Weakness in Justin Bieber and Taylor Swift fragrances were called out as key drivers of a 28.4% sales decline and even bigger loss in Elizabeth Arden’s fourth quarter.
The leading global supplier of beauty products said sales in its fourth quarter ended June 30 tumbled 28.4% to $191.7 million. A key contributor to the decline was worse than expected sales of celebrity fragrances, most notably Justin Bieber and Taylor Swift fragrances. The company’s other celebrity fragrances include Britney Spears, Elizabeth Taylor, Jennifer Aniston, Mariah Carey and Nick Minaj.
Another factor negatively affecting sales was inventory destocking at several non-prestige customers that began in the company’s third quarter and continued in the fourth quarter. A portion of the sales weakness was also self-imposed as Elizabeth Arden said it tightened distribution globally across its key Elizabeth Arden branded products and other fragrance brands to improve pricing and gross margins.
The steep decline in sales caused the company to report a loss of $30.8 million, or $1.04 a share, compared to a prior year profit of $3.1 million, or 11 cents a share.
“Our primary focus as an organization is to improve performance and restore profitability and return on invested capital to levels consistent with historical results,” said Elizabeth Arden chairman, president and CEO Scott Beattie. “In June 2014, we announced the 2014 Improvement Plan, which is expected to result in annualized savings of $27 million to $35 million. We remain committed to achieving a total of $40 million to $50 million of annualized savings upon full implementation of all of our cost-reduction efforts, and remain confident that we can get back to consistent improvement in quarter over quarter performance. Most of the changes to our organizational structure were implemented in the third and fourth quarters of fiscal 2014, which should position the company for improved performance in fiscal 2015.”