IPAR - Earnings call transcript Q2 2021

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Operator

Greetings, and welcome to the Inter Parfums Second Quarter 2021 Conference Call and Webcast. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Russell Greenberg, Executive Vice President and Chief Financial Officer of Inter Parfums. Mr. Greenberg, you may begin.

Russell Greenberg

operator. much, very you Thank Good morning, midyear call. our welcome to XXXX conference and

discussed. results XXXX, projected we for to and results. may this statements, annual uncertainties other cause report not always, discussed conference contain from risks our unknown the ended time but under Securities and materially actual in from may year that limited As the These factors with call reports intend Risk are factors and We headings and Factors risks, and December time and forward-looking to Exchange to different be known XX, the Forward-looking which include, involve file do Form XX-K other to Statements the on not Commission. uncertainties referring operations, Prestige Prestige owned our primarily rate sales of note, second States-based When we respectively. of no we undertake the our conducted average SA. and refer in XXXX dollar-euro second When to we sales our of primarily and the conducted discuss information subsidiaries. domestic European-based talking Fragrance about products subsidiary, Interparfums and X.XX XX% quarter Fragrance Of through United XXXX duty to X.X French to the we through for X.X are exchange to wholly-owned quarters operations, compared the are our was XXXX, update products

and are net quarter, operations of affected, COVID-XX has days impact of the have on favorable also our due negatively down European last incurred a almost the in in that world pandemic. is our costs than treacherous I much a euro their closed while second denominated listeners As are remind the while are know, sales, the U.S. gross versus dollars, of year's you to of margins dollar weak don't all of because sales to net euro. actually XX% that more

What a minimal. visibility Since halt, announced guidance XX to When makes. as difference ground company. we nearly a November, in our a twice. in its then, the make initial extremely and the of and was years time, jurisdictions range our quarterly benefit challenging. regulation changing have continue a we ever and acceptance distribution recorded loss COVID-XX year vaccines to public sales annual and guidance the projections we XXXX of Our variants, various first last of the with raised wide Today,

on good the on to our issued better were the best half we sales XXXX leverage XXXX between and gets. release focused same In operating business. quarter quarter the as in comparison second than and the second Moving as today's news expectations the that resulted far XXXX. first it we yesterday, was periods with

continue during will with that call. this We format

ahead second XXXX XX% $XXX.X and are U.S. ahead operations our first running of up of of by nearly quarter first XXXX. European in up half, with the million XXXX's quarter over sales sales by were $XXX.X sales XX%. Second XX% million half, the operations Through of just XX%

in the resumed in which SG&A For top business in and months travel somewhat. The a period decline hires XX% quarter margin the the several XX% operations the But from proportion XX% XX, XXXX, year, of in and compared our -- we in this XXXX of comparison, second expenses represented to expenses in and U.S. and European SG&A, compares XX% hiring XXXX. ended in new that respectively, compared risen same was SG&A quarter included X which to versus freeze contributed XX% of same of of for to gross XXXX, compared XX% the quarter advertising, XXXX. in expenses XX%, was to that and XX% second expenses or XXXX. made quarter gross to at profit XX% the period XXXX. has $XX.X of have in second of in that was sales the million promotion XX% from the not And sales. is -- is to of a operations, 'XX euro U.S. dollar rose sales to overall, XX% and net $XX.X and SG&A second decline XX% promotion sales advertising XX% came net represented way margin net in European XXXX. net After in net expense line X in in has million operations, administrative slight XXXX, XX% for operations, By growth. reduced sales. or only June the for

continue net sales we million based whole, to another we $XXX year of guidance, a a basis, full expenses approach advertising as sales upon historic in year current levels change the and around our $XXX costs, that in million on have implying our has half. on to be expect total, in monitoring or with especially would significant promotional of approximately impact pricing, For Thus be these very operating XX% budget far, have to a did to closely. we spend effects outlook. This the transportation second QX, inflation not costs, very, will begun which results,

was working provided rate capital first acquisition, $XXX our debt XX-year to quarter closed second which equivalents quarter fixed period cash, and of XXXX. $XXX of XX, was XXXX. loan. same a million $XX.X $XXX XXXX. versus second operating for came a of activities by this Approximately in X:X. the by in half million swapped working the margin EUR in over Our And relates months XXX Paris ended cash operating million approximately June Cash with operating aggregated including XX% million long-term the our short-term in for ratio investments for debt. of EUR first margin capital headquarters XX% bank at XX XX% X million We compared to financed variable was and XX% in million, debt rate half, The of the the

in have diluted EPS we to resulting we of raised million, and guidance our sales $XXX last reported As $X.XX. month yesterday, affirmed XXXX approximately

adjustments that exchange Once levels and in resurgence and pandemic. Our based at COVID-XX subject significant pending orders no make levels. average there the guidance dollar-euro assumes upon will we closes, the Ferragamo rate deal is of and the the current remains inventory guidance revisit

turn Now call to over I Jean. the will

Jean Madar

you, morning, Russ, and good everyone. Thank

can we Our outperforming is sentences. Business message today at all the are Demand virtually budgeted what in is our booming. brands strong. very summed the be X up And beginning year. of

Europe Western smaller to and South So details. let in XXXX, first Sales and me that's XXXX, over of and into half market, Sales largest sales first That huge. Eastern half Through and our the markets, were XX% America, first move North relatively half respectively, declined of sales and in Middle with is as X East the of XXXX. ahead, our rose flat XX% in in Asia the America, while the Central pretty Europe XX%, XXXX, good. XX%. were compared

Coach Our Jimmy running Montblanc, are for Choo, for largest XX% GUESS X% the XX% XXXX XX% X XXXX. compared of as ahead Montblanc, brands rose of to first for GUESS for Choo, Jimmy and and Coach half

that recall XXXX, launched less may the Montblanc for hence, dramatic we and in comparison. Explorer You

around Although barely is slowly resuming, our the on noticeable. have represented been good. That travel net business quite duty sales. sales business international impact historically said, online is this retail of our Pre-pandemic, XX% travel free

not products Internet across do directly are a multiple reminder, platforms. we sold conduct with but Just consumers, e-commerce our

licensors. Tmall sold sites websites of and specialty of and products our Our through the websites the department and Amazon stores stores, are like mega online

minority effective well related XXXX, because doing been acquired On with in growth. we subject, minority the But it's strong Origines-parfums, interest July consolidated. has a a are itself which not sales quite interest,

Of is course, month the Ferragamo. big news over the last

expertise brand will large brands, to welcome to strong origins worldwide. brand's and that to portfolio Ferragamo distributed delighted been suite China very which work advertising, a and XXXX, men's generations in for consumers. elevate the has Ferragamo dating X. are we fragrance sales, a classic quality-driven the our we markets, confident potential, 'XXs, our of the the along exquisite bring are luxury With officially in and the product America, timeless established women's largest of packaging, we encompasses profile, brand's which Italy have marketing will and are North fragrance studying early development, where especially of Parfum presence. produced the brand's in and October We with its the to From happen fragrance Ferragamo its distribution is a that

business, We molds, wholly-owned tools, operate into we of the will Italian the Florence, including are a subsidiary, manage, which inventory, are folded which assets and Italy. purchasing grow in

X-year in including at Ferragamo's also optional agreements [ph] a the with license contractual the worldwide exclusive of with and are obligation, suppliers taking agreement royalty distributors. we customary closing, In employment and a agreement, on requirements course, with are Group as Salvatore advertising with, extension and minimum sign acquisition We agreements with the XX-year industry. will Ferragamo conjunction

for Salvatore because continue the we our new legacy has Parfums providing Our their brands and The Group plan not the that entrusted new And Italy. be to its in XXXX of up both to we launch enjoyed produced brand. product have partner fragrance potential. have fragrance calls as to have products targeted lived for fragrance first Inter success Ferragamo for

remains believe are brand current is established by have fragrance their which our and their We selective Growing we names we our and have brand grow the that the the within network. luxury necessary with whose distribution high reasonably to portfolio fragrance Ferragamo yet. focus a global attention owners business to framework a on not resources made business Group Fragrance devote commitment But within to priority a large done underserved a have Ferragamo the distribution established licensee.

We not very and up the on world. to challenge this that have of potential living I sales. our been acknowledge to to are want successful the taking brands other their opportunity taking suppliers their who fragrance throughout reinvigorating use

been during [indiscernible] surge maneuver the sales. and in have fulfill as Supply were and before recent maintain Our issues. these sufficient of that we finished were to in the cemented but weeks, able resolve more been the reasons knows, why [ph] and was book to have to challenges prevalent them able components good relationships everybody the been always with and orders inventory and we have pandemic, here chain among through

Parfums Mid Conference, number December including with XX of which and in Before we September X. questions, will to to went X a from December Cap Conference Citi Consumer conferences, taking Inter Global virtual investor some share on participate want dates Consumer Citi your you. the

at will XX. our X to are planning look unfolds. XX also We to we Tuesday, West November And XX reporting October year present virtually Conference, a.m. Shareholders forward Jefferies again the progress Coast also, on the on We of as and November Consumer Annual Meeting once at our host

we the questions. to it's floor XX:XX. So operator, And open can

Operator

Instructions] [Operator with Linda comes Bolton-Weiser first Davidson. from question D.A. Our

Linda Bolton-Weiser

about, I quarter up compared of sequentially. quarter the 'XX. actually, 'XX, like just curious second But margin. just to your first if compared it was gross the I comments at went it So actually you look to of on Russ, it mean you

just in curious the the I'm that quarter. because why So unfavorable is actually is second comparison euro

second the color Can than in So higher give on a the that? first just quarter little quarter? why gross more was the margin even you

Russell Greenberg

-- that that lot gross And Linda. in fixed Certainly, in X-month for A of leverage the are and to the much to of costs some the both it is and due actually being up of us sales increase period. the able included margin. it the the X- was

you so that higher, when States, of the As tools is especially in to of types expense fixed more the able a that here sales know, that's are molds, better certain margin included and in you're of leverage United those expenses. depreciation gross

that that the of this during increase and percentage XXXX, of more sales, in course of gross gift the operations, attributed in total And that sales European were percentage quarter the and than a addition, during goes the sold the sets in XXXX. are for that period. to of whereas the much margin number In also less the

Linda Bolton-Weiser

you then sizing know brand? like of annual license, that us Ferragamo the I on revenue of And can Can some long-term maybe a versus of bit perhaps I size you Okay. it the it how color And do up then franchises? you little a give has sales. more other existing the currently? your mean just potential give see

Jean Madar

try Yes. Russ, do want you answer? to to

Russell Greenberg

impacted numbers, want gone the needless see don't lot it and Ferragamo was last really to severely sales publicly really years. and in and information Ferragamo Yes. during really of online the many, double X traded, say, their is the so But as I high a The were year to for of the a not of you disclosed fragrance result yourselves. many fragrance have was We the course And pandemic available this business digits publicly can out to. COVID-XX years. for

the public there, it that? to Ferragamo out So levels agree able do goal where enumerate that's is. to you probably enough information is to its research figures that reinvigorate you back dollar want the find our seen yourself. put probably domain on has I be last XX specific really and to but don't really for and XX, bring years. that in the -- there's And the Jean, for and could it goal really

Jean Madar

sure information it the again The proposal Ferragamo [ph] during because to fight so in public, know were for environment. by we met going at while. but Yes, licensing fashion was alone decided house. them a we not very really for -- run look this the is difficult of to management I'm their -- But and pandemic fragrance internally our Ferragamo so

So by is strength of other our Ferragamo will from Ferragamo joining our from benefit of distribution. stronger. strength our portfolio, much the brands, brands, from the

have to brand. And with in will think achievable, to The perception it's issues to fragrance big ourselves absolutely were the have market. XXXX, top is an existing the the business known, X any a all them give we luxury strong at plans for brand We reestablish need and of don't -- in totally the X years level new as fine. be just we back with the the idea is the they We pre-COVID. elements in that product to we Ferragamo. There that is of be launch brand.

Linda Bolton-Weiser

is I Or Are margin -- just yes. third you guidance? becoming your Okay. you pressure of you your Or so mentioned yes, quarter. the I in are And offset? kind from Can little then, including it's to cost in more inflation just included costs? any in can guidance a -- changing increased specifically hoping what bit exactly that and

Russell Greenberg

a... Yes. That's

Jean Madar

freight sorry. going -- we up. at we true have that's that the cost. look certain have, we cost going guidance mentioned, our up. Like part I'm In the And guidance of worldwide course, are the of In goods our is of Russ

is So freighting up. our

So supply. have and the up. we also is on our cost a of bringing moving major components challenge But components worldwide

in into for All So account we have increase. is our accept price new our taken this in certain to Russ? -- guidance. China already new

Russell Greenberg

was When this what -- recently, we are most supply includes going was some it to the effects we definitely sales our when I XXth, say. sales of the and chain exactly were seeing. I back, that's the guidance issues guidance Yes, that revised we prepared of The announced issued think the new on seen. really faced we're to the basis up, area absolutely margin was That additional take we Transportation biggest consideration. -- in into XXX% inflation some to we've a From relatively time. conservative that cases, transportation are the some incorporated that's a of standpoint, current the costs at XXX%. that that costs have with

the and from year, for do components dive we a at we've into country, to some can as So the moving to country of consideration are But of numbers taking the we've those the effects. as increases. order far we deep around that share projected definitely of in what looking lion's the taken potential get remainder

Operator

with Our Jefferies. next from question comes Wissink Steph

Stephanie Wissink

the is can think for in you there through cadence I us do semester. kind also a to how if model want Or have A&P weighting of back us Russ, I wondering marketing. I for the half? on was a you this QX? few one second could. QX, quarter, Is you by help questions, if on the

Russell Greenberg

concentrated is standpoint, what the Certainly, expenditures in from and advertising always they from a from will are in relatively be trends, past. sales probably much QX than upon more Yes. based standpoint we the our in an see closer sales together QX. have But advertising than QX QX

we've -- XXXX it, Moncler put of QX know launch In coming in of marketing anticipation have a anticipation marketplace we XXXX to fragrance. we're the an fourth quarter. Moncler in small for and the And for into Moncler, addition, the up of the in probably the launch call of we already kind to initial, exclusive allocated in that that of new advance in spend certain dollars going prelaunch

in So that QX are going definitely concentrated QX. things I be to say would than much more

Stephanie Wissink

your And to what's Very relation right. cost. do, And Linda's for to any about is in you helpful. you thinking just give you question notice? market raise raise on then should you plans to in second on All What price? How be pricing? my product to implement? already? have price Do question Do quickly the process have the if we like-for-like can retailers

Jean Madar

that to a more competitors we X. of customers it. long have are all will And have we gave on for raised because do most time ago, have we seems to not so this on We not X, price than our decided Yes, certain prices increase that but years, notice a prices. accepted January this increase X was our August quite doing we Reception don't often. it was

X% increase issues from So we see we X%. talking are about any that anywhere to that. Price didn't is with

Stephanie Wissink

by my is It's is picture, last thinking And channel turning just by COVID, the destinations little this in are or Jean, coming you, Has been expected? of seeing the and you differently consumer back distribution bigger engaging maybe helpful. you're change there would different impressive behavior about point any one, Very really so specific been where bit just how up have out year-to-date. maybe, consumers than for in category. backside a of

Jean Madar

really, forecast. changes. be is what because the to The business the -- we department that stores continue cannot It's Not specialty all are the any don't and good, also -- on we because and today quite way is receiving The really see business they business good. online see I fulfill orders way, impressive are strong. we is above Well our channels. perfumery but

next are So of has only X. nobody can would some they have inventory. quantity -- the lot to like a stores complaining more we or because the definitely, stores month they that in the see sell Nobody Actually, inventory.

fast. a is We very, inventories position. good are The very stores very moving in at

basis. daily a on shipping are We

basis. weekly store, Some

products Some stores, move the very fast.

-- in years I seen have for our a brands. I a not for time. We don't the seen X remember strong demand such long across have last this

Operator

with Financial. comes Khorsand BWS from next Hamed Our question

Hamed Khorsand

comment Just just you think? share, do on that the up inventory. pie you're expanding actually than faster or think -- about Is the you you picking is it made entire

Jean Madar

markets, one we in to shares respond because we the ship were were of first one again U.S., picking the one again. We and ones in certain up to the in So first are definitely marketing advertising. of

some are we different. not share. slower open bit little little So definitely, Europe, bit In it's are a because fully as a speak. taking It's we market markets

and off. China, are it's we market and in in on the So U.S. taking definitely share. But

Hamed Khorsand

comprising now? stores right you the And as revenue for they your assess what you? normal back do duty-free as far of to Are

Jean Madar

No, no, no.

very, very We far normal, far. very from are very,

in it comments, present business. As close my XX% I to used said to our of

We some seen are far. course, still of have Hainan. very, Free, some We've very Also, some we Korea are with, business strong Duty business Chinese travelers. strong China we in in seeing

So percentage below Free, in of we retail. normal way But travel free is Duty Korea China overall, our Duty outperforming. way, are sales

Hamed Khorsand

was And assess this your year? be Is as robust do my was, going describe you question or 'XX launch final it product how to plans? it as

Jean Madar

launches, And, We have launches. of mix flanker call a line running. of a to what very blockbuster course, the important the we keep

have we really positively. market all at of quite going looking is a and So our The we're standing there programs great forward. mix

our manufacturing this to -- why more problem making and in forecasted. more today is demand the the twice not all But demand. already So order sure our we was guidance. raised inventory to all That's supply have

give company the is conservative As when you guidance. know, quite we

we challenge wait little we say, just before orders, a is the So have again. or to I we bit supply have But customers, them. the another review have month more, we'll will we X

are and to problem have, it's well. doing So quite good we a

Operator

no further the for remarks. turn management at to call questions are time. closing this back There I'll

Russell Greenberg

our for call. you. you all tuning Thank into Thank conference

call. further you the contacted questions, stay you Thank do email. As once I for usual, any have well can by if Stay and safe. again into tuning be

Operator

parties All disconnect. conference. may day. today's great concludes Have a This

Inter Parfums (IPAR) 10 Aug 212021 Q2 Earnings call transcript