Parlux Fragrances, Inc.

Parlux Fragrances, Inc. (PARL - Snapshot Report) saw sales surged 43% in the second quarter as the Jessica Simpson and Paris Hilton fragrances took off. Branded fragrances apparently are still a hot commodity going into the holiday season. The company has a forward P/E of 10.15.

Company Description

Parlux Fragrances is a Florida-based manufacturer of designer fragrances under the brands of Paris Hilton, Jessica Simpson, GUESS?, Nicole Miller, Natori, Queen Latifah, XOXO, Ocean Pacific (OP), Andy Roddick, and Fred Hayman Bevery Hills. The company also has licenses for Paris Hilton watches, cosmetics, sunglasses, handbags and small leather accessories.

Parlux, a Zacks #1 Rank (strong buy), distributes its products in the U.S. through department and specialty stores and internationally to more than 90 countries through department stores and perfumeries.

Preliminary Second Quarter Sales Jump 43%

On Oct 6, the company announced preliminary second quarter sales that rose 43% to $53 million from $37 million in the second quarter of 2007.

Sales at domestic department stores increased 190% from a year ago. International sales were also hot, rising 51% year-over-year. The company has been building its GUESS? brand overseas and recently partnered with Sephora stores in Europe. The brand has ranked as high as second in sales in their stores.

The big seller in the period was the new Jessica Simpson fragrance, Fancy, which saw $6.5 million in sales since its launch in August 2008. The new Paris Hilton frangrance, Fairy Dust, began shipping in late September 2008 and saw sales of $1.5 million in that period.

The company is optimistic despite the economic challenges and stated that it has solved the inventory problems that occurred in the first quarter.

"Demand for our products continues to be strong in a very difficult economic environment. Sell-through in our domestic department store business has been steadily growing, increasing in some stores by over 100%," said Neil J. Katz, Chairman and CEO.

"Shipments and sell-through of the new Jessica Simpson line, Fancy, have been robust in the U.S. department stores and we are currently launching the new Paris Hilton Fairy Dust fragrance for the upcoming holiday season," he said.

The company reports second quarter earnings on Nov 6.

Consensus Estimates Rising for the Second Quarter and Full Year

The 1 covering analyst has been raising estimates on the second quarter and the full year in the last month. Second quarter estimates rose 2 cents to 18 cents. The full year estimate is also up 2 cents to 32 cents in the same period.

The analyst expects 2008 year-over-year earnings growth of 33.33%.

Value Fundamentals

Parlux Fragrances' stock has been hit along with most other stocks in the market sell-off. It now has strong value fundamentals and is trading at 10.1x forward earnings. Its price-to-book is 0.74. It has a five-year average return on equity (ROE) of 10.21%.