Perfumania Holdings (PERF) operates as a wholesaler and retailer of designer perfume and fragrances. The company also offers bath aides and skin care products for men, women and children. Perfumania primarily markets its products through the Website Perfumania.com. On Friday, the company warned investors same-store sales and earnings for October 2008 will fail to meet expectations due to a weak U.S. economy. The company also said it will reduce the number of new stores it opens in 2009. Perfumania opened 56 new stores in fiscal 2008.
Slumping sales in August and September, inventory reductions at the company’s recently acquired Model Reorg business, and lower orders from important customers dampened Perfumania’s second quarter results. For the first seven weeks of the third quarter, Perfumania’s same store sales are off by about three percent, the New York-based company said. For the second quarter, Perfumania posted a loss of $2 million, or 65 cents per share, compared with a loss of $413,000, or 14 cents per share, a year earlier. Sales fell $62.1 million from $73.4 million.
Perfumania’s main rivals include Ulta Salon, Cosmetics & Fragrance Inc. and the privately held Sephora USA Inc. Retailers have been especially hard hit by the slowdown in consumer spending due to the slumping US economy. Many large cap retailers have been lowering profit forecasts over the past several months as the US economy continues to shed jobs and consumer spending continues its downward spiral. Pefumania’s shares are 59-percent owned by company insiders, with another 20 percent owned by some 14 institutions. Mutual fund owners include T. Rowe Price and Vanguard.
On Friday, Perfumania shares shed more than half their value, closing at $10.18 after closing at 21.02 on Thursday. The shares traded between $9.29 and $17.01 during Friday’s trading session on volume of almost 138,000 shares, more than 13 times the daily average of the past three months. Perfumania has a market value of $91.2 million and almost 250 employees.
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