Parlux Earnings Preview

May.25.11 | About: Parlux Fragrances, (PARL)

On Wednesday, May 25, after the market closes, Parlux Fragrances (NASDAQ:PARL) will release its annual results for its fiscal year ended March 31 and projections for fiscal year 2012.

The perfume industry has done very well lately. Inter Parfumes (NASDAQ:IPAR), Parlux's competitor, had record sales and earnings last quarter. Although IPAR and PARL both sell in the same stores like Macy's and Dillards, PARL has a different kind of product. PARL uses many celebrities to represent its products, and IPAR doesn't.

Assuming most people reading this report are men, realize that celebrities can sometimes have a very strong influence on women. You can see this demonstrated in the video links below.

I believe both PARL's annual results and projections will be strong. I have a few reasons for my prediction, but the main reason is ... Rihanna! I predict Rihanna's perfume, Reb'l Fleur, which was launched in January of this year, will report excellent sales for quarter 4, and a good outlook for fiscal year 2012. There are three reasons for this:1. Rihanna is marketing it like crazy, and so is Macy's. When I was in the Macy's on Herald's Square a couple weeks ago, I noticed it has a huge section for Parlux Fragrances and especially Reb'l Fleur in the front of the fragrance section as you walk in -- a prime spot. Sales at Macy's stores rose 5.4% last quarter, which means it's getting more foot traffic than in the previous year. This video shows Rihanna promoting it in the mall; notice the Macy's logo is next to the Reb'l Fleur logo. Here's another video of Rihanna at Macy's.

2. The third most popular celebrity fragrance in the US is Beyonce's Heat. That's proof that a black female pop singer can have an extremely popular perfume. Rihanna's perfume may end up being more popular than Beyonce's. Reb'l Fleur's promotional video on Youtube got 1.1 million hits since being put up on February 10. Beyonce's Heat video on Youtube has 2 million hits and it has been around since January 2010. In half a year, the Reb'l Fleur video is on target to have more views than the Heat video.

In its first month, Heat had $3 million in sales and was sold exclusively at Macy's. And that's only the first month and just at Macy's. If Rihanna's perfume sells $10 million in revenues for the quarter ending March 31, that would make a huge impact on the quarter. For the same quarter last year, Parlux only had $17.7 million in total revenues (although keep in mind that's net revenues).

3. Rihanna is very hot worldwide right now, and her concerts are usually sold out in every country she tours in. Reb'l Fleur is sold worldwide.

Paris Hilton and Jessica Simpson's perfumes, both sold by Parlux, are still very popular and their sales have grown since last year. Hilton's and Simpson's perfume sales grew by $6.4 million and $1 million, respectively, during the nine months ended December 31, 2010 over the same period the previous year. Parlux's Queen Latifah sales, however, have dropped by $4.5 million during that period.

Disclosure: I am long PARL.