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Mar 31, 2020
Inter Parfums Q1 2020 Earnings Report
Inter Parfums reported a decline in sales due to the COVID-19 pandemic, with significant impacts in the Middle East and Asia, while taking actions to position the business for a strong rebound.
Key Takeaways
Inter Parfums, Inc. reported first quarter 2020 results, noting a decline in sales due to the impact of the COVID-19 pandemic, which caused widespread store closures and supply chain disruptions. While some brands like Coach and GUESS performed well, overall sales were negatively affected, particularly in the Middle East and Asia. The company is implementing cost-saving measures and deferring certain program launches to mitigate the impact and prepare for future recovery.
COVID-19 pandemic significantly impacted operations due to store closures and supply chain disruptions.
Sales declined in the Middle East and Asia by 44% and 37%, respectively.
Advertising and promotion expenses will be reduced in 2020, with major program launches postponed until 2021.
Company is implementing cost-saving measures, including a hiring freeze and reduced bonuses.
Inter Parfums
Inter Parfums
Forward Guidance
While a precipitous decline in second quarter sales is expected, measured improvement is anticipated in the second half of the year, although the resumption of normal air travel is not expected soon, impacting travel retail business.
Positive Outlook
- Stay-at-home and store closure regulations are slowly lifting in a number of geographic markets where the crisis is receding.
- Several countries in Europe are moving forward with store reopening plans and are targeting later this month as a goal.
- The same thing happening in the Middle East.
- Several states within the U.S. have begun the reopening process, on a limited basis.
- Building upon our already strong financial position, these actions are expected to have a favorable impact on cash flow and fixed expenditures, which are expected to come in at under $25 million per quarter.
Challenges Ahead
- Expect a precipitous decline in second quarter sales, compared to both the current first quarter and last year’s second quarter
- We do not see a resumption of normal air travel happening any time soon, resulting in the loss of our travel retail business for the foreseeable future.
- In a recessionary environment, fragrance is generally a lower priority than essential purchases.
- The impact of COVID-19 was most severe in the Middle East and Asia, where first quarter net sales declined 44% and 37%, respectively, compared to last year’s first quarter.
- Towards the end of March and into April 2020, large parts of the Asia market have opened, with China taking the lead.