Will Glenn Nussdorf Wrestle Away Parlux Fragrances From CEO Ilia Leckach?

The saga continues with Parlux Fragrances (PARL). Yesterday there was an SEC filing by major shareholder, Glenn H. Nussdorf. I believe this 13D filing is what moved the price of PARL up almost 10 percent yesterday morning. I discovered the details of Nussdorf’s letter at 13D Tracker (hat tip goes to Geoff Gannon for emailing me this).

Mr. Nussdorf sent a letter to the Parlux Fragrances’ Board of Directors indicating that he did not believe that Victory International would be able to buy the Perry Ellis line from Parlux Fragrances. Glenn Nussdorf provided the following three reasons why the transaction would not likely occur:

1. Victory International does not have the financial means to go through with the transaction.
2. The licensor of Perry Ellis would not likely consent to the transaction.
3. It is likely that this transaction would require shareholder approval and some large shareholders might not support the sale of Perry Ellis.

So who is this Glenn Nussdorf? He is the owner of over 1.9 million shares of PARL (10.5 percent stake) and has been authorized to acquire more than 15 percent of Parlux’s outstanding shares. Glenn Nussdorf and his brother Stephen Nussdorf own 37% of E Com Ventures, Inc. (ECMV). Perfumania Marketing, E Com Ventures' wholly-owned subsidiary, is a leading specialty perfume discount retailer that I believe is largely dependent on Parlux Fragrances products, and in particular, the Perry Ellis line. Mr. Nussdorf is no ordinary shareholder. He appears to bring a unique set of interests to this Parlux Fragrances roller coaster.

It appears that E Com Ventures has been disposing of its shares of Parlux Fragrances. My guess is that those shares are being sold to Glenn Nussdorf, especially since they are being disposed of at a price between $9.00 and $9.15.

Meanwhile, Parlux Fragrances CEO and Chairman, Ilia Leckach has been unloading a large percentage of his shares. As of the September 22, 2006 Form 4 filing, Leckach has reduced his holdings down to 735,251 shares. This is down dramatically from the 2,113,674 shares he and his family reported owning directly and indirectly on August 21, 2006. It appears Mr. Leckach has lost faith in his company. Maybe this also indicates that he might not put up a fight against Nussdorf.

It will be interesting to see if Glenn Nussdorf can wrestle control of Parlux Fragrances. If he is successful and can turn this company around, there could be some nice recovery for Parlux shareholders.

PARL 1-yr chart:

Disclosure: My family still owns shares of Parlux Fragrances. My hope is to get off this roller coast at the top of the next loop.

Comment on this article

Comments

[Marcelo Lima:]

A few things are off:

1. Ilia Lekach probably still owns a bunch of PARL stock. The count in that filing is only his <em>personal<... holdings, but his wife, and other entities he controls, also own stock.
2. It's PARL that has been getting rid of ECMV stock, not the other way around. The prices in the filing are consistent with the prices on that trading day, and it's impossible to speculate on who the buyer might have been.

The bottom line is that this is a very decent company indeed, with a solid balance sheet and very good returns on capital. The problem is the convoluted nature of related party dealings and the opaqueness of management. But it's certainly trading (at around $5) below break-up value. I plan on attending the shareholder's meeting on Oct 13 to see what else I can find out.

2006 Sep 28 09:09 PM