NEW YORK, Nov. 3 /PRNewswire-FirstCall/ — Elizabeth Arden, Inc. , a global prestige beauty products company, today announced financial results for the first fiscal quarter ended September 30, 2005.


Net sales increased 7.2% to $227.4 million for the three months ended September 30, 2005, from $212.2 million in the comparable period of the prior year. The sales growth was driven by the launch of the fantasy Britney Spears fragrance in U.S. department stores and the Elizabeth Arden after five fragrance into international markets as well as greater shipments of fragrances, including the curious Britney Spears fragrance, to mass retailers. Excluding the favorable impact of foreign currency translation, net sales increased 6.2%.

Gross margin, which was 39.2% for the quarter, was affected primarily by weak sales performance and higher returns provisions for retailers in Western Europe and secondarily, by a weak performing gift-with-purchase program for the Elizabeth Arden brand in North American department stores. Marketing and advertising costs increased due to the launch of the fantasy Britney Spears fragrance, higher royalties for the Britney Spears fragrances and to support the launch of PREVAGE(TM) in the second fiscal quarter.

In line with previously announced expectations, net income was $1.9 million, or $0.06 per diluted share, excluding the impact of FAS 123R, “Share-Based Payment,” of $1.4 million before taxes, compared to $4.8 million, or $0.16 per diluted share, in the same period last year. On a reported basis, net income was $0.9 million, or $0.03 per diluted share.

E. Scott Beattie, Chairman and Chief Executive Officer of Elizabeth Arden, Inc., commented, “Despite a volatile economic environment and decreasing consumer confidence, we are pleased with the sales growth and product launches during the first quarter. The fantasy Britney Spears fragrance, which was launched into U.S. department stores in September, is off to a strong start and currently ranks as the number one or two fragrance launch with most retailers. We exceeded our retail launch plans and have significant promotional programs for both Britney Spears fragrances planned for the season. We expect to exceed retailer expectations this quarter as well. The launch of PREVAGE(TM), the breakthrough anti-aging treatment, is scheduled to begin shipping to U.S. department stores this month and globally in the third and fourth fiscal quarters. Based on the enthusiastic retailer reception and continued success in the dermatology market for PREVAGE MD(TM), we are optimistic that PREVAGE(TM) will dramatically improve the Elizabeth Arden skin care business globally.”

Mr. Beattie continued, “An area that has been and continues to be challenging is the developed markets of Western Europe. While our expectations for the year assumed a degree of softness in that market, consumer spending continues to be extremely depressed, and, therefore, we are projecting a weaker holiday selling season in Western Europe than we had originally planned. This, along with increased returns provisions and reduced replenishment associated with the accelerated door closings resulting from the Federated Department Store and The May Department Stores Company merger is expected to reduce EBITDA by approximately $5 million to $7 million. Accordingly, we are revising our second quarter and full year guidance.”

“At the same time, the rest of our business overall is performing as we had expected. Our business with mass retailers is performing well and most international markets outside of Western Europe are performing at or better than we had planned. This, along with our innovation and global launch schedule, including the launch of the fantasy Britney Spears fragrance and PREVAGE(TM) on a global basis and the Daytona 500 fragrance introduction in the U.S. in the second half of the fiscal year, gives us the confidence in our original expectations for the back half of the year, and that we expect to be able to offset any impact caused by declining consumer confidence and high energy prices on consumer spending.” Mr. Beattie added.

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