Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for the third quarter ended September 30, 2012.
Third Quarter 2012 Compared to Third Quarter 2011:
- Net sales decreased 3.2% to $166.3 million from $171.7 million; at comparable foreign currency exchange rates, net sales rose 2.0%;
- European-based operations generated sales of $148.6 million, down 4% from $154.7 million;
- Sales by U.S.-based operations were $17.7 million, up 4% from $17.0 million;
- Gross margin was 60.8% compared to 62.5%;
- S, G & A expense as a percentage of sales was 47.5% compared to 50.0%;
- Operating margin was 13.3% of net sales compared to 12.6% of net sales;
- Net income attributable to Inter Parfums, Inc. was $10.0 million compared to $10.4 million; and,
- Basic and diluted earnings per share were $0.33 compared to $0.34.
Through the first nine months of 2012, net sales were $477.2 million or 12.0% ahead of $426.1 million in the same period of 2011. At comparable foreign currency exchange rates, net sales rose approximately 16.9%. Net income attributable to Inter Parfums, Inc. increased 11.8% to $31.5 million or $1.03 per basic and diluted share from $28.2 million or $0.92 per basic and diluted share.
Russell Greenberg, Executive Vice President & Chief Financial Officer pointed out, “The strength of the U.S. dollar has had a significant effect on sales and gross margin as the average dollar/euro exchange rate for the three and nine months ended September 30, 2012 was 1.25 and 1.28, respectively, as compared to 1.41 for both corresponding periods of the prior year. Over 40% of European-based net sales are denominated in dollars, while corresponding costs are incurred in euro. Thus, while a stronger U.S. dollar has a positive effect on gross margin during the current third quarter, gross margin declined slightly due to product mix and the sale of certain slow moving goods at a discount. On the other hand, S, G & A as a percent of net sales decreased primarily due to reduced promotional and advertising spending as last year’s third quarter included the largest product launch in our history for Burberry
. Also notable, foreign currency losses aggregated $1.4 million for the current third quarter as compared to a gain of $1.2 million in the corresponding period of the prior year.”
Mr. Greenberg continued, “Our business generated cash flow from operating activities of more than $20 million year-to-date. We entered the final quarter of year with over $240 million in working capital including nearly $26 million in cash and cash equivalents; and we have no long-term debt. With this strong balance sheet and the anticipated $230 million cash infusion from the buy out of the Burberry license, we will be in an excellent position to continue to build upon our existing brands and invest in new ones to drive the future growth of our business.”