Elizabeth Arden is a belieber

What is a belieber? The definition on urban dictionary is one who is an obsessive fan of Justin Bieber, as the site explains ‘once I saw his face, I was a belieber’. I am not making this stuff up, his fans are fanatical. Elizabeth Arden (RDEN) is one these fans, purchasing the rights to Justin Biebers fragrance range in June from Give back brands. According to NPD (a market research firm), his debut fragrance ‘Someday’ was ranked the #1 women's fragrance launch of the year 2011. His next fragrance ‘Girlfriend’ has just launched and by all reports off to a terrific start.

RDEN is more famous for its fragrance brands than skin care (see chart below). RDEN dominates the music fragrance market with Taylor Swift, Mariah Carey, Britney Spears and Hilary Duff. The transaction also resulted in the purchase of Nicki Minaj’s (famous hip hop singer) fragrance which will debut this fall in the US.

Source: Elizabeth Arden 10K

RDEN is predominately a North American business with 63% of overall sales from the region. RDEN’s skin care category is dominant in North America with low penetration overseas. RDEN is not in Japan, Germany or France, 3 of the top 5 markets in the world. RDEN has invested in itself these past few months to make the brand more modern with new product and marketing initiatives in North America with plans to roll out the changes internationally.

One thing to like about RDEN is the lack of coverage. This is a great analyst list no big banks here with a market capitalisation of $1.3 billion it is undercovered.

Firm
BMO Capital Markets
Buckingham Research
Oppenheimer & Co.
CJS Securities
RBC Capital Markets
Stephens
SunTrust Robinson Humphrey
Telsey Advisory Group

Source: http://corporate.elizabetharden.com/analyst-coverage.php

RDEN guided to earnings of $2.55 to $2.70 per share topping analysts views of $2.38, importantly this guidance was given assuming a poor economic environment. No other beauty/fragrance companies are executing and upgrading earnings in this environment with these results I’m a belieber.

Jason

http://www.decisiveassetmanagement.com/

Disclosure: Decisive is long RDEN

The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.