Benefits of restructuring boost Elizabeth Arden results

By Simon Pitman

- Last updated on GMT

Elizabeth Arden says that lower charges attributable to it restructuring drive helped to narrow fourth quarter losses, although the outlook continues to be weak.

Sales for the quarter fell by 10 percent to $212.6m ($148.8m), compared to the same period last year, a figure that was heavily impacted by unfavourable currency exchange against the US dollar, particularly in relation to European operations.

The company said that excluding the negative impact of currency translation, sales for the period fell by just 5.8 per cent.

Although the company registered a net loss of $3.6m for the period, this figure represented a significant reduction compared to the $10.4m loss recorded in the corresponding period last year.

Analysts had on average expected net losses to be a little higher, but had underestimated the drop in sales, with Thomson Reuters reporting average sales forecasts of $213.4m for the period.

Restructuring saves the day

“Our Global Efficiency Re-engineering initiative allowed us to improve gross margin, reduce inventories by $90 million year over year, and generate cash flow from operations of $37m,”​ said Scott Beattie, company CEO.

Scott Beattie also pointed out that the company has had some success with the launch of two new women’s fragrances during the quarter, with worldwide success for the Pretty Elizabeth Arden fragrance and further success for the Viva la Juicy fragrance.

For the full year 2009, the company recorded sales of $1.07bn, a figure that was 6.2 per cent lower than last year, and 3.0 per cent lower after excluding the negative impact of currency translation.

Full year net losses reduced

Net losses for the full financial year were also significantly reduced thanks to the overall effect of the company’s restructuring programme, down from $19.9m in 2008, to $6.1m for the current year.

Despite the positive effects of restructuring, the company still anticipates a rough ride in 2010, singling out continued weakness in the global economy, combined with further impact from negative currency translations.

Although these conditions make visibility difficult, the company said, it is predicting that sales will grow by between 2.0 per cent to 3.5 per cent, gains that are likely to be compromised by the continued impact of currency translations.

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