IPAR- Profile November-final.pub

Industry: Fragrances/Personal Care Products
NasdaqGS: IPAR
Recent Price:
$15.73
12-Month Range:
$13.75 - $24.80
Insider Ownership:
14.3 million shares
Avg. Daily Trading Vol.:
93,000 shares
Fiscal Year:
Dec. 31
Shares Outstanding:
30.5 million
Annual Cash Dividend:
$0.32
Market Cap:
$480 million
B USINESS D ESCRIPTION
Inter Parfums operates in the fragrance business and manufactures, markets and distributes a wide array of fragrances and fragrance-related products. We produce and distribute our prestige fragrances as the exclusive
worldwide licensee for Burberry, Van Cleef & Arpels (“VCA”), Jimmy Choo, Paul Smith, Montblanc, S.T.
Dupont and Boucheron, and we own Lanvin Perfumes and Nickel S.A., a men’s skin care company. We are also
the specialty retail partner for a growing number of brands, including Gap, Banana Republic, Brooks Brothers,
bebe, Betsey Johnson, Nine West, and Lane Bryant. For the specialty retail brands, we typically create, produce
and directly sell fragrance, beauty and personal care products to the North American namesake stores while international distribution is conducted under a license agreement utilizing our international network of distributors.
We also produce and distribute mass market fragrances and fragrance-related products. Our products are sold in
over 120 countries worldwide.
Inter Parfums has been selected as the fragrance licensee for two established designer
brands, Anna Sui and Balmain, effective January 1, 2012. At that time, IPAR will take
over the production and sales of existing scents under both brands. A new Anna Sui fragrance will come to market in 2012 as will a new twist on a Balmain legacy scent.
F I NA N C I A L & I N V E S T M E N T H I G H L I G H T S
First Nine Months 2011 vs. First Nine Months 2010:
sales increased 22.4% to a record $426.1 million from $348.0 million; in constant dollars, 9M’11 net sales rose 18.0%.
operations generated sales of $382.8 million, up 24.0% from $309.4 million.
 U.S.-based operations generated sales of $43.3 million, up 12% compared to $38.6 million.
 Net income attributable to IPAR increased 38% to $28.2 million from $20.4 million; and,
 Diluted EPS attributable to IPAR rose 37% to $0.92 compared to $0.67.
 Net
 European-based
2011 & 2012 Guidance (guidance assumes the dollar remains at current levels):
 For
2011, management anticipates net sales of approx. $570 million and net income attributable to IPAR of $32.5 million or
$1.05 per diluted share.
 For 2012, management anticipates net sales of approx. $625 million and net income attributable to IPAR of $35.7 million or
$1.16 per diluted share.
Strong Financial Position:
 At
9/30/11, working capital was $208.5 million; the working capital ratio was 2.2 to 1; cash, cash equivalents and short-term
investments approximated $30.0 million; and IPAR had no long-term debt.
Other Investment Highlights:
Portfolio of Well-Recognized Prestige Brands often targeted to different customers.
Partner: IPAR is sought out by brand owners because of its brand-building expertise and creative product development that capture the essence of the brand, as well as its global distribution capabilities.
 Number of Specialty Retail & U.S. Designer Partnerships Growing: Since the Gap and Banana Republic agreements of
July ’05, IPAR has entered into agreements to produce and sell products under the Brooks Brothers, bebe, Betsey Johnson,
Lane Bryant, and Nine West brands, and effective January 1, 2012, Anna Sui. In addition to direct sales to these retailers,
IPAR has expanded distribution internationally and domestically, under license agreements with many of these brands.
 Multi-Pronged Growth Strategy aimed at growing existing fragrance brands, extending existing brands into new categories
and adding new brands.
 Growing
 Preferred
P R E S T I G E P RO D U C T S
Prestige fragrance products (88% of 2010 net sales) are primarily produced and marketed by IPAR’s 74%-owned, publicly held,
Paris-based subsidiary, Inter Parfums, SA (“IPAR SA”), whose remaining 26% of shares trade on the NYSE-EuroNext Paris stock
exchange. Within each brand are several fragrance families, versions for men and women, as well as multiple sizes, formulations
and ancillaries. While IPAR acts as general contractor in the production process, its advertising and promotional programs are
designed and executed internally.
In France, U.K., Spain, Italy and Germany, and effective 2011 in the U.S., IPAR controls its brand distribution. For the rest of the
world, independent distributors sell the products into the appropriate channels, typically department stores, perfumeries, duty free
shops and other upscale outlets. Distribution and advertising are focused in geographic regions where the brand has strong
recognition and a loyal following.
Burberry represented 53% of total 2010 sales. The distinct fragrance families include:
BURBERRY
Burberry (‘95), Burberry Week-End (‘97), Burberry Touch (‘00), Burberry Brit (‘03), Burberry
London (‘06), Burberry The Beat (‘08/’09), and Burberry Sport (‘10). A new women’s Burberry fragrance, Burberry Body, launched in the third quarter of 2011. This is the largest launch in IPAR’s
history eventually reaching more than 10,000 doors. An equally ambitious global ad campaign
is underway. The launch of Burberry Beauty cosmetics began in July 2010 with about 100 products initially sold at 30 doors; door count doubling in 2011.
LANVIN
Known for luxury and elegance, the Lanvin fashion house, founded in 1889, expanded into
fragrances in the 1920s. Winner of a FIFI Hall of Fame award, Arpège (created in 1927), is
still sold to its aficionados, as well as to new customers. Lanvin fragrances, IPAR’s second
largest brand includes: Lanvin L’Homme (‘97), Eclat d’Arpège (‘02), Arpège Pour Homme (‘05),
Rumeur (‘06), Rumeur 2 Rose (‘08), Jeanne Lanvin (‘08), Lanvin L’Homme Sport (‘09) and
Marry Me (’10).
A new women’s scent comes to market in 2012.
VAN CLEEF & ARPELS
PAUL SMITH
IPAR is the exclusive worldwide fragrance licensee for the world renowned
jewelry designer, Van Cleef & Arpels. After more than 30 years on the market, one of VCA’s best-selling fragrances is First, and there have been a number of First flankers since IPAR took over the license in 2007. In addition to
the brand’s legacy fragrances, Inter Parfums launched Feerie (‘08), Collection
Extraordinaire (‘09), Oriens (‘10), and Midnight in Paris (‘10).
Paul Smith is one of the U.K.’s most famous designers. He is also well-known in Japan where
his designs are sold in over 200 stores. Since the introduction of the Paul Smith signature fragrance in 2000, the brand has grown to include Paul Smith Extreme (‘02), a men’s fragrance,
Paul Smith Story (‘06), Paul Smith Rose (‘07), Paul Smith Man (‘09), and Sunshine (‘10).
Optimistic, a new collection for men and women, launched in 2011.
S.T. DUPONT
For more than a century, S.T. Dupont has been known for high-end watches,
writing instruments, and lighters.
S.T. Dupont fragrances include: L’Eau de S.T. Dupont, Essence Pure, Noir, Blanc, Rose, and Passenger
and Passenger Cruise. 2010 launches included Intense, Essence Pure Ice and Miss Dupont.
NICKEL
Nickel produces and sells a high-end men’s skin care line.
Nickel’s products are sold in department and specialty stores in the
U.S. and Europe, as well as through men's spas in Paris, New York
and London.
JIMMY CHOO In October 2009, IPAR entered into a 12-year license agreement for the creation,
development and distribution of fragrances under the Jimmy Choo brand. Jimmy Choo encompasses a complete
luxury lifestyle accessory brand with women's shoes, handbags, small leather goods, and eyewear. The first
Jimmy Choo fragrance launched in select distribution in Q1’11, and broader distribution is underway.
MONTBLANC
In January 2010, a 10.5-year license was signed with Montblanc, effective July 1, 2010, when
IPAR took over the Montblanc fragrance business and inventory of 6 lines of women’s and
men’s fragrances, which are sold in approximately 50 countries. The 100+ year old brand is best
known for fine writing instruments, and more recently, jewelry, watches, and other luxury accessories. IPAR launched a new men’s scent, Legend, in Q1’11. A women’s scent comes to market in
2012.
BOUCHERON
In December 2010, IPAR and Boucheron signed a 15-year license agreement, which began in 2011.
The 150+ year old brand, which is best known for ultra-luxury jewelry, has an established fragrance
collection. An established Boucheron fragrance is being reinvigorated for 2012.
BALMAIN
In July 2011, IPAR entered into a 12-year license agreement commencing to create, produce and
distribute perfumes and ancillary products under the Balmain brand. The Balmain couture house
was founded in 1945 by Pierre Balmain. Effective January 1, 2012, IPAR will take over the production and distribution of existing Balmain fragrances. A new twist on a legacy Balmain fragrance will come to market in 2012.
S P E C I A LT Y R E TA I L & M A S S M A R K E T
IPAR is the fragrance and beauty partner for a growing number of distinct specialty retail brands including Gap, Banana Republic,
Brooks Brothers, bebe, Betsey Johnson, Nine West and Lane Bryant. Generally, products are created for direct sales to North
American namesake stores. In some cases, the brands’ fragrances are also sold domestically to department and specialty stores.
IPAR’s global distribution network sells into the brands’ overseas doors, plus specialty, department and duty-free stores.
Since the initial agreement of July 2005 between IPAR and Gap, Inc.,
IPAR has been developing and producing fragrance, personal care and
home fragrance products for Gap and Banana Republic stores in the U.S. and Canada. International distribution of
these products has been conducted over the past several years under license with Gap, Inc.
The Banana Republic Discover Collection debuted in 2006, and new products have been introduced ever since.
Republic of Men and Republic of Women launched in 2009, with brand extensions continuing in 2011. Wildbloom
launched in the first quarter of 2011, and a flanker is planned for 2012.
The initial Gap launch of bath and body products took place in 2007. Other products including fine fragrance
collections have since been added including Close (‘09), Stay (‘10) and
Near (‘11) for women; and Core (‘10) and Deep (‘11) for men. New
Gap fragrance products are coming to market in 2012.
Brooks Brothers and IPAR entered into an agreement in 2007 covering fragrance and
personal care products sold at U.S. Brooks Brothers stores plus a licensing agreement
for international distribution. Since 1818, Brooks Brothers has shaped the American
style of dress through fashion innovation, fine quality, and personal service. Brooks
Brothers New York launched in 2008 followed by Black Fleece in 2009. Madison, a scent for
young women, and a trio of scents, Black Fleece: Red, White & Blue, debuted in late 2010.
Miss Madison is scheduled to launch in 2012.
In 2008 IPAR inked an agreement covering fragrance and personal care products for bebe
stores. The brand’s signature look is hip, sophisticated and body-conscious. The highly
successful launch of the bebe signature fragrance began in 2009 at bebe stores and more than 300 Dillards. bebe
Sheer launched in 2010, and bebe Gold launched in the summer of 2011. International sales of bebe fragrance
products have been especially strong. Wishes & Dreams debuts in 2012.
IPAR has an exclusive agreement to design, manufacture and sell Betsey Johnson
fragrance, color cosmetics and related products. The first new fragrance collection,
Betsey Johnson Too Too, launched in the fall of 2011 at Sephora and namesake stores.
International and broader domestic distribution starts in 2012.
IPAR signed an agreement to design, manufacture and sell Nine West fragrances to its
stores, plus other specialty and department stores worldwide. The first fragrance, Love
Fury, is scheduled to launch in early 2012.
IPAR signed an exclusive agreement with Charming Shoppes for its flagship brand
Lane Bryant, the nation's leading women's specialty full-figured apparel retailer. A
line of performance-based bath and body products were initially sold in 130 of the
750 Lane Bryant stores with chainwide rollout coming in 2012.
In June 2011, IPAR entered into a 10-year exclusive worldwide fragrance license agreement to
create, produce and distribute perfumes and fragrance-related products under the Anna Sui brand,
commencing January 1, 2012. At that time, IPAR will take over production and distribution of
the brand’s existing fragrance collections, and a new women’s scent is planned for fall 2012.
IPAR creates fragrances for Anthropologie stores on a project basis.
Happ & Stahns and a collaboration with Le Labo were unveiled in
2010. Another fragrance under the Happ & Stahns banner is planned for 2012.
Mass Market includes several proprietary fragrance brands, a license for Jordache, and low-priced cosmetics and health &
beauty aids.
F I NA N C I A L H I G H L I G H T S
Net Sales ($ in millions)
N IN E M O N TH S E N D E D S E P TE M B E R 3 0 ,
$625.0
$700
($ in millions
2011
except for share data)
2010
Change
$600
$500
$426.1
$348.0
22.4%
$400
Operating Income
57.9
44.0
31.4%
$300
Net Income Attributable to IPAR
28.2
20.3
38.5%
$100
$0.92
$0.67
37.3%
$0
Sales
Diluted EPS
$208.5 Million
Current Ratio
2.2 to 1.0
Cash, Cash Equivalents and
Short-term Investments
$30 Million
Long-Term Debt
0
Annual Dividend
$0.32 per share
Low Capex
Generally Less than 1.5% of Sales
$409.5
$460.4
$200
2009
STRONG BALANCE SHEET: As of 9/30/11:
Working Capital
$570.0
2010
2011E*
2012E*
Net Income
Attributable to IPAR ($ in millions)
$35.7
$40
$30
$22.4
$26.6
$32.5
$20
$10
$0
2009
2010
2011E*
2012E*
*Guidance assumes the dollar remains at current levels
This Profile may contain statements about future events and expectations that constitute forward-looking
statements. Forward-looking statements are based on Inter Parfums management’s beliefs, assumptions
and expectations of future events and economic performance, considering information currently available
to management. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause actual results, performance or financial condition to differ
materially from the expectations expressed or implied in any forward-looking statement. Inter Parfums
does not undertake any obligation to update or revise forward-looking statements, whether as a result of
new information, future events or otherwise. Anyone receiving this Profile is encouraged to review all
filings made by the Company with the Securities and Exchange Commission. The information contained
herein is being provided for information purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. The Equity Group Inc. is retained by Inter Parfums to provide
investor relations services. The Equity Group, its officers or employees may have a position in the securities of the Company.
Contact
Russell Greenberg
Executive VP & CFO
Inter Parfums, Inc.
551 Fifth Avenue, 15th Fl.
New York, NY 10176
212.983.2640
Linda Latman 212.836.9609
Lena Cati 212.836.9611
The Equity Group Inc.
www.theequitygroup.com
11/11