Why Justin Bieber Is Sending Elizabeth Arden Stock Lower - Stocks in the News
Elizabeth Arden Inc. ( RDEN ) is a global marketer and manufacturer of fragrance brands with products such as Red Door Spa, 5 th Avenue, Geoffrey Beene's Grey Flannel, and most recently, the Justin Bieber and Taylor Swift fragrances.
Shares of Elizabeth Arden opened on Thursday down about 24%, and the main headliner for the sell-off was weakness in sales for many of its celebrity fragrances. In the company's fiscal year fourth quarter, net sales were $191.7 million, a decrease of 28.4% as compared to the prior year. Analysts were expecting EPS to come in with a net loss of .29, and reported EPS came in lower at a net loss of $1.04 per share, a negative reported earnings surprise of 258.62%.
For fiscal year ending June 30th, net sales were $1.164 billion, a decrease of 13.4% from the prior year. The net loss per diluted share for the fiscal year ending on June 30 was $4.90.
Reason for Terrible Earnings
Arden said sales were weaker than expected because of a steeper than anticipated decline in the sale of its Justin Bieber and Taylor Swift fragrances.
In its earnings press release, the company said, "While the Company had expected weaker sales comparisons due to the lower level of fragrance launch activity in fiscal 2014 versus fiscal 2013, the decline in sales of celebrity fragrances, particularly the Justin Bieber and Taylor Swift fragrances , was steeper than anticipated" (emphasis our own).
Although, analysts do have a consensus earnings estimates as $.21 and $.93 per share for the next quarter and next full fiscal year, respectively. But, no analyst has positively revised their earnings estimate for the coming quarters and all analysts have had negative earnings revisions for the coming quarters in the past few months.
For the past year, Elizabeth Arden has disappointed by large amounts and on average, has missed earnings by 1,080%. Can this stock that has been public since mid-1990's show resilience and be at a price that it once was?
We currently rank the cosmetics company with a Zacks Rank #5 (strong sell) after continued disappointing earnings and negative earnings estimate revisions. We also categorize Elizabeth Arden to be in the Cosmetics Industry and this segment is ranked in the bottom 12% of all industries .
Can this stock that has been public since mid-1990's show resilience and be at a price that it once was? Investors should be cautious if they are short-term investing due to dismal earnings reports within the past year and the weak outlook, but this aged-old stock should be around for decades having plenty of time to fix their current business plan.
The company said in their press release that, "Fiscal 2015 will be focused on stabilizing the business and will be the first year of a multi-year plan to rebuild profitability, but the first quarter of fiscal 2015 will continue to be challenged by the same factors that affected recent quarters".
In other words, RDEN shares don't exactly have a nice aroma right now, and the after-effects from this quarter's miss, along with recent troubles, might be here to stay for at least a few quarters. Instead, investors may want to consider a better Ranked stock in the near term, such as Kao Corp ( KCRPY ), the only strong buy ranked stock in the industry at time of writing.