Earnings call transcript Q2 2023

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Operator

Greetings and welcome to the Inter Parfums 2023 Second Quarter Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

As a reminder, I'd like to remind you that this conference is being recorded.

At this time, I'd like to turn the call over to the Vice President at the Equity Group and Inter Parfums Investor Relations representative, Karin Daly.

Karin Daly

Diego. you, Thank

to the unknown Executive on projected be Michel will Chairman that which actual would be On may cause conference Joining forward-looking may uncertainties contain Jean call different and Madar; materially results. Chief statements, like I company, Officer, of known Officer, to that and and from this behalf call and us involve the today note risks, Chief results Atwood. factors Financial other

in found Exchange subsequent be report may company's heading filings Statements and factors These XX-K Factors quarterly annual Securities the the Form XX-Q. most Commission Forward-Looking and with on on Form recent the under filings in and Risk our

Inter Parfums no update speak information to only undertakes discussed. of the statements on as and which date obligation Forward-looking made the they are

begin. my to the pleasure you turn Madar. Jean, to now call Jean It's over may

Jean Madar

Karin. Thank conference Good and second our everyone, quarter you, welcome call. morning, to

aware are to quarter. us increasing is in of during the share, industry With are have already upward trajectory. of our momentum optimistic that continuation continue we to a pleased market the fragrance that Most we be our and booming seen

that but our and all In the not of meet fire to consumer. distributors experienced we very also attract, ensure fact, and on cylinders only retain needs both retailers new we to continue to the

sales XX% regions, respectively. had net Europe experienced top our two comes a quarter, robust consolidated already and On region, North XX% basis, Beginning prior which and net for America Western in business the of by a on we second period sales quarter. This with XX% largest XX% increased second the increased year our in growth.

business thanks very we China, we well and Asia, and grew strong XX%, Asia challenges to mostly In Southeast Australia. doing despite are a in in

and East, the We regions, significant XXX% Eastern respectively. XX% in other up Middle and growth Europe including also experienced

of retailing brands business, travel digitalization process the demand as boost in see and We luxury premium our continue in a life increased particularly sales. for to retail in renewed and sector duty-free observed

by Interparfums to that sales brands, European XX% our driven through called primarily increased SA, net based Montblanc, French subsidiary Choo top-performing and Both respect $XXX With Montblanc sales six increased for and surpassed respectively million prior our Choo our for XX% Jimmy for operations Coach, Jimmy and months compared XX% owned to Montblanc year. the in the by XXXX. XX% Coach, of first XX%

the strong $XX $XXX at were lines Montblanc million of in of half Legend the Explorer lines, of of sales Platinum quarter, was Montblanc the by first and Montblanc recently included reinforced Explorer the for the the continued million XXXX. which Growth introduction the outperformance drivers growth extension. Montblanc

sales for Jimmy the the Want at of continue formidable debut of after Forever to XXXX. in be XXXX launching Choo in by also XXXX the want and success in million Choo $XX Jimmy $XXX XXXX. were and Choo quarter, I boosted to million Choo I market international Passion, half first Rose Jimmy Sales respectively. Choo were an late flankers, two which early also came

de Girl additions. Life, achieved in in Rochas quarter addition Other eco-responsible Coach of Coach new as the fragrances, timeless sales the were any [Lanvin] the re-launch saw which Rochas the in saw And for brands Rochas and and demand from strong growth which to without own lines fragrance Eau an modest genders line. The quarter experienced all sales Green. both in increased new drivers growth our Love Coach nearly steady growth

activities communications and may subject coming licensing marketing read of the for all Interparfums that fashion will On Rochas, have and the and business. the both manage now beauty SA the you

sales growth continued of of XX% from brands. increased second operations, our the the domestic Moving success wholly onto our XX% top healthy XXXX quarter U.S. owned based the net our during of on subsidiaries,

than made the more in XX% increased first challenges from GUESS ERP in which the experienced fragrance sales, up all quarter implementation. quarter for geographies the across the and

Blue in sales our of performance driven quarter Seductive U.S. pillars Acqua. the GUESS second by Uomo and The was

Touching on we're shape the implementation, ERP in much today. better

While and full additional many we to we fully benefits continue like to of the capture would end new tunnel. the train We still the have light implement to enhancement, our of have system. teams to the at see

transition. are providers support to working on Our thank to teams their unwavering organization weekly this and with I subject this and we experts work matter during ensure opportunity the want track. for remain external critical to hard take

the Ferragamo Looking its Storie selected which Seta at sister enriched with perfumes of Harper's Donna become has recently based and And Ferragamo Libera time famine franchises Bazaar share bottle Karan year's in were momentum collections. and irresistibility the our the inspired of that di in scents, Signorina DKNY U.S. new would in favorite one also to strong brands fragrance, and XXXX Signorina largest quarter. just I second finally, design. experienced magazine sales noting the stylish combination like of

have brands across we our of exciting of in the extensions during an of Our half are the and brands year. lineup many demand and second high

we the As will Matieres; later Abercrombie launch Parfums Van & Cleef and Fierce Fitch Vita disclosed, [indiscernible]. in And previously Lagerfeld, to GUESS, joining year, Les Arpels expect portfolio. our Bella & be Paradiso; Karl

Moving industry. in key fragrance themes onto our the

same this modest of continue and the We the then, incremental continued a very of see to sales for On and has call, portion patient And book. our mentioned the recent at at back improvement. continue China I China the and visit my small most be last half to pace. we of since anticipate signs to XXXX into XXXX moment in China is as we growth momentum

though we to time our take are advantage Over supply able leveled are and out. components order in opportunity. notable to disruptions region. the and on no chain have are expertise concern, continue behind impact both deploy market our of And inflation. this immense will chain will the inflationary the longer Supply We'll to right, when and topics, is ready us be mostly monitor generally

for over are well and to positioned call before strategic the execute acquisitions Roberto to Italy. the in as to become comments July, will Most continue brand, few managed Michel, CFO. fragrance in for and on today which into on favorable our A is worldwide turning Cavalli our all we recently, team landscape selective they enter by license Competition an we extraordinary the us competitive available. be exclusive

believe that from with and both Middle it's sophisticated, a encompass these enthusiasm flamboyant of believe this luxurious can acquisitions and globally in in younger world fragrances recognition young Our Roberto East in recognized the America, stems Cavalli And name, maximalism design for are in appeal customers contemporary be Cavalli. Europe, of We minimalism. that to and so we it the its part.

corporate the of portfolio to the our our licensee current distinct name - welcome to We are proud be to brands. and

we followed introduce blockbuster in by into XXXX. two Going XXXX, to expect brand extensions a

Michel? financial our Now, I it over will Michel to to turn review performance.

Michel Atwood

Thank Jean, everyone. and you, morning, good

starting, make maybe I wanted correction. just a small Before to

of of I the XX% growth think section, about in quarter and Choo in Jean's is he growth the Jimmy growth XX%. of was the talked Montblanc, Montblanc the

So quickly FX touch as year, impact know, had far it's to major XXXX. going I'm so only on But this you been a FX. in Obviously, all marginal.

impact adverse sales X.X% so XXXX, it marginal. For an half, the of favorable second had net has had year-over-year while year-over-year relatively the first for impact on quarter X.X we a

the consolidated basis, Moving during profit. gross million profit to On gross a on quarter. increased $XXX XX% to

margin sales, of though percentage - gross approximate a XXX approximately by to basis decelerated As points.

price the was channel while during certain have sales for $X growth, we our by inventory release, in registered As inventory to built conservative and you've reserve from related European of a this scale pandemic mix, increases our we million which brands level. benefits within our brand seen press protect favorable service and one-time offset underperforming operations to our

period XX points a adjustments. have Excluding this one-time year compared gross year-to-date basis flat period. charge, the by prior versus margins gross year margins prior the to expanded would are basis, before On

would net basis adjustments, actually we down be by XXX points. of But the

XXX XX. points operations, For ended margin periods. And XX.X% operating-based for was of down three six to sales XX% European-based and gross basis and the the that corresponding is compared months and - net XXX prior for profit points basis June

This before. described just inventory obviously includes the adjustments

points basis adjustment, prior on as compared XX operations the margins channel pricing European-based took mix. and period second to brand this contracted quarter, year would for enhance gross by have expanded our Excluding year-to-date a and one-time but basis we in

sold the of The up stems for brand expansion from basis increases price factors, months a distributors. margin margin number basis channel And is and XXX points States-based and year retailers XX. a third being For United six party that to sales opposed largely ended higher periods. significant as respectively favorable operations, XXX obviously directly June due to XX.X% our XXXX, and XX.X% prior fragrances of took higher-priced was gross points and profit and three early the as net to portion of compared to mix, we

been only our last FIFO our by the accounting. and call, has on inventory stated As moderately cover affected margins

there fixed compared prior in sales in to increase significant of is the point that allowed absorb sale first is to of period. note if 'XX depreciation better as expenses us to thing and Another the half year expenses

All helped of these with have this margin obviously expansion.

to for turning increased a dollar $XXX quarter. basis, On Now million XX% the expenses to SG&A SG&A.

However, of given percentage net year sales XXX points prior a our growth, from XX% improved sales as by basis SG&A period. the

the SG&A operations, XX.X% as XX.X% and and compared first year respective respectively XX.X% XX.X% based the to half net in for sales represented European For and current quarter of second prior periods.

operation same increases in XX.X% have for as which new second based the the XX.X% period about SG&A periods in XXXX. of licenses. impact X.X% of for as the promotion result - The support as a our to million included year. percentage XX.X% and based the year for of compared in our and respectively generally XXXX primarily are and This operations advertising throughout expenses U.S. investments represented and first to structural net sales of the half quarter. first as increase order net that in are operations, we the the with for represents in prior line half SG&A in in at For and SG&A Royalty is well the U.S. U.S. quarter sales XX.X% of last the $X annualization made

and promotion advertising, industry. which Moving of an our integral onto is part

to advertising anticipate awareness net on sales. new year continue product of to heavily and spend approximate and will to basis We a full invest XX% build brand launches and support promotion

For ended and promotion the months represented sales. six advertising XX.X% XXth, expenses of June XX.X% net quarter and and

order picks to the the a holidays. the due half, in fourth business, of generally normal As quarter promotional especially up back advertising in

and maintaining million million X.X of Now to cash cash moving quarter to with approximately working working including equivalents $XXX short-term closed $XXX in ratio and our capital we capital X. investments, cash, second of the

and with growth. and period based Accounts of continue is days XX% in see working the to growing levels outstanding XXXX We XXXX our second sales days from strong XX as up from days reflects capital previous quarter collection corresponding activity lockstep year-end year. reasonable the XX was sales record down the is balance receivable in on

the and holiday Inventory levels as XXXX year-end XX% of June XXth support season. increased growth from overall also our and sales

carry especially know, to you to in protect volatile context a our like As service strategy is levels, inventory more have. overall we

trademark. Our and June SA totaled to Interparfums acquisition $XXX of primarily Lacoste at million acquisition the XXth, the long-term debt due the headquarters

As especially behind another excellent on driving us, on clear the the the we momentum pointed our we our future consideration can are and out. as reflect we confident achieve orders second brands market that of that half, strong first fragrance positive supply in for disruptions overall mostly and visibility half Jean year, with are

up As of in share full-year to previous versus net diluted XXXX XX% and guidance billion share, $X.XX diluted resulting per such, $X.XX earnings increased from have we of in $X.X our approximately guidance XXXX. per sales, a

for operator, the open questions. line that, please With

Operator

Please Jefferies. Our from with Instructions] Helgans question [Operator state your question. first comes Ashley

Ashley Helgans

our taking questions. for thanks Hi,

So your a couple this having the years. sets question, in gift I first know year be will first that

Thanks. we were Just that brands then And sales? about included give in you any how QX on us think the versus can write-off? QX inventory the should color

Jean Madar

Michel?

Michel Atwood

Yes.

last obviously, we supply know, I as year had challenges gift mean, So on you sets. some

QX and This sets the of fourth more of some And in obviously quarter from expecting moved we to to sales the think the in less gift we're quarter. year third sets have QX. gift

the look growth So growth seeing quarters, terms the as our year growth of in of four subsequent as three are at look balance we to quarter we in rate. quarter for we the more than

is at had are seeing the significantly, seen of We communication brands bit large that - growing the the slowdown Inter terms our in we've now some I had see there of is the quite colleagues Moncler. And you inventory right of growth of a we're what from can write-off, you've Parfums, pretty a In as base. a growth. challenges all think on

down two to any consume was we to when an decided hopefully we track it. doesn't right standpoint. we bring have be to beyond back inventory we we assessed these, our years all had that write felt wanted intents but we manage we're to prudent and mean on prudently some what levels, and that necessarily accounting from them of then that that we're So to reserve going needed Obviously, was inventory destroy

Ashley Helgans

Thanks.

Operator

your our with And question you. Thank Sandler. from Wolfmeyer Korinne state next Piper question. Please comes

Korinne Wolfmeyer

you. forward to with that at the look right Congrats going expansion. of previously the this or you at outlook did for year all? that morning, similar years give quarter. And the touch like write-offs good out talked Thanks if I impacting target good this color, on guys. of bit bit margin outlook margin saw Hi, of at to the hit How first the taking if the remainder as Thank about inventory of I'd margin kind on the target still we've year. little questions. little you a gross is and of is operating it And think kind kind this that you of XX% for a look well? quarter but

Michel Atwood

take Korinne, I'll chime you Jean, Yes. that. And in. can then, Hi, maybe

Jean Madar

Yes, alright.

Michel Atwood

projecting Right of still our now XX% that consistent an about we're income operating with guidance. is

Korinne Wolfmeyer

Helpful. then it. And Got the just you. A&P increased spend. Thank on lastly

the baking are some in you you year, advertising investments benefit As thinking increased from term? about how and for spend? term remainder the then think ROI the topline about And much that these the of near how both of of is your longer guidance

Michel Atwood

the strong consumption across promotional Day, The in think there of big is, we expenses. in inventory I basically holiday way Obviously, Day, consumption Mother's these happens world. right. what is Father's a mean, happen And season we key periods. obviously that inventory of drive selling the regularly certain store the consumption business in works are I like sell one holidays model through Yes, generally, and ahead in advertising the we Day is you key questions, number Valentine's periods then get December. our and and the are

inventory the subsequent is advertising end that, March. and which - the doesn't don't and go reorder years is sell-out a been and retailers' of quarter. February we what for strong your that in consumed it If what January, things essentially get If you do taking our happens is up then you back in in all now experiencing stores well, couple drives

ROI. that's we how typically mean, I really, So the really will measure

best been lot look in We makes where media. terms that our in towards at spend, invest sense. and of We've But and let we have typically expenses in where our return all spend terms shifted ROI. expenses Now generally obviously obviously, try ROI we I'll for have this, and of we in after chime it a speaking, we results to Jean on of we there's of we know where strong we the invested experience outdoor investment. digital where selectively

Jean Madar

we We feasible. XX% our XX% we to this inventory, do Americas, two margin. margin, spending be Digital South yes. split took our of will think though big the we see Europe. absolutely Absolutely, and for that that is the between a - we reserve a largest market, North is to chunk and back And this this to have and the the go even able

Korinne Wolfmeyer

Thank you.

Operator

question Instructions] next state with Our Financial. BWS comes your Please question. Khorsand Hamed [Operator from

Hamed Khorsand

Hi.

then about more at consumers just are growth little could releasing the options you're to So, by last as to all home? fragrances really provide just XX my your demand to as goes? first been level was, that consumer you've have home? driver on Is of bit tapped more months? seeing consumers products many as what question driven they over you what this out far how Is more use granular new the this being the really at X And expectations a having

Jean Madar

lines, growth through we also try existing see our good and question. we see to very lines our I it's in Hamed, in answer. innovations. What will

Choo, that products new So from than market. months have on more than growth top growth which innovation, is coming our and our having Donna bigger new lines, that et brand Jimmy products, have as blockbusters, see existed GUESS Coach, we're the cetera. such are still that XX flankers, That's that and and we And competition largest this for Karan. especially we for growth, see than we DKNY, why - are bigger of - growing, Montblanc,

we of quite didn't At didn't of the We to are things signs it And first - contrary, see slowness. see in good. see August. week any we be not do in do We July. the continuing it not see

We shipping are on to this our sets time gift have send year so them started worldwide. we

we'll quarter sell-through, end So beginning in a gift of we in said start Michel our stronger because to we'll like can January have And a have longer good third generate February. and sell-through fourth, or of we so new expect advertising businesses for sets.

well. quite doing are things So

Michel Atwood

Hamed, this. to Jean, on build Yes, just on, on

So, well why innovation all also rest of the the and lines, flankers curves historical flying reasons The halo working, are of is that. to and executed. on are one is well-designed first, the designed and intended but hero innovation lines the to our do innovation is this the the the right, our because

are On we don't a look again, and what a growth, is market are up data is up the NPD category. regular very you in an market The very for are strong. increase get data, in was is of significant There basis. XX% lot this but what around is data, is penetration the seeing seeing there example, entering at in in U.S., we again NPD June your question on clearly we're the new year-to-date consumption, clearly And people really if category. that resulting XX%,

we're Europe. also that We're and usage. versus under-penetrated seeing penetration seeing was more U.S. the growth Historically,

fragrance may the wearing also in to vice-versa. So more the one wearing a evening the and point usage people as be morning fragrance coming or you're asking in before,

and growth slowdown category in and at we time. point not the things these of are driving believe sustainable any this all seeing So we're are they

Jean Madar

strong very Men's they're try to you like as our growing Men's, the we but part a also see two with to men's than at Today would pace. used more one women's that smaller fragrance or willing we've very a than it know, to add fast only I business. is our fragrances. it's seen numbers. business, two and a in one trend And have or

Hamed Khorsand

seen And retail that just could the different prior as and you how are talk any holiday season QX retailers than far the it reacting? at you've level? years Is about build the inventory as

Jean Madar

on we do not try. or is can to EDI And retailers Most inventory maybe based I not are looking order Spain. in France, they the Europe, huge so problems I are much also inventory you us, any U.S. the know, think, they Western are them - see - light just the on the too create What carefully. in would as a I with through of their sale at very order will at season. are And only Retailers of quite and Michel? contrary, department stores before say Germany, in this backlog.

Michel Atwood

Yes, to more - really I was nothing add.

last weren't gift typically what gift challenges, what think happened available. - supply was sets year are is the because we I weren't of seeing sets

So able the more and through the sets I think basically a fourth gift quarter saw be number sold fulfilled in - of arriving second being probably and fourth the in to retailers quarter weren't we quarter.

sets So see earlier hopefully, should purchases starting with see have to to abating, we the supply are season we to see holiday chain should - a longer start we sell problems through. and -

Hamed Khorsand

Okay, thank you.

Jean Madar

you. Thank

Operator

from with D.A. next Our comes Bolton-Weiser state Davidson. Please your question. Linda question

Linda Bolton-Weiser

Yes, hi.

a last third gross the So margin more tends gift being think little guess, question gross your I to euro, plus would lower have with margin. all than on the sets stronger year year just hurt you margin, the this quarter, which a sales gift and gross be I sets

give flat Like margin a the half half, any can we way it of be if rough think So I the thinking Is year-over-year? specifically? of gross year-over-year you rough can up of there or in am second you should second wondering gross kind in be the for margin about do outlook sort year?

Michel Atwood

Yes.

are the margin ahead you And our explained, of are if - projecting look some the we in on first lot at erosion during we for of some now, margins projecting right half, gross half. during the now, of right, - explained been for remarks. prepared - reasons Right you've roughly flat. the the the gross second So - reasons have our I

obviously sets. with of we a One, have business our bigger proportion gift

European you margins The other growing and more aspect know our operations. are our as as rapidly than well U.S. our operations U.S. typically on gross lower operations our is

of continue play. into the increases the are - So our make those costs going come P&L. cost through to factors their to of obviously that our way some are There's that going also to through are some

So those factors. some the are of

in So second gross we - the right half margins the of now, we're modeling the deterioration for year. slight

Linda Bolton-Weiser

And by correct? - erosion, a on that mean is that basis, you year-over-year by

Michel Atwood

Yes, gross yes, absolutely, - margins year-over-year. year-over-year. Obviously,

Linda Bolton-Weiser

then, just I ask And you. can inventory. you Thank also Okay. about

creeping So the a it's getting bit up situation is that the better. shortage despite fact component

up of Or year? of just level I'm So, running on as are I another here? you in risk talk about for you can wondering like we inventory - a the certain a the write-off the are just guess Just targeting color Thanks. maybe future inventory inventory end some that. your creeps maybe

Jean Madar

No, level right at is we level. think the inventory our

not inventory. Let's decided to take that another in forget that in we we sales, years at have have will The nice good like big second not have do chasing have done quarter. this than before. that think stronger we of some position we so will inventory, reserve to we're I the instead the - - looking so And increase a

thing color sizes issue Linda, seasons. or don't quarter we is We the good with to as you our other the industries. when same But business, have at sell quarter after look product opposed or an

thing problem see high reserve have create of Moncler, we right to bought any - So levels that do to we do the other not we in inventory. it components certain think was the for the components this but at

Linda Bolton-Weiser

Okay.

Jean Madar

Michel?

Michel Atwood

Yes. more No, add. nothing to

Jean Madar

Okay.

Linda Bolton-Weiser

second quarter the down up you in can - the say was China whether year-over-year in quarter And sales? just or in

Jean Madar

do China have anything know, Michel, don't for? - you I

Michel Atwood

we're actually - moderate number. inventories, knowledge, but China relatively are is sales the of my we down run to Yes, down to continue our best again China in our sales because overall

Linda Bolton-Weiser

I much. it. appreciate very thanks Okay,

Jean Madar

Thank you.

Michel Atwood

mean, the don't of have write-offs. hold want inventory normally, I be rate. we I these just Jean's on to comment kinds around may

destroyed necessarily anything. haven't We

some we be. lines just the being them level above of feel specific like where above that we because for think was to is I components would - prudent we're

will more this mean doesn't be us is them off. to and decided this necessarily destroyed we've basically So that completely being write It prudent.

continue quickly, in some smaller turnaround. write-down quick very And to things if get X% brands, consumed get to can of roughly looking could of inventory. relatively particularly It market. We'll our small. monitor very, successful the And the mean, can very be these sales this. for remember you I move is a required a we're at these

it's in So the small overall relatively scheme of things.

Linda Bolton-Weiser

Thank you.

Operator

Thank you. There this I'll remarks. are the closing Michel for at no further hand Atwood questions to time. back floor

Michel Atwood

All today. our right. thank Well, for you joining again call

Next XXXX month, host September to the New Conference And at headquarters Nashville. return XXth and Sandler Piper we'll attending Frontiers be Meeting York September our to we'll on Growth our on XX. in Annual XX

recent like Annual from or can a have you the most earnings again Investor in for email have Relations questions, Equity attend Meetings Counsel. So, and great please Karin if Daly our your release. address the found Thank to Group, telephone day. you our be number any contact support Her and

Operator

you. concludes disconnect. This parties may Thank today's call. All

Inter Parfums (IPAR) 9 Aug 232023 Q2 Earnings call transcript