Interparfums 1H operating profit EUR103.8M, estimated EUR96.1M

Interparfums 1H operating profit EUR103.8M, estimated EUR96.1M

Interparfums, Inc. (NASDAQ: IPAR), a global leader in prestige fragrances, reported its first-half (1H) operating profit of EUR103.8 million, according to the latest financial statements. The company had previously estimated its 1H operating profit to be EUR96.1 million. This performance indicates a strong start to the year, despite some challenges in the U.S. market.

The company's revenue for the 1H period was EUR333.9 million, representing a decline of 2.4% year-over-year (YoY). The U.S. segment contributed significantly to this decline, with a 20% drop in sales, primarily due to a decrease in sales of GUESS and Donna Karan/DKNY fragrances. However, the European segment offset this decline with a 6% increase in sales, driven by strong performance from Lacoste and Coach.

Gross profit remained relatively flat at EUR221.09 million, with a slight increase of 0.15%. The gross margin improved by 1.70 percentage points, reaching 66.20%, due to a higher margin in the U.S. segment from the discontinuation of Dunhill products. However, the European segment experienced a slight decline of 0.5 percentage points due to an unfavorable brand and channel mix.

Net profit dropped by 11.6% to EUR41.197 million, and net margin declined to 12.3%. The decline in net profit was primarily due to an increase in selling, general, and administrative (SG&A) costs, which rose from EUR155.9 million to EUR161.9 million, reflecting a 3.8% increase. Additionally, the company experienced an FX loss of EUR1.5 million, almost double the loss of EUR634,000 in the same period last year.

The company's long-term growth prospects remain positive, with a revenue outlook of EUR1.48 billion for the full year 2025, reflecting a YoY growth of 2.16%. This is supported by recent license agreements, such as an exclusive licensing agreement with Longchamp through 2036 and a renewal of the Lacoste licensing agreement. The fragrances and perfumes market is projected to grow at a CAGR of 7.95% from 2025 to 2030, with the largest market being in Europe and the fastest-growing market in Asia-Pacific.

Interparfums' normalized EPS estimates for FY 2025 are conservative, with analysts projecting a slight decline of 0.5%. This decline is expected to be due to the absence of revenue from Dunhill and the high debt the company raised this year. The company is pursuing a strategy of omitting low-margin brands and is expected to launch 10 new fragrances under its owned brand, Solférino, and a flagship boutique in Paris.

In conclusion, Interparfums reported a strong 1H operating profit, despite challenges in the U.S. market. The company's long-term growth prospects remain positive, driven by recent license agreements and the growth potential in the fragrances and perfumes market. Historically, a simple buy-and-hold strategy following IPAR's earnings beats has shown mixed but generally favorable outcomes. From 2022 to the present, the stock has demonstrated a 40.00% win rate over 3 days, 30.00% over 10 days, and 40.00% over 30 days after outperforming expectations, with a maximum observed return of 3.12% over 57 days. These results suggest that while short-term volatility is possible, the stock has historically trended upward in the medium term following strong earnings reports.



References:
[1] https://seekingalpha.com/article/4820345-interparfums-stock-big-growth-catalysts-ahead-buy