Perfumania's Q3 doesn't smell so nice

The value proposition of Perfumania stores is under scrutiny after the retailer reported dismal same store sale for the third quarter.



For the 13-week period ended Oct. 31, net sales at Perfumania decreased 8% to $142 million, compared to $154.3 million in the prior year. Same-store sales decreased 22.1%. Net income was $3 million, or net income per diluted share of 20 cents, compared to a net income of $7.5 million, or a net income per diluted share of 48 cents during last year’s third quarter.



“The quarterly retail sales and gross margin decline was largely attributable to locations in areas dependent on high tourist foot traffic or in older malls. As other retailers have reported, third quarter sales at malls across the country were significantly lower than in prior years, in particular at stores in B and C-rated malls, as well as across the mass market, where celebrity fragrances in particular experienced a decline. In addition, Perfumania stores across Florida were especially impacted by the devaluation of many major foreign currencies, including the Euro,” said Michael Katz, president and CEO of Perfumania. “Notwithstanding the retail challenges, we generated very strong results across a number of our brands, including Vince Camuto and Jessica Simpson. In addition, our initiatives around loyalty programs, enterprise selling orders and increasing traffic to our website continue to gain momentum.”



The retailer says it intends to shift its fragrance mix from a celebrity-centric offering to a more designer-based fragrance and brand portfolio. “We are in discussions with a number of high-profile designers that we expect to be able to announce in the near future,” Katz said.



Perfumania Holdings, Inc. operates 319 corporate-owned retail stores and a website.