INTERPARFUMS INC Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Started the year with net sales up 5% (7% like-for-like). Top brands like Coach, Jimmy Choo, Donna Karan/DKNY, Lacoste, and Casale performed well. Launched new fragrances. Prestige brand portfolio and distribution network positioned well. Supply chain flexibility helps respond to challenges. In US, Donna Karan/DKNY fragrance sales up 5%, new launches like Ferragamo Fiamma, Lacoste L1212 silver. Strategically refining brand portfolio, planning to launch own brand Solférino in July, assume full ownership of white brand names in 2026, acquired Annick Goutal. Renewed Coach license. Omnichannel capabilities important, e-commerce growing. Supply chain transition to third-party logistics in NJ by H2 2025. Addressing tariffs with supply chain adjustments, alternative sourcing, potential price increases. Focus on improving MSCI score to BBB.

Segment Performance

• European-based operations: Net sales rose 7% or 9% excluding foreign exchange. Gross margin increased by 150 basis points. SG&A expenses increased 6% to $96 million, but SG&A as a percentage of net sales decreased 40 basis points. Net income attributable to European operations grew 7% to $48 million.
• United States-based operations: Net sales increased by 3% on a like-for-like basis (11% organic growth in 2024 Q1). Reported net sales declined by 1% due to Dunhill license discontinuation. Gross margins remained flat at 58.7%. SG&A expenses increased 2% to $45 million. Net income attributable to US-based operations was $9 million.

Guidance

• Reaffirmed full year 2025 guidance of $1.51 billion in net sales and EPS of $5.35 per share.

Risks

• Tariffs pose a potential impact, but company is actively mitigating through supply chain adjustments, alternative sourcing, and potential price increases. However, uncertainty remains regarding tariff evolution after the 90-day moratorium.

Question and Answer

• Q: Susan Anderson on US business and consumer trends A: Michel Atwood discussed no significant sell-in/sell-out disconnect, US business strong despite market conditions, Europe and Asia trends with fragrance still growing but Europe more challenging.
• Q: Korinne Wolfmeyer on tariffs and operating margin A: Tariff exposure on components from China, plans to mitigate with price adjustments and supply chain moves. Operating margin upside due to brand/channel mix and A&P investment shifts.
• Q: Ashley Helgans on premium portfolio and luxury outperformance A: Michel Atwood and Jean Madar discussed luxury segment outperforming, focus on premiumization through brand portfolio moves like Annick Goutal acquisition and Van Cleef distribution.
• Q: Hamed Khorsand on premium in recession and sales guidance A: Michel Atwood explained sales guidance remains flat due to volatility, FX, and tariff uncertainties, with prudence in guidance