Inter Parfums (IPAR) Gains On Solid Units Despite Cost Woes

Inter Parfums, Inc. (NASDAQ:IPAR) is benefiting from strong brand portfolio, solid performance of U.S. and European operations units, and robust earnings trend.

Buoyed by such upsides, shares of this Zacks Rank #3 (Hold) have gained 6.1% in the past three months compared with the industry’s growth of 1.6%.

Let’s delve deeper.

A Brief Introspection

Inter Parfums boasts a solid product portfolio, which acts as a primary growth driver. In this regard, the company’s Prestige brands has been doing well, which resulted in solid performance in the U.S. operations unit in the second quarter of 2019.

Within the U.S. operations, the GUESS? brand’s solid performance along with benefits of product launches under the Abercrombie & Fitch, and Hollister brands bodes well. For the GUESS? banner, the company expects to gain from the recently debuted 1981 Los Angeles brand and is on track with the launch of Seductive Noir.

Further, within the European operations segment, Montblanc — one of the largest brands of the company — has been performing well. The brand registered sales growth of nearly 28.3% in the second quarter, courtesy of the launch of its new scent — Montblanc Explore. Also, growth in the Coach banner, backed by advancements in Coach Floral Blush and Coach legacy scent brands, contributed to the quarterly results. The Lanvin brand also delivered strong results, driven by the successful launch of Lanvin’s A Girl in Capri.

Markedly, management expects to gain from the new 11-year licensing agreement with the Kate Spade New York brand. Per the agreement, Inter Parfums will develop perfumes and fragrance-related products as well as aid in the expansion of Kate Spade's fragrance line up globally.

However, the company is not free from headwinds as rising selling, general and admirative expenses act as deterrents. In the second quarter of 2019, SG&A expenses rose 9.9% year over year on new brand developments as well as augmented advertising and promotional activities. Management expects expenses related to promotion and advertising programs to amount to $150 million for 2019. This may take a toll on the company’s bottom line in the near term.

Wrapping Up

All said, we hope that Inter Parfums’ growth endeavors will be able to address the above-mentioned challenges and help sustain momentum.

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