Perfumania continues slide in Q4; eyes store closures

After a difficult third quarter of fiscal 2016, Perfumania Holdings Inc. continued experiencing problems in the year’s fourth quarter.



The specialty chain is considering closing an unspecified number of underperforming stores after reporting net income of $2.26 million, down 59% from $5.5 million a year earlier. Lower gross profit and operating income helped slash profit.



Total net sales fell 11.5% to $162.48 million from $183.5 million, driven down by reduced same-store sales and lower store count with the average total number of stores at 319, compared to 325 the same quarter the prior year.



“The fourth quarter marked the conclusion of what was a transitional and challenging year for Perfumania largely related to a weak consumer environment, which impacted our retail operations,” said Michael Katz, president and CEO of Perfumania. “The fourth quarter and full year decline in net sales were largely attributable to lower foot traffic at stores, in particular those located in malls, and the ongoing slowdown in tourist-dependent areas, such as Florida, due to the devaluation of many major foreign currencies. Retail operations were also impacted, though to a lesser extent, by the closing of several store locations.”



In addition to focusing on unprofitable stores, Perfumania also recently launched new POS technology with full omnichannel capabilities that let store associates promote and cross-sell e-commerce products, and is pursuing partnerships with fragrance and fashion designers as it prepares to launch non-fragrance products in 2016.



For the full fiscal year, Perfumania swung to a net loss of $11.67 million from net income of $2.65 million in fiscal 2015. Net sales dropped 7% to $541.96 million from $583.95 million.