Interparfums, Inc. Common Stock 2026 Q2 Earnings Call

Thank you, Rob. Good morning, everyone. Joining us on the call today will be Chairman and Chief Executive Officer, Jean Madar, and Chief Financial Officer, Michel Atwood. As a reminder, this conference call may contain forward-looking statements which involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from projected results. These factors may be found in the company's filings with the Securities and Exchange Commission under the headings "Forward-looking Statements" and "Risk Factors." Forward-looking statements speak only as of the date on which they are made, and Inter Parfums undertakes no obligation to update the information discussed. Inter Parfums' consolidated results include two business segments, European-based operations through Interparfums SA, the company's 72-owned French subsidiary, and U.S.-based operations. It is now my pleasure to turn the call over to Jean Madar.

Jean, please go ahead. Thank you, Devin.

Good morning, everyone. Thank you for joining us on today's call. We are very pleased with our performance at the midpoint of the year, which reflects the appeal of our global brand portfolio and the strength of our underlying business, and also the disciplined execution, and also the continued dedication of our team. Despite the challenges that persist in our business and industry, these results gives me confidence in our ability to deliver on our full-year objectives and continue on the path towards creating long-term value for our shareholders. We delivered a 2% sales growth in both the second quarter and first half of 2026, supported by strong performance from several of our leading brands and a strong rebound in our U.S.-based operation off an admittedly weak comparison.

Excluding the war-related headwinds in the Middle East, organic sales advanced 4% in the quarter and 1% year to date. We maintained a robust financial position while continuing to invest in product initiatives that position us well for the balance of the year and beyond. Consolidated sales growth in the first half of the year reflect strong brand execution and solid performance in select regions, partially offset by macro and regional headwinds. North America, our largest market, was up 5%, propelled by a health category, a steady cadence of new extensions, most notably from Coach, and marketing investments that are clearly paying off. Asia Pacific was up 14% as initiatives supporting Coach and Montblanc took hold, GUESS extended its footprint in Australia and New Zealand, and our new Korean affiliate got off to an excellent start after several years of uneven results in the region.

We are also encouraged that consumers across Asia Pacific are increasingly embracing the fragrance category, we are moving quickly to capture that opportunity. In India, for example, we recently teamed up with a new distributor to bring Coach, Montblanc, and Jimmy Choo, and several of our other brands to one of the world's fastest-growing beauty market. Central and South America rose by 15% behind the continued success of Coach for Women and Men and Montblanc Legend line. Partially offsetting growth from these geographies, a few regions declined in the first half. Western Europe hit 3% on softer consumer demand. Eastern Europe was down 7% amid operational difficulties in certain markets, which weighted most heavily on Lanvin costs. Of course, Middle East and Africa fell 24% as the war in the region continued to weigh on our results.

Even with these pressures, our diversified footprint allowed us to grow overall, which speaks to the resilience of our model Looking at our brands, momentum in the first half was broad, and several of our largest properties finished the second quarter with real strength. Coach grew 10% in the first half, driven by strong performance in the U.S., its primary market, driven by continued demand across most existing line, and by the launch of new extensions in the Coach woman and Coach man franchises earlier in 2026. Montblanc advanced 6% in the first half of 2026 due to favorable exchange rates and the ongoing success of the Montblanc Explorer Extreme line and the strength of a Legend franchise. With sales holding firm in the second quarter and the first franchise arriving in 2027, we see plenty of runway ahead for this brand.

Next, Jimmy Choo was up 8% for the half year, capped by an impressive 23% jump second quarter. The brand's fragrances are winning over more and more customers, particularly in the U.S., thanks to the enduring popularity of I Want Choo and the very successful debut for Jimmy Choo Man Parfum. GUESS, largest U.S.-based brand, rose 11% in the first half, including 10% in the second quarter. The iconic franchise keeps delivering, now bolstered by Iconic Blue for Men and the newest Amoure extension, Amoure Napoli, which was launched in the second quarter. The brand's reach keeps widening as well. Today, for instance, GUESS stands among the top 15 fragrance brands in Australia. Let's talk about Ferragamo. Ferragamo sales jumped by 41% in the second quarter, bringing first half growth to 17%.

Growth was geographically broad, with the Signorina and Ferragamo lines performing very well, elevated by their latest launches introduced in late 2025. We rolled out a commercial innovation program across the brand's franchise in May, which further enhanced the brand's growth, including our newest extension, Fiamma Assoluta, which has seen very positive feedback so far. During the second quarter, Chinese singer and actor Karry Wang joined the Ferragamo family as the brand's global fragrance ambassador. As mentioned earlier, Asia Pacific is increasingly embracing fragrance. We're hopeful that Karry's affiliation with Ferragamo will further elevate the brand in this burgeoning market. Donna Karan DKNY climbed 12% in the first half, punctuated by a 28% increase in the second quarter, with healthy demand across categories and franchise and e-commerce becoming an increasing engine for the brand's growth. The Cashmere Mist deodorant remains a fixture on TikTok Shop and Amazon.

Roberto Cavalli grew 8% in the first half, fueled by this year's introduction across several franchises. Among them, the unisex scent Marbleous Cypress and several other fragrances launched earlier this year. Serpentine continues to be a massive success for the brand globally. The war in the Middle East is certainly impacting this brand, and Cavalli is our largest brand in the region. Notwithstanding the war's impact, our conviction and excitement, the trajectory of the brand remains strong. A few brands faced steeper comparisons. Lacoste came in 16% below last year, when a string of hit launches lifted first half sales 44%, and conditions in Eastern Europe added pressure. We introduced L.12.12 Bleu for Men during the second quarter. With major initiatives lined up for 2027 and 2028, we believe the brand's best performance lies ahead. Recognition keeps coming for our fragrance as well.

Bella Blanca from Oscar de la Renta took home the best eau de parfum at the Allure Fragrance Awards 2026. Ferragamo Signorina was honored as the best sensual gourmand fragrance at the Who What Wear Fragrance Awards 2026. Awards like this celebrate the artistry of our teams and partners and add to the desirability of our portfolio. Even as consumers remain increasingly selective about how they allocate their products, in the U.S., fragrance was once again the fastest-growing beauty category in the first half, owing to its status as an affordable indulgence and daily form of self-expression. The market has normalized after several years of exceptional growth. Opportunity remains attractive for us. Our strategy is very clear: win share with brands that have personality, quality, and global reach.

Across our portfolio, we have many ways to speak to consumers. That diversity is one of our greatest strengths. Beyond the success and innovation from our core brands so far this year, we've also made significant strides in developing and expanding our newest portfolio brands. Rick Owens is rebuilding momentum in high-end fragrance, with existing accounts having resumed distribution and reopening of Paris boutiques. We are also preparing the launch of new fragrances in 2027. Lastly, newly created high-end brand Solférino expanded to 100 total point of sales at the end of the first half of this year. We plan to launch an 11th fragrance to the initial collection in the second half of this year. We are also preparing for the first launches of new fragrances for Longchamp and Off-White in 2027.

Longchamp has the potential to become our next $100 million brand. Off-White represents another step for us into the high-end category. Layered on top of that is the extraordinary rise of digital commerce, which remained a growth driver for us in the second quarter, highlighting Amazon and TikTok Shop. Amazon now sells more beauty online than anyone else in both the U.S. and Europe, while TikTok Shop has become the fourth largest beauty e-commerce platform in the U.S. and is quickly expanding across Europe. We will stay ahead of the curve to identify evolving behaviors, continuously adapt how, where, and when we engage. We meet consumers not just where they are, but where they are heading. Consumers are also making fragrance personal, layering scents, assembling fragrance wardrobes, and turning to AI-powered recommendations to guide discovery.

However, they choose to find us on social media, on the major marketplaces, or in stores, we are meeting them with storytelling that carries across every channel and delivers an immersive, consistent brand experience. Ultimately, this business is about inspiring desire, offering consumers an entry point into the world of an iconic fashion house or celebrity, and we work every day to keep the desire burning across each of our brands. Travel retail remained a steady contributor, once again accounting for 7% of total net sales, in line with prior periods. Europe is where the channel is strongest today, with conditions softer elsewhere, including, of course, the Middle East, and we see steady growth ahead for this business. I will briefly touch on tariffs, given the newest round implemented under Section 301.