Yahoo Finance Inter Parfums' (IPAR) Brand Strength & Alliances Bode Well
Focus on strategic partnerships and a robust brand portfolio is favoring Inter Parfums, Inc. IPAR. The provider of fragrances and related products is benefiting from solid growth across European and U.S. operations. These upsides have boosted second-quarter 2022 results, with the top and the bottom line increasing year over year.
Encouragingly, Inter Parfums anticipates 2022 net sales of roughly $1 billion. The metric reflects growth from $879.5 million reported in 2021. It expects earnings per share (EPS) of $3.25 for 2022. The company reported an EPS of $2.75 in 2021. IPAR’s stock has gained 6.1% in the past three months against the industry’s 14.1% decline. Let’s discuss.
Impressive Q2 Performance
Inter Parfums’ second-quarter 2022 earnings came in at 86 cents per share, up 21% from 71 cents per share reported in the year-ago quarter. Quarterly net sales stood at $244.7 million, up 18% from $207.6 million reported in the year-ago quarter. At comparable foreign currency rates, second-quarter net sales rallied 24% year over year. Inter Parfums’ Europe-based product sales came in at $166.3 million, up 3% from 2021 levels. U.S.-based product sales amounted to $78.4 million, surging 69% from second-quarter 2021.
The company highlighted that sales in its U.S. operations were impressive, with comparable quarterly gains from GUESS?, Abercrombie & Fitch, Oscar de la Renta and MCM rising 39%, 40%, 35%, and 56%, respectively. Talking about the European operations, the company highlighted that rise in the dollar masked gains of well-known brands. Brands like Montblanc, Jimmy Choo and Coach rose 6%, 4% and 13%, respectively, in U.S. dollars. During the second quarter, management launched the Moncler duo, Jimmy Choo Man Aqua and Lanvin Mon Eclat.
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What’s Favoring Inter Parfums?
Inter Parfums is on track to expand its business through new licenses or acquisitions. Inter Parfums concluded its agreement with G-III Apparel Group, Ltd. GIII — to become the exclusive worldwide licensee for the Donna Karan and DKNY fragrance brands, effective Jul 1, 2022. Management highlighted that it is optimistic about the partnership with well-established fragrance brands like Donna Karan and DKNY.
We note that G-III Apparel designs, sources and markets women's and men's apparel globally. GIII continuously strengthens its power brands through innovations, partnerships and licensing agreements. G-III Apparel remains on track with the process of bolstering brands across channels with new launches, improved marketing strategies and broader consumer reach. It also plans to make efficient utilization of digital and social media platforms.
In December 2021, Inter Parfums, through its subsidiary Interparfums Italia signed a 10-year exclusive global licensing agreement with Emanuel Ungaro. The partnership aims to create, develop and distribute fragrances and fragrance-related products under the Emanuel Ungaro brand. In October 2021, Inter Parfums finalized the agreement with Salvatore Ferragamo S.p.A. Per the agreement, Inter Parfums now holds the exclusive worldwide license for the production and distribution of Salvatore Ferragamo brand perfumes.
High SG&A Costs
Inter Parfums has been grappling with higher selling, general and administrative (SG&A) expenses for a while. During the second quarter of 2022, SG&A expenses amounted to $108.4 million, up from $87.7 million reported in the year-ago quarter. SG&A expense as a percentage of net sales expanded to 44% from 42% reported in the year-ago quarter. For European operations, SG&A as a percentage of net sales came in at 47%, up from 44% reported in the year-ago quarter.
Nonetheless, we believe that well-chalked growth endeavors like strategic alliances and brand strength will likely keep the Zack Rank #3 (Hold) company’s growth story going.
Some Stocks to Consider
Some top-ranked consumer staple stocks are e.l.f. Beauty ELF and Hershey HSY.
e.l.f. Beauty, a cosmetic company, currently sports a Zacks Rank #1 (Strong Buy). ELF has a trailing four-quarter earnings surprise of almost 77%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for e.l.f. Beauty’s current financial year sales and EPS suggests growth of 16.9% and almost 6%, respectively, from the year-ago period’s reported figures.
Hershey, the largest chocolate manufacturer in North America as well as a global leader in chocolate and non-chocolate confectionery, presently has a Zacks Rank #2 (Buy). HSY pulled off a trailing four-quarter earnings surprise of 8.7%, on average.
The Zacks Consensus Estimate for Hershey’s sales and EPS for the current financial year suggests respective growth of 13.9% and 14.4% from the year-ago reported figures.
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