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Elizabeth Arden Earnings Stink, Blames Weather; Stock Tumbles 15%

Tyler Durden's picture




 

Q1 2014 was the first negative EBITDA quarter for Elizabeth Arden since before Lehman (June 2008) and worst quarterly EBITDA loss for the company since Q3 2001... and the rest of the data was terrible:

  • *ELIZABETH ARDEN 3Q SALES $210.8M, EST. $255.7M
  • *ELIZABETH ARDEN 3Q ADJ. LOSS/SHR 84C, EST. BREAK-EVEN

The reason... come on you can guess... "an unprecedented number of weather-related store closures in our North America business during the quarter."

 

EBITDA...

 

The data:

Net sales for the third fiscal quarter were $210.8 million, a decrease of 20.3%, or 19.4% excluding the impact of foreign currency rates. Net loss per diluted share was $0.89. On an adjusted basis, excluding non-recurring items, net loss per diluted share was $0.84. The non-recurring items include Elizabeth Arden repositioning and restructuring costs. A reconciliation between GAAP and adjusted results can be found in the tables and footnotes at the end of this press release.

 

Net sales of the Company’s North America segment decreased 23% to $121.9 million from $158.7 million in the prior year. The decline in net sales was primarily due to fewer fragrance launches in the fiscal 2014 period as compared to the prior year and lower replenishment orders at a number of non-prestige retail accounts.

The excuse...

E. Scott Beattie, Chairman, President and Chief Executive Officer commented, “Clearly these results are not indicative of the strength and potential of our brand portfolio. We have been hampered this year by weak performance in our North American mass fragrance business and a global environment that has been highly promotional. We also did not have the same level of significant fragrance innovation as we did last year. This coincided with an unprecedented number of weather-related store closures in our North America business during the quarter, which is our seasonally weakest quarter, exacerbating the impact of these other factors and contributing to the weak overall results.”

So if some cold weather can cause your entire business model to collapse to 13 year low EBITDA... then maybe it is time for that "strategic alternative"...

The Company has engaged Goldman, Sachs & Co. to assist the Board of Directors in exploring potential strategic alternatives to enhance shareholder value and to accelerate the growth and maximize the value of its brand portfolio. 

The reaction...

 

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Mon, 05/12/2014 - 17:06 | 4752288 ebworthen
ebworthen's picture

And trading was halted for 1/2 an hour!

And what is this "after hours" trading?

Why have an "open" and a "close"?

Maintain appearances?

p.s. - Hey look, worst quarter since Jun. '08, hmmm....

Mon, 05/12/2014 - 17:08 | 4752297 nope-1004
nope-1004's picture

I love weather.  It gets blamed for every negative economic event.  That weather thing must be put in its place, cuz once we solve the weather, all areas of the economy will flourish.

Funny how I never once heard about the weather from 2002-2008.   Did we have weather then?  I bet not.  Let's ax Maxine Waters.

 

Mon, 05/12/2014 - 17:09 | 4752302 McMolotov
McMolotov's picture

It will only get worse from here. Conspiracy theorists believe that, due to the laws of nature, we can expect to have weather EVERY SINGLE DAY — truly a terrifying proposition.

Mon, 05/12/2014 - 17:16 | 4752327 ParkAveFlasher
ParkAveFlasher's picture

In my own head, I've replaced these headline analyses with a running version of Dean Martin's "Baby, It's Cold Outside."

Mon, 05/12/2014 - 17:40 | 4752406 James_Cole
James_Cole's picture

You think it's bad when it's cold, imagine how bad it'll be when it's hot and then when it's cold again... 

Mon, 05/12/2014 - 18:18 | 4752518 Stuck on Zero
Stuck on Zero's picture

So, the only sales that legitimately fell during the Winter of 2014 were Al Gore's book.

 

Mon, 05/12/2014 - 18:42 | 4752573 aVileRat
aVileRat's picture

Yeah, everyone knows Arden has been a dog for the last 2 years. The whole monetization of celeb. brands to sell OEM parfumes burns out when everyone owns 1 Spears, 1 Timberlake & 1 Swift branded parfume that all stink the same + last twice as long as the celeb star power. Kind of like headphones......

But yes, consumer gimmicks are fading fast. Sadly, most of top down indicators are driven by consumerism and that will validate the bear case. Bear case in turn will force companies to M&A with each other to form ever bigger balls of crap (like Hudson Bay Co did last year), or gear themselves to zero (like American App, Sears & JCP).

Eagerly waiting for the tablet/fablet shoe to drop "soon".

Middle Income retailers & fashion were the short de jour last year, most have faded this already (unless you got some funky default short going on ).

 

Mon, 05/12/2014 - 19:53 | 4752803 max2205
max2205's picture

Dont blame my wife . She shops in any weather.   Believe me. ...

Mon, 05/12/2014 - 17:11 | 4752316 Smegley Wanxalot
Smegley Wanxalot's picture

The odd thing about weather is that when it is blamed and the stock sinks 15%, the managing directors can only surmise that the shareholders must believe that bad disasterous weather will go on forever and the company has no hope.

Mon, 05/12/2014 - 17:34 | 4752385 Gringo Viejo
Gringo Viejo's picture

UPS is fuckin' me over on delivery of a package.
They're blaming the weather too.
Unoriginal motherfuckers that they are......

Mon, 05/12/2014 - 17:06 | 4752296 buzzsaw99
buzzsaw99's picture

shareholder value - lulz

goldman sachs - double lulz

Mon, 05/12/2014 - 17:07 | 4752300 hognutz
hognutz's picture

What did they do before weather was invented?

Mon, 05/12/2014 - 17:09 | 4752306 foodstampbarry
foodstampbarry's picture

USS Banana Republic is sinking fast.  FORWARD!

Mon, 05/12/2014 - 17:11 | 4752314 Dr. Engali
Dr. Engali's picture

Not one of these assholes has the balls nor the vagina to say " this economy fucking blows".

Mon, 05/12/2014 - 17:32 | 4752374 NoDebt
NoDebt's picture

I'm pretty sure their pluging stock price just said it for them.  

Pretty amazing when you thing about it- new all-time index highs, but individual companies being taken to the woodshed when they miss.

Mon, 05/12/2014 - 17:12 | 4752319 Bryan
Bryan's picture

Seriously.  So they think that if a store is closed for a day or hard to get to, the customer will never return to buy whatever they would have bought on that day?  If their whole business relies on completely impulsive purchases that, once a customer thinks twice about it would never purchase, then maybe they should go out of business.

Mon, 05/12/2014 - 17:14 | 4752324 nosoeawe
nosoeawe's picture

the last ice age was directly caused by not enough factories emiting green house gases and cows farting.

my advice to elizabeth arden, build more factories and make more leather clothes.

just think if we could have prevented it from happening, all those cuddly dinosaurs would be our house pets today.

Mon, 05/12/2014 - 17:14 | 4752325 Relentless101
Relentless101's picture

Was there an ice age I don't know about?

Mon, 05/12/2014 - 17:15 | 4752326 walküre
walküre's picture

Well, it's a cosmetics company. What do you expect other than make-up as they go and lipstick on a pig?

I guess Barbara Walters has reduced her cosmetic budget? Who else uses Elizabeth Arden anymore? It's make-up for fossils.

Mon, 05/12/2014 - 17:16 | 4752328 Hulk
Hulk's picture

If ya'll think Elizabeth stinks, ya ought to smell Eve !!!

Mon, 05/12/2014 - 17:16 | 4752332 HaroldWang
HaroldWang's picture

Not to worry. EU talking up QE. It's all good.

Mon, 05/12/2014 - 17:18 | 4752335 Bernoulli
Bernoulli's picture

Weather-related store closures. Sure. Got it. Makes total sense.

And now asking GS for help. Of course. They'll help you out.

Please tell me this is all a stupid fucking nightmare and pinch me, will you?

Because it's not funny anymore. At all.

Mon, 05/12/2014 - 17:18 | 4752336 almapal
almapal's picture

all about the management 

Mon, 05/12/2014 - 17:23 | 4752350 kchrisc
kchrisc's picture
MILLI VANILLI

Blame It On The Rain Lyrics

...
Gotta blame it on something (Gotta blame it on something)...
Gotta blame it on something...

(Blame it on the rain) that was fallin' fallin'...
(Blame it on the stars) that did shine at night...
Whatever you do don't put the blame on you...
Blame it on the rain (yeah yeah)...
You can blame it on the rain...

...

Mon, 05/12/2014 - 17:45 | 4752423 Bernoulli
Bernoulli's picture

Awesome! Those guys were a classic. Still remember it like yesterday.

The one guy od'ed because he couldn't take it anymore. After they found out Milli Vanilli was fake, he said "I am very proud person, and this is embarrassing, we can sing as good as any other pop star in the Top Ten."

Mon, 05/12/2014 - 17:26 | 4752358 oklaboy
oklaboy's picture

a quick back of the envelpoe calculation sez weather knocked off 45.5 million in sales, or 25% of sales in one quarter? cold weather effects stink water this much, whodda know?????? 

 

must be some good stinkwater.

Mon, 05/12/2014 - 17:34 | 4752386 Jack Sheet
Jack Sheet's picture

less deodorant sold when temperatures are in the 30s

Tue, 05/13/2014 - 05:30 | 4753850 2bit Hoarder
2bit Hoarder's picture

less deodorant sold when half the world is converting to Islam. 

Mon, 05/12/2014 - 17:48 | 4752428 firewire888
firewire888's picture

So they are seeking GS advice on how to buyback share?  "potential strategic alternatives to enhance shareholder value"

Mon, 05/12/2014 - 18:19 | 4752522 Spungo
Spungo's picture

That's like a 20% drop. Hilarious!

Mon, 05/12/2014 - 19:29 | 4752722 Bunga Bunga
Bunga Bunga's picture

Why need anti aging creams when have Instagram?

Mon, 05/12/2014 - 19:34 | 4752737 Miss Expectations
Miss Expectations's picture

Generally companies like Arden (with huge Christmas promo items/fragrances) set up their fiscal quarters such that sales/returns occur in the same year.  Do these results reflect huge Christmas returns?

Mon, 05/12/2014 - 20:48 | 4752970 NoWayJose
NoWayJose's picture

But didn't Obama just try to mobilize the country to fight climate change? And wasn't this supposed to be one of the hottest winters ever across the globe? Even with a colder US? How come there was no Increase in sales due to 'good' hot weather everywhere else?

Tue, 05/13/2014 - 06:41 | 4753894 junction
junction's picture

That graph looks like someone did a bear raid on Elizabeth Arden stock, driving the stock down to cheapen the takeover price.   

Tue, 05/13/2014 - 10:52 | 4754747 Eurodollar
Eurodollar's picture

The government of the USA has gifted CFOs a good excuse at least.

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