Boston, MA 08/21/2014 (wallstreetpr) – Elizabeth Arden, Inc. (NASDAQ:RDEN) announced that Rhône Capital has bought a stake in the firm. It will buy $50 million of the Elizabeth’s preferred stock. It will be eligible to get warrants to buy 2.5 million common shares priced at $20.39 each. It will represent around 7.6% of the Elizabeth’s shares outstanding. As per Elizabeth Arden, Rhône has plans to hike its ownership in the coming time. However, Rhône Capital is interested to acquire maximum 30% of common stock after it exercises the warrants.
Additional information
Rhone has got the additional power to appoint one member to the Elizabeth’s board. It is a part of the investment that is possible till the time Rhone maintains the initial held interest in Elizabeth Arden, Inc. (NASDAQ:RDEN). If it crosses the ownership stake of 20% or more, it will get the power to designate one more additional member on the board.
The poor performance
Elizabeth Arden, Inc. (NASDAQ:RDEN) posted biggest ever quarterly loss as the sales of its celebrity perfumes falls in the fourth quarter. The sales declined by 28.4% that is the biggest in a decade. Elizabeth also said that the sales will remain sluggish in the next six months. Elizabeth posted a loss of $155.9 million comparable to the loss of $5 million a year ago. It accounts for the loss of $5.24 a share comparable to the loss of 17 cents a share a year ago. The loss excluding the nonrecurring costs came at $1.04 per share comparable to profit of 10 cents per share a year ago.
The problem areas
The sales of celebrity perfumes like Taylor Swift and Justin Bieber brands took a hit in the fourth quarter. Also, Elizabeth Arden, Inc. (NASDAQ:RDEN) didn’t go for any significant perfume launches in the year. Retailers considered it wise to reduce inventory and opt for the heavy discounts. The problem is coming from a decline in disposable income that is not allowing the young adults and teens to buy the celebrity-branded perfumes.
