It has been about a month since the last earnings report for Inter Parfums (IPAR - Free Report) . Shares have added about 0.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Inter Parfums due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Inter Parfums Posts Narrower-Than-Expected Q2 Loss
Inter Parfums delivered second-quarter 2020 results, with the top and the bottom line declining year over year. Results were hampered as operations were hurt by the pandemic-led hurdles.
During the first half of 2020, the company’s net sales slumped 43.6% compared with year-ago period’s levels to $194.3 million. Notably, the company’s two largest brands Montblanc and Jimmy Choo saw sales decline of 50.8% and 43.6%, respectively. The downside can be attributed to adverse impacts of the coronavirus outbreak. Also, Coach and GUESS brands witnessed sales decline of 21.3% and 21%, respectively in the year-to-date period.
Region wise, net sales in North America, Western Europe, Asia, Middle East and Eastern Europe declined 38.9%, 34.0%, 53.8%, 57.4% and 56.2%, respectively, during the first half of 2020. Notably, coronavirus-induced travel restrictions acted as a major deterrent in the Asia region.
Although the overall business momentum has improved since April, management believes that it has still not reached normal levels. Nevertheless, the company is optimistic about its recent strategic partnerships with Origines-parfums as well as Moncler SpA. In fact, management expects to launch its first collection for Moncler during the first quarter of 2022. Also, the company is optimistic about its robust product pipeline for 2021. In this regard, its scents for the MCM and Kate Spade New York brands are scheduled to be launched in 2021. The company also plans to launch several programs under Jimmy Choo and GUESS brands in 2021.
Quarter in Detail
Inter Parfums posted net loss per share of 10 cents, which was narrower than the Zacks Consensus Estimate of a loss of 16 cents. However, the company had posted net income of 39 cents per share in the year-ago quarter.
Net sales amounted to $49.5 million, down 70.2% on a year-over-year basis. At comparable-currency exchange rates, net sales slumped 69.8%. Net sales declined across both U.S. and Europe-based operations. In U.S.-based operations, net sales fell 75.2% to $10.1 million. Net sales in the Europe-based operations amounted to $39.4 million, down 68.6% year on year.
In a recent press release, the company stated that second-quarter sales were hampered by coronavirus-induced retail outlet closures in many parts of the world, which declined across all brands and geographic locations. Also, Inter Parfums witnessed sluggishness in its travel retail segment.
Gross profit amounted to $26.8 million, down 75% year on year. Further, gross margin was 54.2%, significantly down from 64.4% posted in the year ago quarter.
SG&A expenses amounted to $32.4 million, down 61.7% year on year. As a percentage of net sales, SG&A expenses were 65.4%. The metric increased from 50.8% in the prior-year quarter.
The company’s operating loss came in at $5.5 million, down from operating income of $22.5 million reported in the year-ago quarter. Further, operating margin was 11.2%, down 230 basis points.
Other Financial Aspects
The company ended the quarter with cash and cash equivalents of $127.5 million, long-term debt (excluding current portion) of $18.9 million and shareholder’s equity (excluding non-controlling interest) of $466 million. Further, the company had $48 million available under its unused credit facility.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 186.36% due to these changes.
At this time, Inter Parfums has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Inter Parfums has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.