Elizabeth Arden, Liz Claiborne sign long-term fragrance deal
NEW YORK Elizabeth Arden and Liz Claiborne have entered an exclusive long-term global licensing deal for Liz Claiborne fragrance brands. Terms of the deal were not disclosed.
The Liz Claiborne fragrance portfolio consists of such products as Juicy Couture, Usher, Curve by Liz Claiborne, Lucky Brand and the Liz, Realities, Bora Bora and Mambo fragrances.
According to E. Scott Beattie, chairman, president and chief executive officer of Elizabeth Arden, the deal will allow the company to benefit from improved market share and productivity in its North American fragrance business, gain efficiencies from a larger fragrance business, increase gross margins and bolster sales volume of its international business.
For Liz Claiborne, the transaction will enable it to maximize profitability going forward. “Through this partnership with Elizabeth Arden, we can continue to successfully develop and market brand enhancing fragrances in a more capital efficient manner, leveraging our strength in brand building with Arden’s expertise in developing and growing fragrance businesses,” stated William McComb, chief executive officer of Liz Claiborne.
Liz Claiborne expects the transaction to have a positive impact on its 2008 cash flows and to have no impact on 2008 projected adjusted EPS and operating margin. Looking forward to 2009 and beyond, the company expects the impact of the royalty income to be accretive to both EPS and operating margin.
Elizabeth Arden expects the deal to contribute to both net sales and earnings growth in fiscal 2009. It expects to incur advertising and marketing expenses paid by Liz Claiborne and other transaction related expenses during the fourth quarter of fiscal 2008 and the first half of fiscal 2009. Elizabeth Arden expects its gross margins to be impacted in the fourth quarter of fiscal 2008 and through the first half of fiscal 2009 by the sale of Liz Claiborne inventory that Elizabeth Arden acquired prior to the effective date as a distributor. After the full impact of these costs, Elizabeth Arden expects the deal to be accretive to earnings in the first half of fiscal 2009.