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Elizabeth Arden CEO Points To Weakness At Walmart

|Includes:Wal-Mart Stores, Inc. (WMT)

Sometimes if you can connect-the-dots, it can give you a decent chance of predicting future results. Elizabeth Arden (NASDAQ:RDEN) reported a dismal quarter today. The company missed earnings and sales by a mile and also guided next quarter and the full year way below Wall Street estimates.

The company in their press release said one of the key reasons the results were so poor was:

" due to weakness at one of our largest North American mass retail customers, both in terms of retail sales performance and replenishment rate" (Source Link)

The financial media later in the morning quickly worked their sources to find the identity of this un-named mass market retailer.

Wal-Mart is the (unnamed) retailer that Elizabeth Arden says ordered much less inventory than expected -- @bobpisani $RDEN $WMT

- Carl Quintanilla (@carlquintanilla) August 8, 2013

CNBC's Carl Quintanilla confirmed to me (Source Link) that their reporter Bob Pisani did actual "shoe leather" journalistic reporting to confirm that it was Walmart (NYSE:WMT) that was the un-named retailer. Reuters also reported the retailer was Walmart (Source Link).

Why is this a big deal? So what if Walmart ordered less Elizabeth Arden products? The nugget comes from what the CEO of Elizabeth Arden said on their earnings conference call this morning:

Largest mass retailer account in the U.S. has experienced negative retail sales trends and even worse replenishment trends. The replenishment trends actually accelerated in the fourth quarter despite improvement in retail trends..

This is not a unique situation to us or to our category. This is not a brand issue, not a fragrance category issue as we actually built market-share in this key account..we actually..successful in the remainder of our mass retailer accounts (Source Q4 2013 Elizabeth Arden Conference Call Link)

The CEO is basically saying this large account, which we now know is Walmart, is under-performing all their other mass retailers and the poor business trends are "across-the-board". The poor order rates are not just their account or the fragrance category.

If this CEO is accurate with his commentary, it is highly likely Walmart will report poor financial sales results and guidance when it reports next week on August 15th.

Disclosure: I am short WMT.

Stocks: WMT