* Q2 adjusted EPS $0.80 vs Wall St view $0.72
* Sales up 6.3 pct to $393.3 mln, Street view $388.1 mln
* Raises view for FY adjusted EPS, sales view unchanged
* Aims to significantly grow international business
* Shares up 0.3 pct to $15.44 in after hours trading
(Adds executive comments)
By Jessica Wohl
CHICAGO, Jan 27 (Reuters) - Elizabeth Arden Inc’s RDEN.O quarterly profit topped expectations as sales picked up, but the cosmetics maker remains cautious about the rest of the year as retailers manage inventories conservatively.
While many consumers are still holding back from buying discretionary items such as perfume, the holiday season proved better than 2008. Demand was particularly strong for the new Juicy Couture’s Couture Couture fragrance, made by Arden.
Overall, business was better at mass channel stores than in department stores, Chairman and Chief Executive E. Scott Beattie said on a conference call.
While mass retailers and U.S. department stores are crucial parts of the company’s strategy, it is has set its sites on a larger piece of the fragrance business -- the European market. Increasing its share there is a “top priority,” Beattie said.
In 2008 global fragrance sales were about $40 billion, with the United States representing about $6 billion and Europe accounting for about $18.4 billion, Beattie said. The U.S. market has essentially been flat over the last decade, while Europe has seen about 2 to 3 percent growth, he added.
Right now, Elizabeth Arden has less than 1 percent fragrance market share in Europe, Beattie said. The company wants to bring international sales from about 35 percent of total sales to about 50 percent over the next five years.
Elizabeth Arden also named former Johnson & Johnson (JNJ.N) executive Kathy Widmer as its chief marketing officer.
Arden saw travel retail sales soar 32 percent, echoing comments made last week by larger rival Estee Lauder Cos Inc (EL.N). [ID:nN20183927] Estee Lauder raised its outlook for the latest quarter after travel retail, or airport sales, and the U.S. holiday season were better than anticipated. It is expected to report its full results on Thursday.
Elizabeth Arden earned $21.1 million, or 73 cents per share, in its fiscal second quarter, ended on Dec. 31, up from $13.7 million, or 48 cents per share, a year earlier.
Excluding restructuring and other expenses, the company earned 80 cents per share, topping analysts’ average forecast of 72 cents, according to Thomson Reuters I/B/E/S.
Sales rose 6.3 percent to $393.3 million, also ahead of Wall Street expectations.
Some of the sales boost came from Wal-Mart Stores Inc’s (WMT.N) decision to unlock fragrances at many stores. In November, Arden said it expected a sales boost from that change. [ID:nN03486732] The company is working on “significant” merchandising efforts for a variety of mass retailers, not just focusing its strategy on Wal-Mart.
Elizabeth Arden now expects to earn 63 cents to 73 cents per share this fiscal year, up from October’s forecast of 55 to 65 cents. Analysts expected a profit of 64 cents per share.
The company still expects sales to rise 2.5 percent to 3.5 percent in the fiscal year, which ends in June.
Arden expects to lose 15 cents to 19 cents a share in the current third quarter, as it spends more on advertising and promotions than it did a year earlier. It forecast sales of $210 million to $217 million. Analysts had been expecting a loss of 15 cents per share and sales of $216.6 million.
Elizabeth Arden shares rose 0.2 percent, or 3 cents, to $15.39 in Nasdaq trading and were up to $15.44 after hours. (Reporting by Jessica Wohl; editing by Steve Orlofsky and Andre Grenon)