Mr. Greenberg also pointed out, “Similarly, the average dollar/euro exchange rate normally benefits our gross margin as over 40% of our European-based operations net sales are denominated in dollars, while our costs are incurred in euro. However, current second quarter sales had a high proportion of value sets, which carry a much higher cost of goods than single unit merchandise, thus mitigating any gross margin gains obtained from currency fluctuation. Promotion and advertising included in S, G & A aggregated $30.4 million or 21% of net sales for the three months ended June 30, 2012 compared to $22.5 million or 19% of net sales for the corresponding 2011 period.”
He continued, “Based upon results year-to-date, assuming that the dollar remains at current levels, we stand by our recently updated 2012 guidance calling for net sales of approximately $632.0 million, with resulting net income attributable to Inter Parfums, Inc. of approximately $35.9 million or $1.17 per diluted share.”
Reviewing the second quarter, Jean Madar, Chairman & Chief Executive Officer noted, “The growth in European-based sales was all the more gratifying given the absence of major new product launches. As we reported, in local currency second quarter sales of Burberry products increased by 34%. Lanvin sales rose by 13%, Montblanc by 72% and Jimmy Choo by 13%. Year-to-date growth by our smaller brands has been very encouraging, especially for Boucheron and S.T. Dupont where new product launches for Jaïpur Bracelet and 58 Avenue Montaigne, respectively, were on a relatively small scale. We have Montblanc Legend for women and a Lanvin brand extension called Jeanne Lanvin Couture also debuting this year.”
On the subject of U.S.-based operations, Mr. Madar again pointed out, “In addition to the inclusion of Anna Sui fragrances, second quarter sales benefitted from the introduction of Miss Madison by Brooks Brothers, Wishes & Dreams for bebe, and a new men’s scent, Wildblue for Banana Republic. Continued sales of our first Nine West fragrance, Love Fury, and ongoing international distribution of the U.S. specialty retail brands in our portfolio also drove second quarter growth.”Mr. Madar closed by saying, “As previously reported, Burberry will buy out the brand’s beauty and fragrance license rights from us for €181 million (approximately $220 million at current exchange rates exclusive of receivables, inventories and other tangible assets) on December 31, 2012. We have planned for this eventuality and face this new chapter in our history with confidence. We expect to begin 2013 with nearly $250 million in cash and shareholders’ equity of approximately $375 million, placing us in an excellent financial position to support the growth of existing brands and further enhance our growth potential by seeking to add new brands to our portfolio either on a proprietary basis or as a licensee. We remain confident that 2013 net sales can reach approximately $400 million, generating a better than 10% operating margin with the remaining brands in our portfolio. We expect to issue more precise 2013 guidance as the new year approaches and we have greater visibility on the timing of new product launches. Our 2013 new product pipeline currently includes new market entrants for: Lanvin, Jimmy Choo, Van Cleef & Arpels, Balmain, Boucheron and Repetto.”
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