IP
INTER PARFUMS INC (IPAR)·Q4 2023 Earnings Summary
Executive Summary
- Q4 net sales rose 6% YoY to $328.7M with gross margin up 30 bps to 64.7%, but heavy fourth‑quarter A&P spend drove operating margin down to 5.7% and diluted EPS to $0.32 (‑37% YoY) .
- Management reaffirmed FY2024 guidance: revenue $1.45B and EPS $5.15, noting ~flat gross margin assumptions and ~21% A&P target; Lacoste amortization expected to trim 2024 EPS by ~$0.11 .
- Strategic catalysts: shipments of Lacoste (Jan) and Roberto Cavalli (Feb) began; combined 2024 contribution modeled at ~$90M with upside if Middle East remains stable; dividend raised 20% to $3.00 and 2024 buyback authorization up to 130k shares .
- Management emphasized premiumization, strong holiday sell‑through and early 2024 restocking as positives; caution persists on geopolitics (Middle East/Eastern Europe) and inventory normalization dynamics, but tone was confident on execution and market demand .
What Went Well and What Went Wrong
What Went Well
- Premiumization and brand momentum: “each of our three largest brands generated sales in excess of $200 million” in 2023; Jimmy Choo +19%, Montblanc +15%, Coach +25%; GUESS +23% .
- Healthy holiday sell‑through supported restocking: aggressive Q4 A&P “drove sell‑through for our retail partners, enabling 2024 first half restocking orders” .
- Geographic breadth and balance sheet: all major regions grew in 2023 (North America +22%, Europe +21%, Asia +17%); year‑end cash and ST investments ~$183M; working capital $514M; W/C ratio 2.6x .
What Went Wrong
- Profitability compression in Q4: operating income fell 19% YoY and EPS declined 37% YoY on heavy A&P (33% of Q4 sales vs 28% LY) and seasonality; operating margin 5.7% vs 7.5% LY .
- Inventory and working capital intensity: inventory days rose to 249 vs 231; management expects normalization as new licenses begin to ship .
- Macro/geopolitical visibility: ~8% of sales Middle East exposure and ~$50M Russia exposure cited; management remains conservative on 2024 outlook pending clarity .
Financial Results
Headline P&L vs prior periods and estimates (USD millions, except per-share and %)
Note: We attempted to retrieve S&P Global consensus estimates but access was unavailable at this time; therefore, estimate comparisons are not shown.
Segment/Operating view and selected mix indicators
Balance sheet and cash flow KPIs
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- “For the first time ever, each of our three largest brands generated sales in excess of $200 million… Jimmy Choo… Montblanc… Coach…” — Jean Madar, CEO .
- “We achieved our 2023 bottom line goal of $4.75 per diluted share… Excluding [a] $3.1 million tax assessment, we would have delivered $4.82…” — Michel Atwood, CFO .
- “We are reaffirming our 2024 guidance, which calls for net sales of $1.45 billion… earnings per diluted share of $5.15… [with] Lacoste non‑cash amortization… reduce… by ~$0.11.” — CFO .
- “Consolidated net sales grew 6% in the final quarter, reflecting 13% and 2% growth in our U.S.-based and European-based operations respectively.” — CFO .
- “We see no price resistance… more consumers… buy larger size… More than 50% of the sales are in the large size.” — CEO (Q&A) .
Q&A Highlights
- Exposure and prudence: ~8% of sales in Middle East; Russia revenue about $50M; conservative guide reflects macro risk, not brand health .
- 2024 margin framework: Expect ~flat gross margin; converge A&P toward ~21% of sales; U.S. business increasingly resembles Europe (higher GM and higher A&P) .
- New licenses trajectory: Company modeling ~$90M combined Lacoste+Cavalli in 2024; upside possible given early demand and prior licensee under‑stocking .
- Cash flow/dividend: Inventory build for new licenses largely in place; expect better FCF conversion, supporting 20% dividend hike to $3.00 .
- Seasonality: Expect 1H growth high‑single‑digit and 2H double‑digit given innovation calendar and new license sell‑in .
Estimates Context
- We attempted to retrieve S&P Global consensus (EPS and revenue) for Q4 2023; access was unavailable at this time, so estimate comparisons are not shown. As a result, “vs estimates” cells are marked N/A. We note management met full‑year EPS target ($4.75) and reaffirmed FY2024 guidance .
Key Takeaways for Investors
- Quality of growth remains strong amid premiumization; 2023 saw record sales and three $200M+ brands, setting a high base for 2024 .
- Q4 was deliberately investment‑heavy (A&P 33% of sales) to drive sell‑through and 1H24 restocking; sequential margin compression appears tactical, not structural .
- FY2024 guide looks prudently achievable (revenue $1.45B, EPS $5.15) with ~flat GM and A&P ~21%; upside skew from Lacoste/Cavalli if geopolitics stay calm .
- Balance sheet resilience (cash/ST investments ~$183M; W/C 2.6x) and a 20% dividend hike signal confidence; management also extended buybacks .
- Watch geopolitical headlines; Middle East (
8% sales) and Russia ($50M) exposures introduce event risk, which management has already embedded in cautious stance . - Near‑term trading catalyst: confirmation of early sell‑in/offtake for Lacoste and Cavalli and any upward revision to FY2024 guide as visibility improves .
- Medium‑term thesis: compounding via brand extensions, premiumization, and direct distribution mix shift (supports GM), balanced by structurally higher A&P to sustain share gains .