Summary
By signing such figures as Britney Spears and Jeff Gordon to its list of celebrity endorsers, Elizabeth Arden is positioning itself for excellent growth in 2005, according to Business Week. Already a major player in the cosmetics and fragrances market, Business Week expects that Elizabeth Arden's marketing campaign will bring in new customers. Thus, they have given the company a 5-star or "strong buy" rating.
Original source:
http://www.businessweek.com/bwdaily/dnflash/feb2005/nf20050215_5641.htm
Details
- hile the company's newest celebrity-themed fragrances may lack the old-time glamour of its department-store mainstays -- Elizabeth Taylor and Elizabeth Arden -- Standard & Poor's thinks its future growth is likely to come from consumers' channel shift to mass retail, along with new fragrances, acquisitions, and growing distribution.
- We consider Arden a growth stock in a mature industry that investors can purchase at a reasonable price.
- The company's strong execution, coupled with improving stature in the fragrance and cosmetics industries, will help manufacturers and celebrities look to Arden as an attractive partner, we believe.
- Net sales of fragrance and ancillary products were $623 million in fiscal 2004 ended June, about 76% of the total.
- YOUNGER CELEBRITIES Arden owns and licenses about 50 fragrance brands and distributes more than 250 scents under brands manufactured by others, mainly to mass retailers.
- Over the years, the business has developed or acquired an extensive list of popular fragrance brands such as Elizabeth Taylor's White Diamonds, Elizabeth Arden, Geoffrey Beene, and Halston.
- Indeed, Arden had 18 of the 25 top-selling prestige fragrances in the U.S. mass retail channel in 2003, according to the NPD Group and company sources.
- We think the Britney Spears' Curious fragrance, introduced in the September, 2004, quarter, has been a great success.
- As a result, the fragrance's distribution has been extended to international markets, with plans to launch a second Britney Spears fragrance this fall.
- With our projection of nearly 9% average growth in sales and 28% in earnings over the next two fiscal years, we view the stock as undervalued.
- We see operating income increasing 18% in fiscal 2005, with expectations for significantly wider gross margins than in the prior year and a marketing spending boost to support new products.
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