMG previously, to the and diverse IMG for direct-to-consumer beginning dynamic models base. strategic e-commerce and partnership as our subsidiary between models fragrance we businesses look beauty talents and Interstellar we forward and to

that a an by closely for of in Secret is line and Sports with the products work social her unique directly super a been her to high for working site to Bulgari, connected She's Lauren, has Levi's. Initial Victoria's available known devoted will sale fans. collaboration was Angel, first with Lily and be with profile e-commerce Our to expected Lily Interstellar who fragrance well Aldridge, featured channels also are develop and is Illustrated. be end Ralph XXXX. model and

aspect e-commerce of service. and handle development, are platform, production, we'll We fulfillment, the customer marketing, all packaging, building product

namesake it's develop we're with the working from groundbreaking. experience our effort. of to and is IMG we promotional creating decades partnership social and spirit believe to sales look make in of scalable this closely and industry capture the we capture advertising of products our business creative the Drawing So our opportunity. content media This than potentially by products that marketing rather Direct-to-consumer think interpret also develop support first very each luminary. we brands, traditional that and will attractive a DNA to backed

be our Year. me on of to & wish on Davidson December that hope will you even Before questions, some happy it's best XX. Wellness Russ and Tuesday, if and the very Beauty time. your to Bust on early at let New New D.A. see at And holiday Tour you all little office I for the Also we York moving

Now, operator, floor questions. you can for open the

Operator

of [Operator Instructions] Bolton comes with your Our Davidson. the Please from question. proceed Weiser question with Linda line first D.A.

Linda Weiser

impressive that's be So we increase. what a foretelling like that's of that your in Should dividend that rate XX% the XXXX? quite into increase could of growth an read earnings

Jean Madar

really not in to it's Thank think going to what our is related be. growth whole you, in the discussion I XXXX

I our directed and our to sheet the growth position think more more year it's of cash than to strong August. next balance

Russell Greenberg

of that function I taken increase. XX% year thing continue would arrived and current on at earnings, amount in future. to we've how are and other XX% the each going to point this year distributing happen the at position to a every the than and is Yes, looking we we is dividend of to as what time more dividend the say build a rather approximately was to in the At

to we're to for looking I Monday where next have going see wait XXXX. think we're until exactly to at

Linda Weiser

but ask again on or fragrance year, are? what it's Los an one? XXXX blockbuster new existing for elaborate Can just those Angeles, a can mentioned that is next I you you scents just is few a not that a then completely And new GUESS,

Jean Madar

It - a extension line is we call what an extension.

XXXX. is Seductive, it's which line part but new which an it's of called So and is called existing fragrance a

way with call we we XXXX market. in flanker, very the you The a have it's flankers. these so the animation XXXX, will that launch rely new the blockbuster will of we but are will But a So where fragrance product that new it’s position happen on. beginning be all what

sales happy GUESS. with We are of sales our with happy are of our very very GUESS, we

well has Europe certain markets U.K. European we response to responded Holland, from from the very great are Germany, line. existing to so specially all We have been happy Western markets response

terms we something. fragrance new and introducing in the Russ want terms a said - distribution to will XXXX products. of of in will we’re you before, and add actual in price be more the we elevated As that point

Russell Greenberg

and covered trading concept the existing you same usually is No, typically I of bottle extensions it. that fragrance is is consumer that much new and total brand but The We that it flankers off a fragrances. use product an pretty geared another line. towards cap same within think

Linda Weiser

GAAP up division in the you U.S. And it? then from year-over-year the exclude can if you quarter just or was down say

Jean Madar

Good tell can but question, Russ I didn’t look at maybe it you us….

Russell Greenberg

that to not We sales. product really we in on do want way want really not individual breakout any do comment because to

asked don’t to of have do Our Linda off so that, question mind. to licensors to going that us beg I am try not if you

Linda Weiser

Okay, strong year-to-date little channels? bit you how also Can any maybe give very travel I obviously you and that’s mean of been is fine. seeing the Asian sales weakening your just but a color retail have are

Jean Madar

of Yes, very Asia we is in Asia questions there business. lot, see about is retail. in a lots What strong travel

Our very true a particularly especially only to - - almost Sui growth business for slowdown year. said XXXX - retail Sui world and as expect and our other this last brand. in in we has travel year travel shape of we have is Asia in but for comparing sales Anna retail good our not this to In been also this before but strong. the for That's of doubled Anna part as terms Lanvin

We Asia our see and duty doubling of sales for we growth all still free. for another anticipating but are not brands in

Operator

question the from next Altobello Our line Raymond comes your James. question. proceed Please with with Joe of

Joe Altobello

I to if have of around your suppose look it till I A&P regarding it’s wait I last getting you XX around XXXX sales. guidance I of year know at spend months question had was this we're months today XX a sale, year not but Monday

Next it launch it’s busy relative year like a very to schedule year. this sounds

to A&P XX% new it we support busier year is schedule, do that off launches? spending a will within how those or So think next chance stay about at kicks there it that range launch

Russell Greenberg

I our right a fragrances, blockbuster a is not money launch and in years even A for and year, perfect where the creating GUESS think with markets. around have in invest campaign you still surrounding XX% to to flankers complete we’re we Jean advertising in don't is you're need blockbuster even a that will currently respect advertising as hover to mentioned that next have plan your or XXXX. launching example that as seductive you just

So, still and or your fragrance, as in marketplace. support blockbuster you whatever whether to your regardless it's not fragrance, a to need you're launching the brands

to our stay are So today around current XX%. that right hover plans

Jean Madar

add I for brand. would beginning launch happen about next Montblanc, definitely am will to new And I we the of next major launches for talk go Montblanc and be year brand if I The by year may will blockbuster going Explorer like - very one quickly launches QX. will to major biggest for this

XX% a advertising. have that of you're in you Abercrombie promotion beginning our we in starts fragrance in new Jimmy we're across launch that you're sales the a have And and to year for a a when new spend to This will So going the a QX. launch to Capri. in call in will year men. QX of After Lanvin, going U.S. QX at the for in least have Girl going starting And QX. women's brands Choo have

at percentage above the for around QX, be to advertising. So QX, and type expecting same XX% I QX, QX, that will say I'm of

Joe Altobello

Okay.

it back-end like year? be as this year next not as to is sounds weighted, going probably So

Jean Madar

we and Montblanc because retailers I strength absolutely we the us will yeah two a be decided simultaneously but because in less, usually countries think launched to that we're countries for have duty-free XXX then time or and X. absolutely, the The in countries it one a same have and and launch with we rollout new of year. other to Explorer going with full of at appetite be we start all January almost the launch It's first will countries. in to the operators,

a QX. So we'll have in start big launch

Joe Altobello

accommodation really last your despite a market growth? year Linda's section helped some good there, couple is what's of different that question to out real any was you obviously And around? over sounds was about it marketing, – weakness to not in made Anna that to drive which it that product, all it Asia Was has you're of to that to turn last the that over concerns in Sui brand seeing to have then response it years hear. secondly, like helped progress guys lot new

Jean Madar

of lot well marketing. money compounded boosted lot with accepted. have is major We spent we product We Tumulte. had a a Yes, of

important that with that was product Let's the the We perfect not taste really the for interesting very the teenagers. we very geared very bottle, focused of and groups, for Anna funnier product interesting forget young Chinese have the Sui tested consumer launched so had we is smell, animation. very

market. the this for So ingredients I that all we say for would had success

sales and are or Southeast that Asia. Let's Anna Sui well Korea, China, in XX% XX% not in in Taiwan, in in almost also forget Asia,

and of targeted product collect we very when us. amount spend for advertising, for region and make very very, the it we So we been particular fruits has is a in successful that money large

Operator

comes the question line Steph next with from your Please question. of Wissink proceed with Jefferies. Our

Stephanie Wissink

on question a have We GUESS.

bit talked more category that in positioning in the how world you mass in a little more out about the Prestige Is that providing think your positioned that with use I the positioning and dichotomy? domestic slightly versus or release a talk is stepping a globally internationally it brand around positioning aligned category. Can you the in about the you market, and bit U.S. the different is market? maybe then

Jean Madar

of Yes, course.

domestically absolutely of positioning. doing outside U.S. and at wanted are the the following the carry Outside GUESS we U.S. what of U.S. We to higher in is this and is positioned level GUESS than type

countries U.S. in Germany, GUESS other the the recognition Klein, has market and many want. of quite like fragrance a of So outside the if Italy, competing Russia, parts in last points GUESS the the Ralph you month very, is all in of stores GUESS designer a and world were the we're name with price sold opening Lauren, is a be Calvin will in for strong France, for U.S. very instance advertising lot We lot. as designers outside at GUESS Russia of and the looking of closing high. American

it Macy's will designer in a GUESS not all In selling the but fragrance be not normal this of at definitely be So as U.S, regular we we will core domestic will kind in area. stores, position department it's different or in distribution. more because and

be the So course response of will different.

Stephanie Wissink

been That for follow-up of a Coach. just remarkably has a then number years. brand And on strong

a signing there that mentioned growth. extends fragrance years the you still but women's pacing that bit longer past? flankers profile of the brand of Are the whether design what you versus couple see that being what that in something some in maybe some it's by strength launched than architecture you're of would or think finding core seen already of mix your north new your Is or we've you launches the curve brand and in the or resulting we demand brand that combination I is your up XXXX, historically? XX% marketing with elongated this actually your

Jean Madar

well products their Coach of even the they we and U.S. we recognition France Russia. They and course don't the - the considered Coach or in market to demand up are name difficult Coach or of But a expect is that and been and strong the - through also U.S. stores. done of we this outside but well the U.S. because are U.K. didn't in American huge sales surprise secondary today we Western sales. that honestly especially their in people lot and have the type than in and is brand Europe, have Coach of was where I to really has think has What are are are on stronger the always Asia made to why interesting the markets betting Vuitton that question. quarter-after-quarter Asia has gaining this, It's the have brand picking brand. great say in the in European - markets we on the the a share are Vuitton, their through Louis markets Germany that see very advertising progress and like of U.S. We these and it's but responding We that's for

Operator

proceed Our the Hamed your with question. BWS with Financial. comes Please from next question of Khorsand line

Hamed Khorsand

sales that a falls this is of first had prior was really year, of fourth the I The about versus into question shipments just just quarter timing that the years?

Russell Greenberg

of don't just I in know what if I respect I had the that a targets fact timing was - to in we launches. expecting like that a say are anything There what sales. QX, our pretty blockbuster think where before wouldn't this Again, that or we came our that maintained really that. we on year a we much it's guidance sales there indicates were during is The don't bit with no exactly - consolidation. were little

would we numbers So the didn't major surprises much came we that pretty any have very really expected. as think were we and out pleased

Hamed Khorsand

into because your closer quarter-over-quarter I referring you to it source that's be has was X%, drop-off my that will is implies Well, from. drop-off a to of QX, historically been the where coming it my guidance XX% go question when

Russell Greenberg

when But your so a don't a out the from basically quarter you with don't sales cause have to Right. And sale, holiday network. you have launch continuing next. pipeline season, a your one differential could day in every coming that just distribution you blockbuster the are

Hamed Khorsand

then as it as the mix or ads the goes, - same is digital between strategy the And there far much traditional change as far goes? pretty are in and your a is you where spending as

Jean Madar

digital quarter-after-quarter. increasing are we No,

represents brand-to-brand. varies our spending adverting it brand from XX% spending, some now For of but our of it

Russell Greenberg

of perfect community. targeted on advertising towards most really Yes, I example mean Sui would the clearly done Anna brand the the is I community the is the which say Asian digital. Anna the Sui brand young is and

Operator

gentlemen, we call of And our turn over session. back closing Russell I for Greenberg like to remarks. and Ladies to end would the the have question-and-answer reached

Russell Greenberg

and We Thank comments. appreciate questions you, everybody. your your

tuning our for all you putting our and where for guidance XXXX, into will for on press be our call. will everybody Monday evening, out please XX, we release November conference We forward - look thank

day. my further usual, office. if a great me can questions, have contact any you at have Thanks very you and As much

Inter Parfums (IPAR) 6 Nov 182018 Q3 Earnings call transcript