Why Elizabeth Arden Shares Tumbled
Jan 31st 2013 4:21PM
Updated Jan 31st 2013 4:36PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of beauty-products maker Elizabeth Arden were cracking up today, falling as much as 22% after its earnings report left investors wanting.
So what: The cosmetics company grew earnings per share 11% to $1.58, but that was short of estimates at $1.63. Revenue also missed as sales of $468 million were well below the analyst consensus at $492 million. Arden blamed slow sales at department stores for the miss, and also dialed back its 2013 forecast. The company now sees sales growth of 9% to 11% instead of the 13.5% to 15% it had earlier predicted. Revised EPS guidance of $2.30 to $2.50 was down from a previous range of $2.55 to $2.70, and below estimates of $2.66.
Now what: The holiday quarter is key in the cosmetics industry, which helps explain why Arden is taking such a big hit on the news. Arden is in the middle of a transition toward a higher-end brand image, converting its flagship counters, where it saw a 24% increase in year-over-year sales. Given the positive momentum in some areas and the opportunities being uncovered through new partnerships and rebranding, today's drop seems overdone.
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The article Why Elizabeth Arden Shares Tumbled originally appeared on Fool.com.Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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