Elizabeth Arden Announces Financial Results for Fourth Quarter
Elizabeth Arden, Inc. (NASDAQ:RDEN), a global prestige beauty products company, today announced financial results for its fourth quarter and year ended June 30, 2015.
FOURTH QUARTER RESULTS
Net sales for the fiscal quarter ended June 30, 2015, were $175.5 million. On an adjusted basis, net sales were $188.7 million, a decrease of 6.2% from the prior year, or 0.7% at constant foreign currency rates. The net loss per diluted share for the fiscal quarter ended June 30, 2015, was $3.65. On an adjusted basis, excluding non-recurring and other items, net loss per diluted share was $1.57. The Company’s reported results for the quarter include $65.7 million (pre-tax) of costs associated with the Company’s previously announced 2014 Performance Improvement Plan, including $48.3 million of non-cash charges. A reconciliation between GAAP and adjusted results can be found in the tables and footnotes at the end of this press release.
Adjusted net sales of the Company’s Elizabeth Arden branded products decreased by approximately 2% (but increased 7% at constant foreign currency rates) in the fourth fiscal quarter with growth driven by the International segment. Adjusted net sales of non-Elizabeth Arden branded fragrances decreased by 9% (or 7% at constant foreign currency rates) in the fourth fiscal quarter. Adjusted net sales exclude returns and markdowns under the Company’s 2014 Performance Improvement Plan.
By segment, North America segment net sales declined by 14% (or 13% at constant foreign currency rates) and International segment net sales increased by 4% (or 15% at constant foreign currency rates). Net sales of the International segment and the Elizabeth Arden brand reflect increased skin care and fragrance sales, particularly in the Asian domestic and travel retail markets as a result of a change in distribution strategy in China and the impact of proactive tightening of distribution globally in the prior year period. Declines in sales of non-Elizabeth Arden branded fragrances, which largely impacts the Company’s North American business, primarily reflects a lower level of new fragrance innovation.
During the fourth quarter of fiscal 2015, the Company identified certain additional restructuring and cost savings initiatives that it expects to implement during fiscal 2016 to allow the Company to achieve its original goal of $40 million to $50 million of annualized savings.
E. Scott Beattie, Chairman and Chief Executive Officer, commented, “This is the second consecutive quarter of sales growth for the Elizabeth Arden brand. The 7% constant currency increase this quarter is on top of a 9% constant currency increase in the third fiscal quarter. This gives us confidence as we head into the launch of the new Elizabeth Arden brand marketing campaign this fall, which is accompanied by a richer innovation pipeline. Our balance sheet and cash flow metrics also continued to improve, and we finished the fiscal year ahead of plan, resulting in $54 million in operating cash flow for fiscal 2015. Our performance improvement initiatives continue to drive down costs and improve efficiencies in our business. Indirect overhead savings from our 2014 Performance Improvement Plan and other cost savings initiatives are on track to achieve approximately $47 million to $50 million of annualized savings.”
FISCAL 2015 YEAR RESULTS
Net sales for the fiscal year ended June 30, 2015, were $971.1 million. On an adjusted basis, net sales were $999.3 million, a decrease of 14.9% from the prior year, or 13.1% at constant foreign currency rates. The net loss per diluted share for the fiscal year ended June 30, 2015, was $8.26. On an adjusted basis, excluding non-recurring costs and other items, net loss per diluted share was $2.58. For the fiscal year ended June 30, 2015, the Company’s reported and adjusted results include $6.7 million (pre-tax) of currency transaction losses. Non-recurring items include $94.6 million of costs associated with the Company’s 2014 Performance Improvement Plan, including $53.2 million of non-cash charges. A reconciliation between GAAP and adjusted results can be found in the tables and footnotes at the end of this press release.
Mr. Beattie continued, “We have completed a meaningful series of business changes over the past year, including most recently significant changes to our leadership and organizational structure that we announced in July. Our appointment of JuE Wong as President, Elizabeth Arden Brand, and Joel Ronkin as President, Global Fragrances, should better align our sales and marketing organizations to improve the commercial execution of the business and deliver our financial metrics. With a stronger innovation pipeline, across both the Elizabeth Arden brand and our core fragrances, improved go-to-market capabilities, and reinvestment of savings from our performance improvement initiatives, we expect to return to consistent sales growth and margin expansion in fiscal 2016.”
The Company currently expects the following for fiscal 2016 (on an adjusted basis):
Net sales increases driven by the International business and the Elizabeth Arden brand;
Gross margin expansion primarily due to better sales mix, improved commercial execution and improved cost structure;
Flat overall selling, general and administrative expenses, with lower indirect overhead costs and targeted reinvestment in advertising to accelerate revenue growth; and
Improved EBITDA margins from gross margin expansion and lower indirect overhead expenses.
Elizabeth Arden is a global prestige beauty products company with an extensive portfolio of prestige beauty brands sold in over 120 countries. The Company’s brand portfolio includes Elizabeth Arden skin care, color and fragrance products; its professional skin care line, Elizabeth Arden PRO; the celebrity fragrance brands of Justin Bieber, Mariah Carey, Nicki Minaj and Taylor Swift; the designer fragrance brands of Juicy Couture, John Varvatos and Wildfox Couture; and the heritage fragrance brands of Alfred Sung, Britney Spears, Curve, BCBGMAXAZRIA, Elizabeth Taylor, Geoffrey Beene, Giorgio Beverly Hills, Halston, Ed Hardy, Jennifer Aniston, Lucky Brand, Rocawear, PS Fine Cologne and White Shoulders.