(News Bulletin 247) – The specialist in licensed perfumes is under pressure on the Paris Stock Exchange after the publication of its first-half accounts. Interparfums, however, confirms its sales target for the whole of 2024.

Interparfums delighted the market this summer by revealing a higher-than-expected activity in the second quarter. The specialist in licensed perfumes was able to count, among other things, on the promising first steps of the Lacoste license, obtained in December 2022 for a period of 15 years and which took effect on January 1 of this year.

Already published at the end of July, the company’s turnover had thus increased by almost 16% to reach 209.9 million euros in the second quarter, and by 6.7% to reach 422.6 million euros over the whole of the first half.

This Tuesday, the French group revealed its full financial performance for the first six months of 2024. The group announced that it had recorded an operating profit of 71.8 million euros, which contracted by 9% over one year. The corresponding margin significantly declined by 3.9 percentage points from one year to the next, to land at 21.9%.

High marketing spending

The group missed market expectations on the profitability front, as the group made significant marketing and advertising expenditures. According to a consensus quoted by Invest Securities, operating profit was expected at 97.2 million euros when the corresponding margin was expected at 23%.

“The results for the first half of the year are impacted by a +32% increase in marketing & advertising expenses which are returning to a normal level after a moderate level in the first half of 2023,” notes Invest Securities.

Philippe Santi, its deputy CEO, had declared last July that he was counting on a “limited decline” in this indicator in the first half of 2024 compared to an “exceptionally high” first half of 2023.

The group has indeed suffered from a demanding base effect compared to a high-flying first half of 2023. Between January and June of last year, operating income had jumped by 42% to reach 102.2 million euros when the corresponding margin had reached 25.8%, which was a “record and a singularity”, recalls Sarah Thirion, analyst at TP ICAP Midcap.

The company’s net profit followed the same trend, falling by 10% over the year to 69.6 million euros.

Cash flow has fallen sharply over the year, by 64% over the period due to maintaining a deliberately high level of stocks at the end of June 2024. Interparfums explains that it has had supply difficulties in recent years. The company explains that with the gradual reduction in these lead times observed since the end of 2023, it will be able to reduce stocks, which will have a beneficial effect on cash flow in the second half of 2024.

On the Paris Stock Exchange, investors are not happy with the latest publication from Interparfums, whose shares have fallen by 6.2%, and are experiencing the biggest decline on the Paris market.

Sales targets confirmed

On the outlook side, Interparfums is showing confidence. The group confirms its objectives announced in April, namely a turnover of 880 to 900 million euros, which suggests growth of 10.2% to 12.7% compared to the 798.5 million euros published for 2023.

This target includes an annual sales forecast of 60 million euros for the Lacoste license and therefore, by deduction, “growth outside the Lacoste scope of 3.5 to 4% on high base effects at 2 years and in a year without a major launch”, specifies TP ICAP Midcap.

Interparfums is also counting on an operating margin “at a high level” for the whole of the 2024 financial year. TP ICAP Midcap estimates it at around 19%. For the following year, Interparfums should, according to the research office, achieve a turnover growth of 10% for a financial year that will include “major launches, notably at Lanvin, Rochas, Van Cleef (launch of a historic collection), Moncler (men’s in collaboration with Fabien Baron), Lacoste (women’s) and, potentially Montblanc (new franchise in 2025 or 2026)”.