* 4th-qtr loss $155.9 mln vs $5 mln yr-ago
* Sales fall steepest in a decade
* Warns of weak sales in first half of fiscal 2015
* Rhone Capital to invest in co via preferred stock,
* Shares slump 25 pct
(Adds details on celebrity fragrances, analyst comment, updates
By Devika Krishna Kumar
Aug 19 Elizabeth Arden Inc reported its
biggest ever quarterly loss due to a steep fall in sales of
celebrity perfumes, particularly the Justin Bieber and Taylor
Swift brands, sending its shares plunging as much as 25 percent.
The company said fourth-quarter sales fell 28.4 percent, the
steepest in a decade, and warned that the weakness, which
started about a year back, would continue for the next six
Still, investment firm Rhone Capital LLC agreed to invest
nearly $100 million in Elizabeth Arden through preferred stock
The company's net sales in fiscal 2014 were hit by fewer
launches of perfumes, retailers reducing inventory, heavier
discounting and a decision to prune the distribution of its key
brands, CFO Rod Little said on a conference call.
While teens and young adults still like celebrity-branded
perfumes, they have less disposable income to spend on such
discretionary items given the high unemployment among youth,
according to market research firm Euromonitor International.
Elizabeth Arden had five of the top 10 celebrity perfumes in
the United States last year, but the overall market for these
perfumes is shrinking, according to Euromonitor.
This has had a bigger impact on Elizabeth Arden, which gets
about 75 percent of its sales from perfumes, than on rivals such
as Estee Lauder Cos Inc, L'Oreal SA and Coty
Inc, who rely more on sales of cosmetics.
Elizabeth Arden's total sales fell 13.4 percent in the year
ended June 30, with the fall increasing each quarter. About half
the 14 percent decline in its North American sales was due to
Distributors and retailers were selling the company's
products for too little, CEO Scott Beattie said.
The result caps a year in which Elizabeth Arden saw a
potential suitor walk away, launched a restructuring program,
and started exploring alternatives to prop up its business.
The review process ended on Tuesday with Rhone Capital's
investment of $50 million in preferred stock and 2.5 million
through warrants in exchange for a board seat and a stake of
about 7.6 percent in the company.
Rhone agreed to cap its stake at 30 percent after the
exercise of the warrants, which are worth about $49 million
based on the stock's Monday close.
"Rhone's investment might support the shares in what would
otherwise be a painful day," BMO Capital Markets' Patrick
Trucchio said in a note.
While Elizabeth Arden said it expects sales to increase in
the second half of fiscal 2015 as comparisons ease and pricing
improves, Trucchio believes it would take years for the company
to return to "historical levels of profitability".
Net loss attributable to Elizabeth Arden widened to $155.9
million in the quarter from $5.0 million a year earlier. Net
sales fell to $191.7 million.
The stock was trading down 24 percent at $14.93 in afternoon
trading, making it the top percentage loser on the Nasdaq.
(Editing by Savio D'Souza)