INTERPARFUMS INC Q4 FY2024 earnings call

• 2024 was a strong year with record fourth-quarter sales and earnings; sales were $1.452 billion and adjusted earnings before impairment were $5.18 per diluted share, beating guidance.
• Launched new brands Lacoste and Roberto Cavalli; renewed license with Bank of America and signed agreement for off-price fragrance business starting 2026.
• Jimmy Choo grew 7%, Guess 13%, Donna Karan/DKNY fragrances exceeded $100 million in sales. Ferragamo to launch new blockbuster 'Fiamma' in 2025 with over $20 million investment.
• Lacoste had over $84 million in sales (6% of total) in its first year; Roberto Cavalli had $31 million in sales in less than 11 months.
• 2024 saw growth in all major markets: North America +6%, Western Europe +21%, Asia Pacific +3%, Middle East and Africa +5%, Eastern Europe +14%, Central and South America +17%; travel retail sales up 20%.
• Transitioning supply chain in Europe and US to third-party logistics to streamline operations and reduce costs; plan to complete US warehouse transition by June 2025.
• Emphasized omnichannel services, including e-commerce growth on platforms like Amazon, Divabox, and TikTok Shop.

The company has two business segments: European-based operations and US-based operations. For European-based operations, net sales grew 10% for the year, with net income attributable to European-based operations growing 12% to $140 million for the full year. For US-based operations, net sales increased 12% for the year, and net income attributable to US-based operations grew 8% to $69 million for the full year. Consolidated net sales grew 10% in both the final quarter and the full year to $362 million and $1.452 billion, respectively, with gross margin at 64.5% for the fourth quarter and 63.9% for the full year. SG&A as a percentage of net sales was 44.7%, up 10 basis points from the prior year.

• Maintained guidance for 2025 with net sales expected to be $1.51 billion and EPS of $5.35 per share, representing a 4% growth across the board.
• Acknowledged FX headwinds in the first quarter of 2025, expected to impact by about two points, possibly extending into the rest of the year, but remains confident in achieving guidance.

• Potential tariffs on components sourced from multiple regions, including China; working to mitigate cost impact and avoid passing on to partners.
• Regulatory challenges such as MOCRA (modernization of cosmetics and regulation act) and reformulating about 80% of formulas and packaging over the next three years to meet safety and compliance standards.
• Currency fluctuations affecting financial performance, including impact on imports and exports.

Q: Could you talk about destocking in the industry and channel inventory?

A: Jean Madar said sell-in and sell-out gap reduced in last two to three months, not as severe as 2024; Michel Atwood added most destocking effect was in first nine months of 2024, with fourth quarter moderate.

Q: What about competition changing and market share gain in 2025?

A: Michel Atwood noted peer group growth below overall market, competitors' operating margins eroding; Jean Madar stated innovation in brands (blockbusters, extensions) gives tools to gain market share.

Q: Ferragamo blockbuster launch details?

A: Jean Madar said starts in second quarter, accelerates in third quarter; important markets include USA, Italy, Mexico, and China, with gradual rollout.

Q: Specific markets and promotional levels in 2025?

A: Michel Atwood mentioned US market growth slowed from first to fourth quarter; Jean Madar said promotional levels expected to be similar to 2024, with significant investment in A&P.

Q: Brand performance building blocks and recovery in 2025?

A: Michel Atwood said declines in some brands due to footprint issues; Jean Madar noted focus on largest brands and innovation for smaller brands, with MCM expected to grow in 2025.

Q: 2025 gross margin, operating margin, and quarterly trends?

A: Michel Atwood said first quarter impacted by Dunhill loss and FX; gross margin not expected to change significantly; SG&A phased A&P into first quarter for better ROI.

Q: 2025 start trends and fragrance dynamics?

A: Jean Madar said sell-in vs sell-out gap improved; trends include more men entering fragrance category and demand for long-lasting fragrances; first and second quarters expected to be lower than third and fourth due to blockbuster rollouts.