Inter Parfums Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
February 28, 2024

There are 7 speakers on the call.

Operator

Greetings, and welcome to the Inter Parfums, Inc. 2023 4th Quarter and Full Year Earnings Conference Call and Webcast. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.

Operator

At this time, I'd like to turn the call over to Karen Daly, Vice President at The Equity Group and Inter Parfums' Investor Relations representative. Thank you. Please go ahead.

Speaker 1

Thank you, Diego. Joining us on the call today will be Chairman and Chief Executive Officer, Jean Madar and Chief Financial Officer, Michelle Atwood. On behalf of the company, I would like to note that this conference call may contain forward looking statements, which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from projected results. These factors may be found in the company's filings with the Securities and Exchange Commission under the headings Forward Looking Statements and Risk Factors in their most recent annual report on Form 10 ks. Forward looking statements speak only as of the date on which they are made and Interpark Blooms undertakes no obligation to update the information discussed.

Speaker 1

As a reminder, the company's consolidated results reflect its 2 business segments, European based operations and United States based operations. Certain Prestige Fragrance products are produced and marketed by their European based operations through its seventy 2% owned French subsidiary, Inter Perfumes S. A. When the company refers to their U. S.-based operations, they are talking about their wholly owned subsidiaries.

Speaker 1

It is now my pleasure to turn the call over to Mr. Jean Mazard. Jean, you may begin.

Speaker 2

Thank you, Karen. Good morning, everyone, and thank you for participating in today's call. We are seeing ongoing momentum in the fragrance market, particularly within the prestige and premium categories in which we play. Much of the growth we have seen can be attributed to premiumization as consumers are increasingly seeking high quality and higher concentration fragrances in today's market. The ongoing demand in our prestige portfolio of brands led to a record net sales of $1,300,000,000 in 2023, an increase of 21% compared to 2022.

Speaker 2

At comparable foreign exchange rates, net sales increased 20% in 2023, of which 5% was related to new brands. Similar to 2022, our successful growth during the year was attributable to our established brands and our new product pipeline dominated by extensions. Sales for each of our largest brands, Jimmy Choo, Montblanc and Coach rose above $200,000,000 for the year, representing 49% of our total sales. Our 4th largest brand, Guess, grew sales by a robust 23%. And with a strategically planned pipeline of innovation, we believe Guess!

Speaker 2

Is well on its way to also surpassing 200,000,000 in sales in the coming years. In our European brand, there were also significant gains made by our midsized brand in 2023, including Rochas, Carla Gerfel, Van Cleef and Arpels, increasing respectively 11%, 24% and 12%. As you may recall, Donna Karan dkNY joined us in July 2022. This explains the significant 200% growth in 2023. We anticipate that the substantial growth rate will normalize, but will remain healthy and the brand will well exceed €100,000,000 in sales in 2024 as it continues to benefit from our expertise.

Speaker 2

Relative to our newest brands, we began shipping Lacoste Fragrance in January of this year after rebooting the brand's existing fragrance portfolio and creating all new freshly developed goods for our retail partners and consumers alike. Our Cavalli fragrance reboot coincides with the fashion house renaissance efforts to revamp the powerful creativity of Vera Parole while opening new stores and increasing visibility. We have blockbuster launches in the works for both brands later this year. As you may recall, our entry into Italian operations in 2021 was strategically timed coinciding with the signing of a Ferragamo license. This decision, I think, was well founded as the Italian fragrance market witnessed a +12 percent sales growth in 2023.

Speaker 2

In fact, Ferragamo fragrance sales outperformed the market, achieving 21% sales growth in the last year. CostMaker Italia noted that they expect to see similar sales expansion in 2024. While we have seen new entrants into the Italian market across the industry recently, driving healthy competition, we are confident our Italian affiliate will take advantage of the booming demand in Italy and across its borders. We have also leveraged this new affiliate to serve as an anchor point to attract other Italian brands and increase company scale. After starting to distribute all the brands from the United States based operation in January 2023.

Speaker 2

Our team in Italy has also started to distribute the brand from our European based operation since January 2025 12, I'm sorry. With our Italian operations managing distribution for both segments, we will expand cross company synergies in that market and continue to improve gross margin as we sell directly rather than through a distributor. The team in Italy also started shipping Roberto Cavalli fragrance at the beginning of February 2024, and we look forward to fully capturing the potential of this brand. Abercrombie and Fitch also achieved significant sales growth of 25% in 2023, in part due to the sustained popularity of their legacy scents. Our initial success in the Phase 1 distribution rollout of Fierce was a leading contributor to the brand's growth in the back half of the year, and we expect to see further sales expansion as we commence Phase 2 in the Q1 of this year.

Speaker 2

On another note, I've spent a lot of time traveling to meet with retailers, buyers and wholesalers across the globe. 2024 is off to a great start. In fact, I recently visited Mexico to meet with buyers and I was very encouraged by what I saw, including empty shelves representing healthy sellout, particularly for Ferragamo, Montblanc, Guess and BTNY. With the holiday season behind us and strong reorders, we are enthusiastic of the growth prospects in that region. Turning to our stimulating pipeline of innovation.

Speaker 2

During the Q1 of 2024, we debuted new fragrance collection. For Moncler, we introduced 5 new ultra luxurious unisex fragrances called Les Somme Moncler. And we developed also a premium quartet of eau de parfum for Donna Karan called Cashmere Collection. These layers and more concentrated fragrance were unveiled in conjunction with the relaunch of Donna Karan Fashion Business and the reveal of the Sprint 2024 campaign. These premium fragrances debuted in more than 200 department stores across the United States.

Speaker 2

We have an invigorating lineup of products set for the balance of 2024. In addition to the new blockbuster fragrance for Cavalier and Lacoste I mentioned earlier, there is a new Guess fragrance planned for the Q2 as well as the Romo flanker in the Q1. Extensions of Jimmy Choo, I Want You, Montblanc Legend, Koche Dreams and Roberto Cavalli Signature are set to debut throughout the year. Furthermore, brand extension are also in the works for Ferragamo, MCM, Abercrombie, Hollister and Oscar Vallarta. With ongoing innovation in the development and marketing of our portfolio of fragrances, coupled with the overall strength in the fragrance market, we are poised for a dynamic year ahead.

Speaker 2

We have successfully onboarded over 80 new team members just for our United States based operations, exemplifying our unwavering commitment to developing robust operations capable of effectively managing and optimizing our diverse portfolio of prestige brands. In the ever changing world of beauty, fragrance innovation is at the forefront for our brands, Epos, with category penetration on the rise in the United States and in Asia and the continued shift towards more premium fragrances, we believe that the consumers heightened appreciation and curiosity for fragrances will be a compelling force for the future. I will now turn the call over to Michel for a more detailed financial review. Michel?

Operator

Ira, you may be muted. Go ahead.

Speaker 3

I'm sorry. Thank you, Jean, and good morning, everyone. As we reported yesterday, consolidated net sales grew 6% in the final quarter, reflecting 13% and 2% growth in our U. S.-based and European based operations, respectively. For the full year, we are pleased to have achieved record sales and earning results.

Speaker 3

As previously disclosed, the quarterly growth rate in comparison to the full year reflects the elevated sales baseline from the preceding year. Compared to 2019, which was a much stabler year, our sales were up 85% both for the Q4 and the full year 202023. On a consolidated basis, gross margin expanded 30 basis points from the Q4 of 2022 to 64.7 percent leading to a full year gross margin of 63.7 percent broadly in line with the prior year with higher selling prices and channel product mix offsetting the inflation headwinds and segment mix. In 2023, European operations gross margin eroded by 100 basis points from percent to 67.2 percent. However, as previously disclosed, the bulk of the erosion was attributed to the inventory write off in the 2nd quarter.

Speaker 3

Excluding this impact, gross margins would only have eroded by 20 basis points with pricing and regional mix almost entirely offsetting higher inflationary costs in Europe. U. S. Based operations gross margin on the other hand continue to expand significantly from 54.7% in 2022 to 57% in 2023. The U.

Speaker 3

S. Margin expansion stems from several factors including price increases we took early in 2023 that were not fully offset by higher cost of goods due in part to our ongoing cost containment efforts. We also had favorable brand and channel mix as a larger portion of our higher priced fragrances are being sold directly to retailers as opposed to third party distributors. An example of that is what Jean explained is happening in Italy. We're also seeing that in the U.

Speaker 3

S. With the U. S. Market growing faster than the rest of the other regions. And then lastly, a significant increase in sales in 2023, which has allowed us to absorb fixed costs, namely manufacturing and depreciation of tooling.

Speaker 3

As expected, selling and general administration expenses as a percentage of net sales were 59% for the quarter, which is 4.50 basis points higher than the prior year period, mainly due to higher promotion and advertising spending. For the full year, SG and A expenses as a percentage of net sales were at 44.6% compared to 45.3% in 2022. This decrease was largely driven by continued sales growth during 2023, allowing for better absorption of fixed operating costs and favorable segment mix. As previously disclosed, we continue to invest heavily in A and P to build brand awareness, remain competitive and sustain our growth. During the year, we dedicated 19.7% of net sales to advertising and promotion.

Speaker 3

And while we again spent below our target A and P of 21% of net sales, due in part to higher than expected sales growth, we continue to deliberately converge towards this figure. In fact, in the critically important Q4 of 2023, spending was 23% higher than in the prior year period, representing 33% of net sales, up from 28% in the Q4 of 2022. As you know, our Q4, we typically spend double what we spend in the other quarters. Royalty expenses are included in SG and A and average approximately 8% in 2023, generally in line with the last 3 years. And finally, our operating margins aggregated to 19.1 percent for 2023 or 120 basis points improvement from 2022.

Speaker 3

We closed the year with working capital of $514,000,000 including approximately $183,000,000 in cash and cash equivalents and short term investments, resulting in a working capital ratio of 2.6:one. Our long term debt at December 31, 23 was $128,000,000 associated with the Paris headquarters and La Coste license acquisitions were our 2 main investments on the last couple of years. From a cash flow perspective, accounts receivable was up 19% from year end 2022. The balance is reasonable based on 2023 record sales levels and reflects a strong collection activity as day of sales outstanding decreased slightly to 60 days in 2023 as opposed to as compared to 64 days in 2022. Additionally, inventory levels are up 25% from year end 2022, of which inventory days on hand increased to 249 days in 2023 from 231 days in 2022.

Speaker 3

This increase was fully anticipated is primarily explained by the buildup of inventory related to the Anubhav acquired licenses for La Costa and Cavalli, which began shipping to customers in 2024. We expect inventories to start normalizing now that we have sales and this inventory in our base. And finally, touching on our 2023 execution and 2024 guidance, not only did we surpass our sales target of $1,300,000,000 in 2023 and achieve our all in bottom line goal of $4.75 earnings per diluted share, But on an adjusted basis and excluding the one time tax assessment undergone by our European operations, we largely beat our bottom line guidance and achieved $4.82 earnings per diluted share, representing a growth of 22%. For 2024 guidance, as we reaffirmed in yesterday's earnings release, the fragrance market, particularly in the prestige and luxury category remains robust. This coupled with healthy stock and trade level gives us the confidence we can continue to grow and achieve approximately 10% annual sales growth to $1,450,000,000 We expect first half growth to be a more modest high single digit due to the seasonality of our pipeline of innovation and the selling of the newest brands of our portfolio.

Speaker 3

However, we expect double digit growth in the second half. This will lead to an 8% increase in earnings per diluted share to $5.15 Of note, included in our guidance, the LaCoste non cash amortization impact of the acquisition cost is expected to reduce our 2024 earnings per diluted share by approximately $0.11 Excluding this impact, we are projecting EPS growth of 11% versus 2023. While we are confident in the strength of the market and our ability to gain share with our overall portfolio, we have always remained we've always taken a conservative stance in our guidance. And this year, we are particularly keen on being cautious, especially in light of the ongoing conflicts in the Middle East and in Eastern Europe. Given the potential for volatility and the lack of visibility at this time, we will revisit the subject of guidance as the year progresses and as we attain greater clarity on the market and the successful offtake and expansion of our 2 new licenses.

Speaker 3

Lastly, as announced in our press release, given our strong results, future prospects and robust financial standing, our Board of Directors authorized the company to continue to purchase up to 130,000 shares through 2024. They also approved a 20% increase in the annual dividend to $3 per share from $2.50 per share. The next quarterly cash dividend of $0.75 per share is payable on March 29 to shareholders of record on March 15, 2024. With that operator, please open the line for questions.

Operator

Thank you. We'll now conduct our question and answer Our first question comes from Linda Bolton Weiser with D. A. Davidson. Please state your question.

Speaker 4

Yes. Hi. Good morning. So I was just wondering if you could comment a little more, give us some color on those two regions of the world that you mentioned, a little bit of lack of visibility, but Eastern Europe and the Middle East. And specifically on the Eastern Europe, I know you had been shipping some still to Russia, I think, in 2023.

Speaker 4

How much was that kind of roughly in revenue in 2023? And is that going to go down a lot in 2024? Can you just give us some more color on that? Thank you.

Speaker 2

Yes, I can try to good morning Linda. Yes, we see of course like everybody, this does in Europe and even though they today, they do not it doesn't have a real impact on our sales, It makes us put some conservative light regarding the guidance. When it comes to Russia, for Russia, it's very simple. It does not change. We ship to Russia from the products that are made in Italy or in France.

Speaker 2

We do not ship to Russia products that are made in USA. The business Michel in Russia is about 4% of our total sales, something like that.

Speaker 3

Yes, it's €50,000,000 Linda. Yes Linda, it's about €50,000,000 and that's kind of what we've it's actually disclosed in our 10 ks.

Speaker 2

Do we expect this business to grow? No. But what we see is that the news are not great from this part of the world. And any sparks could not only stop the business that we have, personal business that we have in Russia, but it's also tension in this region, Poland, etcetera, which represents a nice business. That's why even though business is very strong, we have no reason to deal.

Speaker 2

I prefer to have an approach that is more conservative. When it comes to the Middle East, we do business as you know, we have a very strong business in Saudi Arabia, in Kuwait and the EMEA rates. This represents Michel, can you give me a percentage?

Speaker 3

Yes. It's about 8%. It's about 8%, Middle East and Africa. Yes.

Speaker 2

I was there. I was there. I was in the region 2, 3 weeks ago. Everybody is fine. We continue to sell, but we feel that if anything happen, immediately we'll see an impact on the region.

Speaker 2

So that's why we prefer to wait and see. But our business, for instance, on Carvalho, Roberto Carvalho, more than 50% of the business is in the Middle East. So this is to give you some color of our conservatism.

Speaker 3

Yes. Just to build on Jean, I think the tone of caution is not relative to our business. The tone of caution is more coming from the macroeconomic environment, which we obviously don't control. But we're certainly feeling very good about the health of our brands, the level of offtake that we've had over year end and our ability to replenish and to successfully launch our 2 brands. But again, we are being prudent more because of the macro environment than by any concerns we might have with our business.

Speaker 3

We think that

Speaker 2

we will wait a couple of months before, I will say, when we release the Q1, we will review I hope we'll be able to review this guidance, but not now.

Speaker 4

Okay. Thanks. And then just I know, Michel, you were giving some color, I think, previously that you felt gross margin in

Speaker 5

the year? Thanks.

Speaker 4

Yes. So, hi, Linda. In the year? Thanks.

Speaker 3

Yes. So hi, Linda. Yes, certainly, we're working towards a flat gross margin for next year with pretty much the carryover of the pricing that we took this year, offsetting some of the inflationary costs that we might still expect. But broadly, I think the costs are pertained and looking good for now. On the A and P, I think we've been very clear.

Speaker 3

We want to remain competitive. Some of the reasons why we've been below our 21% goal is because we continue to see a lot more market growth than potentially anticipated. And that obviously has an impact on our denominator as we divide the spending by lower sales. We continue to plan more, we're gating and gating our investments as well we can land that number better. And I think I've been very clearly indicating that now for a few quarters that we're finding our ability to forecast and plan these expenses as the sales come in.

Speaker 3

So yes, you should assume that we will continue to work in that direction. There's another element that's actually quite important to keep in mind here and it's not always very obvious. But if you compare our European operations to our U. S. Operations, while the margins are roughly the same, overall operating margins and have been converging, there's a big difference in our operating model, which is European operations has much higher gross margins, but also much higher A and P spending.

Speaker 3

And if you compare that to U. S. Operations, it's the opposite, lower margins and lower A and P spending. As the U. S.

Speaker 3

Operations becomes more and more like the European operations, you're starting to see the gross margins converging, but you can also expect to see the A and P also increasing as that business looks starts to look more and more like the European one. And I know that that creates some segment mix, both on the COGS, which was going to be favorable, but on the A and P, which will be unfavorable.

Speaker 2

If I may add, 2023, our operating margin was high 19%. I think it's a great label. It's higher than what it was in 2022. But one of the reasons, Linda, that we want to spend this money in advertising is that, one, this advertising is spent a lot in the Q4 to ensure the sell through. And when I see that our gift sets and all our programs are sold through by the end of the year, it's very reassuring for the year after.

Speaker 2

So I think it's very important to continue to spend at this level.

Speaker 4

Yes. Thank you. And then my final question just has to do with capital allocation and that's a nice healthy dividend increase 20% and you've had big increases in the last few years. Quite frankly, your free cash flow in 2023 was not too much above the dividend amount. So I'm wondering like kind of are you expecting to have more robust free cash flow and a better a bigger margin of safety?

Speaker 4

I just wonder if we should worry that your dividend is getting too high relative to your cash flow. Thanks.

Speaker 3

Yes. So if you look at really what's been going on for the last couple of years, right, is I think we've been delivering very healthy operating profit growth. The challenge is that a lot of the that has been consumed in free cash flow either through the inventory and the AR buildup, which is commensurate with our growth, particularly, I would say inventory. So inventory has consumed a lot of cash. What we're seeing at this point in time is that we're getting to a level of inventory that we feel is quite comfortable.

Speaker 3

We have now, as I put laid out in my prepared remarks, we have built the inventory now for Lacoste and for Cavalli. And so we are expecting going forward that a lot less of our operating profit will be consumed through an increase in inventory. And so that will definitely provide us with some good tailwinds. And then the last piece is we have made 2 significant investments that have consumed cash in the last couple of years. There's been the acquisition of our headquarter in Perris.

Speaker 3

And there's also the Lacoste purchase, which as you all know is not typical in this industry. But so overall, we're feeling very, very good about our prospects for next year and our ability to generate more free cash flow from our earnings.

Speaker 4

Thank you. Thank you very much. That's it for me.

Speaker 2

Thank you, Linda.

Operator

Our next Our next question comes from Corrine Wolfmeyer with Piper Sandler. Please state your question.

Speaker 1

Hey, good morning and thanks for

Speaker 6

taking the questions. I'd like to touch on how you're thinking about the outlook for both the Lacoste and Cavalli licenses this year. It does seem like the guidance you laid out is factoring in maybe a

Speaker 5

little bit more conservatism

Speaker 6

and it does sound like you're being more prudent with expectations, especially with what's going on in the Middle East. Can you

Speaker 5

just provide a little bit more color on

Speaker 6

how you're thinking about the trajectory for both these licenses this year and maybe how we could how or when or in what areas could we see some upside to both these licenses this year?

Speaker 3

So that's

Speaker 2

Go ahead and go ahead, Nishan.

Speaker 3

So Koon, hi. Right now, we are assuming in our forecast about $90,000,000 in combination, both for Lacoste and for Cavalli for the total year. So far, we've been able to get some healthy sell in. And so overall, that's kind of the number we're working towards. As Jean explained, the Middle East remains a pretty volatile region and half of Kavali is pretty much going to be in the Middle East.

Speaker 3

So while we currently have about $90,000,000 in our forecast, we're probably in our guidance assuming a slightly smaller number than that. So, right now, if you look at our building blocks of the 10%, we're looking at about kind of 4% to 5% coming from the base business and then the balance coming from the new licenses. And we understand that that's a little conservative. Right now, we do expect the market to be more around high mid single digits, call it around 6%. But again, we are being prudent at this point in time.

Speaker 6

Very helpful. Thank you. And then can you just touch on kind of your longer term expectations for A and P spend? And I know you're not guiding beyond 2024, but how should we be thinking about like the proper run rate for operating margin beyond this year if you are keeping that A and P spend heightened? And specifically, like is it reasonable to think we could get to levels delivered here in 2020 3 over the coming years?

Speaker 6

Or is it going to be sustainably a little bit lower due to the spend? Thanks.

Speaker 3

At this point in time, we're comfortable with the level of margins we have. I don't think we're necessarily looking to further expand. I think we've had a really, really good run. We're comfortable with the level we have. I think as the business continues to grow, we'll continue to have operating efficiencies and scale gains.

Speaker 3

I think that would potentially drive a little bit of margin appreciation. But we are being very vigilant. And again, as I was explaining before, we have a lot of there's some mix impact, segment mix impacts that can kind of throw some of these things off. If you look at our A and P, right now, we're at 19.7%. But if you look at our European operations, they're at 22%.

Speaker 3

And the reason why we're lower than that is because U. S. Operations is more in the 15% to 16% range. And it's the same thing on COGS. So I think what you can probably expect to see really over the long term is U.

Speaker 3

S. Operations gross margins will probably continue to improve. A and P will continue to increase. And that's but overall margins will remain roughly the same.

Speaker 1

Great. Thank

Speaker 2

you. Excuse me. I would like to if we have time, I would like to go back to this interesting point of Lacoste and Cavelu, which are the 2 new license that just started. We took them over January 1. I think we're going to see some good surprise on both because the former licensee didn't put a lot of inventory in the market.

Speaker 2

And there is from the orders that we are receiving in the Q1, we see that there is a large appetite for our Lacoste existing product and also for Carcavali from the troops that I make, we see empty shelf and we have to replenish this shelf quickly. So there is if it continues at the level that we are seeing now, we have a lot of chance to make the bigger numbers on that for Cavalli and for

Operator

this year. Thank you. And our next question comes from Ashley Helgans with Jefferies. Please state your question.

Speaker 1

Hi. This is Sydney on for Ashley. I was just wondering if you can talk a little bit about what you're seeing in terms of consumer price sensitivity and maybe just also sensitivity to promotion. And then any kind of color you can give in terms of what you're expecting for the broader fragrance category promotional environment looking out through 2024?

Speaker 2

Well, I can try to answer. But as I said before, we have seen a premiumization in the market for sure. There is a there are more and more consumer willing to spend more for higher quality fragrance. When I say higher quality, meaning more concentrated fragrance. So instead of buying eau de toilette, they will buy eau de parfum.

Speaker 2

So it could be more expensive. We see no real price resistance when it comes to fragrance. We see also worldwide more people buying larger size, which is also a sign. Our fragrance come usually in 3 sizes. Let's call it small, medium and large.

Speaker 2

More than 50% of the sales are in the large size. So this of course helps the business. It has not always been like that. So and we see this trend continue. We see it in the brick and mortar business and of course in the very important e commerce business.

Speaker 2

Michel, you have something to add? Yes. No, I think I would

Speaker 3

say the market has been generally very strong. So even if there is if there were to be any price elasticity related to pricing, we're certainly not seeing it or there's a very strong underlying trend that's kind of pushing the market up that would be offsetting that. And on the promotion side, we're not really seeing any significant increases in the promotional levels. Typically holiday, you get your normal gift sets. There's some various events throughout the holiday season to facilitate sell through, but we haven't really seen any significant increases in promotional activity either.

Speaker 1

Got it. That's helpful. And then just one more from us was any updates you can kind of give us on the travel retail channel and what you're seeing there?

Speaker 2

Travel retail is really back. We have all the operators, the largest operators and there is less than a dozen of them. Going back, they're strong with a lot of programs at higher price. And in Europe, in the U. S.

Speaker 2

And in Asia, except China, we will see a nice increase in our travel retail.

Speaker 1

Got it. Thank you so much.

Operator

Thank you. And our next question comes from Hamed Khorsand with BWS Financial. Please state your question.

Speaker 5

Hey, good morning or good afternoon, John. So first thing I want to ask you is, are you seeing any difference? Can you hear me?

Speaker 2

Yes.

Speaker 5

Yes. Are you seeing any difference in your relationship with the retailers and what's going on with you going direct and how beneficial that is for you? Are they buying more because you're establishing relationship? Or how is it different?

Speaker 2

I am not sure.

Speaker 3

Michel? Yes. So let me try to take that and then Joao you can maybe fill in. I mean, obviously, there's always a benefit in going direct because if you go direct, you can obviously pick up a piece of the overall value that is out there, if you can do it obviously efficiently. The second benefit that you get is effectively you're closer to the business, you're closer to the pulse of the business.

Speaker 3

When you're selling to a distributor, you don't necessarily have as much visibility on what the retailers are doing. Obviously, you have ongoing conversations with your distributor, you stock you track stock and trade, you track their stock levels, you look at offtake. But when you're one step closer to that consumer, to that retailer, it definitely helps the relationship. You also are the one talking about your brands. And obviously, we always know how to talk about our brands even if partners are also very well trained.

Speaker 3

We definitely are one step closer as well. So I think all of that just creates positive momentum and inevitably kind of helps us. Okay. I understand.

Speaker 2

I hope you agree. We have direct relationship with retailers in many countries. And of course, we can respond much more faster than when you have a distributor in the middle for sure.

Speaker 3

Okay.

Speaker 5

And then have you changed up any of your timeline for new releases this year? Are you staying put?

Speaker 3

Yes. I think there's some if you really look at this the business overall, typically what you see is from a seasonality standpoint, I mean a lot of if you look at a stable FMCG business, it's pretty much everybody's buying every quarter, roughly a quarter, a quarter, a quarter. What you see on the fragrance business, it's much more skewed to the second half of the year. And if you look at what we did this year, this year we are about roughly 47% of our business was in the first half and 53% was in the second half. Normally, it's more like a 46%, 54% split.

Speaker 3

And this year was a bit of an outlier because we had a very, very strong Q1 last year with a lot of innovation, particularly on Mambo and Jimmy Choo. So this is one of the reasons why we're guiding to a slightly slower growth relative to last year. It's more driven by seasonality of this market and this industry, which was a little bit off last year versus what we normally see.

Speaker 5

Okay. Thank you. Thank you.

Operator

Thank you. And there are no further questions at this time. I'll turn the floor back over to Michel Atwood for closing remarks.

Speaker 3

Okay. Well, thank you really all for joining our call today. Really, before I end the call, I wanted to take this opportunity to really thank our teams. They're really the unsung heroes here. They're not on this call, but they're all behind us.

Speaker 3

For those that have been following us for a while, I think you've all seen the pace of growth and transformation over the last few years. It's been really considerable and we could not have achieved this, not only achieved and sustained these record results without all of their hard work and dedication. So really again, wanted to really thank our teams today to all of you. Last thing I would like to do is just also maybe announce some upcoming events. So first Jean, I will be joining D.

Speaker 3

A. Davidson's inaugural Best of the Breed Bison Virtual Conferences on March 8. And separately Jean will also be attending the Raymond James Beauty Leaders dinner in London on March 19. So please reach out to the respective sales representatives if you're interested in partaking in these events. Obviously, if you have any additional questions, you can contact Karen Daly from The Equity Group, our Investor Relations representative.

Speaker 3

Her telephone number and email address can be found on our most recent earnings release. And obviously, I'm always available as well to answer any questions. We look forward to the next conference call. And we wanted to thank you again and wish you all a great day.

Operator

Thank you. And that concludes today's conference. All parties may

Powered by Quartr
Earnings Conference Call
Inter Parfums Q4 2023
00:00 / 00:00