Inter Parfums’ Banana Republic Line Drives Q4 Sales, With Gap Body To Come

Inter Parfums' U.S. sales soared 141 percent during the firm's fiscal year 2006 fourth quarter to $19.8 million on the success of its fragrance, bath and body products developed for Banana Republic, the company says.

On the coattails of the Banana Republic Discover Collection , which launched in September 2006 with about 70 SKUs, Inter Parfum's partnership with Gap, Inc. will continue with the debut of Gap Body (¹ (Also see "Inter Parfums To Branch Into Skin Care, Cosmetics Through 2007, 2008" - HBW Insight, 15 Jan, 2007.), p. 9).

Comprising fragrance, bath, beauty and home products, the collection will begin shipping to Gap stores in April, Jean Madar, Inter Parfums CEO and chairman, reported March 13 during a Q4 and year-end earnings call.

New products will roll out under the Gap Body umbrella every month following its debut, beginning with men's and women's edt products in June, according to Madar.

Inter Parfums also will create personal-care products for the Gap outlet stores, Baby Gap and Gap Kids doors, Madar said. Inter Parfums and Gap expect to have introduced about 200 SKUs by the end of the year, the CEO said.

Gap will promote the launch with in-store visuals, activities and window displays, Madar said, noting that he is "impressed" by the amount of space Gap has devoted to the body line in its stores.

The partnership between the two companies requires Inter Parfums to oversee product development, packaging, manufacturing and inventory while Gap, Inc. promotes and sells the lines.

Inter Parfums incurred about $2 million in staff, product development and other start-up costs related to the Gap partnership and other product launches during the quarter, according to Russell Greenberg, CFO, chief accounting officer and executive VP of the firm.

The company also had a banner quarter in Europe, with sales rising 22 percent to $70.4 million on the strength of new launches as well as the continued performance of existing lines including Burberry , Lanvin and Paul Smith .

Overall Q4 sales were up 37 percent to $90.2 million, Inter Parfums reports. Net income grew 41 percent to $5.5 million, translating to diluted earnings per share of $0.27.

For the full year, Inter Parfums booked record sales of $321.1 million, up 17 percent from 2005, Greenberg said. Sales in the states totaled $51 million, climbing 49 percent compared with the prior year.

European product sales in 2006 rose 17 percent to $270 million, accounting for 84 percent of the company's overall revenue, Greenberg noted.

Inter Parfums' "classic" prestige fragrances fueled growth in Europe for the year. Sales for Lanvin and Paul Smith climbed 19 percent and 22 percent in local currency, respectively.

Such strong showings from established fragrances are uncommon, Madar said. "In our industry, the rule of thumb is that new products drive brand growth."

Meanwhile, sales of Burberry - the largest franchise in Inter Parfums' portfolio - were up 10 percent in local currency for the year. Burberry London for both women and men debuted in 2006 (² (Also see "Burberry London Men’s Fragrance Debut Backed With Print Campaign" - HBW Insight, 4 Sep, 2006.), p. 3).

Inter Parfums plans to "animate" the Burberry London line going forward through promotions including gift sets and gifts with purchase, Madar said.

Inter Parfums will augment its established lines in 2007 with new women's fragrances for Paul Smith, S.T. Dupont , Christian Lacroix and Roxy .

Also in 2007, the firm plans to grow existing Van Cleef & Arpels fragrances beyond their current sales base of $20 mil. through promotions alone, rather than launching new scents.

An entirely new Van Cleef & Arpels fragrance family will follow in 2008, the company says. Inter Parfums signed a licensing agreement with the jewelry designer in October (³ 'The Rose Sheet' Oct. 9, 2006, In Brief).

The firm is projecting 2007 sales of $365 million, net income of $20.4 million and earnings per share of $1.

- Molly Laas ([email protected])