Elizabeth Arden receives a 5-star rating from Business Week for new marketing campaign

• 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.