Elizabeth Arden Shares Plunge After Unexpected Loss
Elizabeth Arden Inc. (RDEN), the maker of Elizabeth Taylor and Britney Spears brand perfumes, fell the most in more than five years after posting a surprise loss and hiring Goldman Sachs Group Inc. to help explore its options.
Excluding some items, the loss was 84 cents a share in the third quarter, according to a statement yesterday. Sales slid 20 percent to $210.8 million in the period, which ended in March. Analysts had estimated that the Miramar, Florida-based company would break even on sales of $255.7 million.
Elizabeth Arden is suffering from sluggish perfume demand in North America and heavy discounting overseas. Cold weather also hurt sales last quarter, when an “unprecedented number” of stores were forced to close, Chief Executive Officer E. Scott Beattie said.
“Clearly these results are not indicative of the strength and potential of our brand portfolio,” he said in the statement. “We must position the company for success in an economic environment that remains challenging.”
Elizabeth Arden shares slid 23 percent to $27.50 at the close in New York, the biggest one-day decline since January 2009. The stock has dropped 22 percent this year.
Elizabeth Arden also confirmed that it hired Goldman Sachs to explore its strategic alternatives. The move followed remarks from South Korea’s LG Household & Health Care Ltd., which said last month that it’s considering bidding for the fragrance maker. Elizabeth Arden is relying on Goldman to contact private-equity firms and other potential buyers, a person familiar with the matter previously told Bloomberg.
The company introduced fewer fragrances last quarter than a year earlier, contributing to slow sales. There also was less demand for replenishing supplies from lower-end retailers. As part of a turnaround plan, the company is cutting costs and tightening its distribution network. It plans to save $40 million to $50 million a year when the program is implemented.
“We fully recognize that we have a lot of work to do,” Beattie said.
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