(Reuters) - Cosmetics maker Elizabeth Arden Inc RDEN.O cut its full-year forecast after quarterly results missed estimates due to weak sales at department stores and at what it called a “major mass retail account” during the holiday season, sending its shares down as much as 24 percent.
Arden, known for its Prevage anti-aging creams and celebrity fragrances by Britney Spears and Elizabeth Taylor, is in the middle of a revamp to make its brands more upscale.
In spring last year, it acquired licenses for fragrances based on fashion brands True Religion and BCBGMAXAZRIA and hip-hop star Nicki Minaj as well as singer Justin Bieber.
Suntrust Robinson Humphrey analyst Bill Chappell said he was surprised that the results hadn’t beaten expectations as the recent initiatives had the company well positioned going into the holiday season.
However, it was too early for the cosmetics restage to start reflecting in the results, he added.
Weakness at department stores and at a key retailer, which an analyst speculated could be Wal-Mart (WMT.N), hurt sales in the key holiday season, the company said.
International sales, which contribute about a third of the total, were also hurt by weakness in China and lower-than-expected inventory replenishment in its travel retail business.
The company lowered its full-year earnings forecast to between $2.30 and $2.50 per share from between $2.55 and $2.70 per share. Analysts were looking $2.66 on average, according to Thomson Reuters I/B/E/S.
It now expects sales to grow by 9 to 11 percent during the year, and not by the 13.5 to 15 percent forecast earlier. The projection implies a revenue of $1.35 billion to $1.37 billion, below the $1.42 billion analysts estimated.
However, analysts were of the view that the company’s revamping initiatives were on track, pointing to retail sales at its flagship counter that rose 24 percent in North America and 9 percent internationally during the quarter.
“The Elizabeth Arden brand repositioning, the largest opportunity in RDEN’s history, remains on track, and is gaining momentum,” BMO Capital Markets analyst Connie Maneaty said in a note.
The company’s shares recovered from their early morning lows to about $37.80, though they were still down 17 percent.
The company’s net income rose to $48.1 million, or 1.58 per share, from $42.4 million, or $1.42 per share, a year earlier.
Excluding one-time items, Elizabeth Arden reported earnings of $1.58 per share, missing the $1.63 per share analysts expected.
Revenue rose 9 percent to $468 million, well below the average analyst estimate of $492.3 million.
Reporting by Siddharth Cavale in Bangalore and Phil Wahba in New York; Editing by Sreejiraj Eluvangal