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On Oct 31, 2013, makeup and skin care company Elizabeth Arden, Inc. (RDEN - Snapshot Report), announced first-quarter fiscal 2014 results. While the results significantly surpassed the Zacks consensus Estimate, they fell year over year.

Fiscal first-quarter (ended Sep 30) earnings per share of 22 cents beat the Zacks Consensus Estimate of 15 cents by 46.7%. Earnings, however, declined 50.0% from the year-ago levels due to lower revenues and poor margins.

Revenues slipped 0.3% year over year to $343.6 million. However, sales beat the Zacks Consensus Estimate of $342 million. Excluding currency headwinds, revenues increased 0.6%.

Strong sales in the Greater China and European markets were offset by 3% decline in sales in the North American segment. First-quarter net sales for the international segment went up 7.2% in constant currency. Branded products recorded a strong sales growth of 12.3% in constant currency backed by strong growth in skin care, color cosmetics and fragrance categories.

The gross margin declined 30 basis points (bps) to 6.0% in the quarter due to sluggish top-line growth.

Weak FY14 Outlook

For the second quarter of fiscal 2014, sales growth is expected to grow by 3% to 5% (including currency headwinds of around 0.4%). Adjusted earnings are expected in the range of $1.30 to $1.60.

RDEN has maintained the fiscal 2014 guidance. For full year 2014, sales are expected to grow between 3.0% and 5.0% year over year, much lower than the growth seen in fiscal 2013. Earnings are expected in the range of $2.15 to $2.30, representing approximately 4% growth at the mid-point. Currency headwinds are expected to hurt fiscal 2014 sales by 1% and earnings by 19 cents.

In fiscal 2014 the company will continue to focus on Elizabeth Arden's brand repositioning initiative and expansion of the fragrance brands overseas. Innovative marketing programs, product introductions and the upcoming holiday season could bode well for sales growth.

Elizabeth Arden is a leading global marketer and manufacturer of prestige beauty products. Its brands include fragrance brands like Elizabeth Arden and Red Door, celebrity fragrance brands of Britney Spears, Elizabeth Taylor etc., skin care brands like Visible Difference and Ceramides; and some cosmetic products under the Elizabeth Arden brand. The Elizabeth Arden brand is one of the most widely recognized beauty brands in the world.

Other Stocks to Consider

The stock carries a Zacks Rank #3 (Hold). On Oct 31, 2013, another cosmetics company. Estee Lauder Companies Inc. (EL - Analyst Report) posted first-quarter fiscal 2014 earnings of 76 cents per share (excluding restructuring charges). The earnings exceeded the Zacks Consensus Estimate of 74 cents by 2.7% and management’s guidance range of 67 cents to 71 cents.

 Other stocks in the consumer staples sector worth considering are NU Skin Enterprises Inc. (NUS - Snapshot Report) and Reckitt Benckiser Group plc (RBGLY). Both the stocks carry a Zacks Rank #1 (Strong Buy).

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