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Inter Parfums, inc (IPAR) Q3 2021 Earnings Call Transcript

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IPAR earnings call for the period ending September 30, 2021.

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Inter Parfums, inc (IPAR 0.34%)
Q3 2021 Earnings Call
Nov 9, 2021, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Hello. And welcome to the Inter Parfums Third Quarter 2021 Conference Call and Webcast. [Operator Instructions] As a reminder this conference is being recorded.

It's now my pleasure to turn the call over to Russell Greenberg, Executive Vice President and Chief Financial Officer of Inter Parfums. Please go ahead, sir.

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Russell Greenberg -- Executive Vice President and Chief Financial Officer

Thank you, operator, and good morning, everybody. And welcome to our third quarter 2021 conference call. As always, 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 include but are not limited to the risks and uncertainties discussed under the headings, Forward-looking Statements and Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020, and other reports we file from time to time with the Securities and Exchange Commission.

We do not intend to, and undertake no duty to update the information discussed. When we refer to our European-based operations, we are primarily talking about sales of prestige fragrance products managed through our 73% owned French subsidiary, Interparfums SA. And when we discuss our U.S.-based operations, we are primarily referring to sale of prestige fragrance products managed through our wholly owned domestic subsidiaries. Back when we announced results for the 2020 third quarter, we were pulling ourselves out of the business abyss of the second quarter following the paralytic measures undertaken to combat the COVID-19 pandemic.

Shortly thereafter, we announced our initial 2021 guidance when visibility was extremely poor as we were faced with uncertainty as to when stores would reopen, when shoppers and store personnel would return, when social distancing requirements would be minimized, and when all the other restrictions that we endured during the peak of the COVID pandemic would be lifted. It was lack of visibility, not conservativism, when we initially forecasted 2021 sales guidance in the range of $610 million to $625 million. Three increases later we are now looking for 2021 net sales of $810 million, or about 30% above the high end of that initial range.

Last fall, our initial EPS guidance was between $1.20 and $1.25, and it is now at $2.35. Excluding onetime gains, 2021 will be our best-ever year for sales and earnings per share. As you read in the release we issued yesterday, all stars were in alignment for our third quarter. Sales were better than our best expectations. One of the reasons for the surge in third quarter sales was because customers shifted some deliveries from Q4 into Q3. Our gross margin was exceptionally high due in part to a large portion of to a large of our sales being comprised of newly launched higher margin products.

Furthermore, advertising and promotion expenses were quite understated relative to the sales levels and the result was an operating margin of 25.7% in the third quarter. With respect to gross margins, I will once again make a comparison with 2019, as 2020 was really an outlier year. The year-to-date gross profit margin for European operations was 66%, compared to 65% in 2019. This year, we had a large number of new product rollouts for our European operations, including Montblanc Explorer Ultra Blue, I Want Choo by Jimmy Choo, Coach Sunset Dreams, [Indecipherable], Rochas Girl and Kate Spade New York.

And as I mentioned, our margins are considerably better on several of our new product launches. In addition, sales growth by our European operations was heavily weighted in the United States where we controlled the distribution through a majority owned subsidiary and therefore we book sales at wholesale rather than at ex-factory. These two factors have played a far more important role in expanding our gross margin than the exchange rate did in depressing it. For our U.S. operations, year-to-date gross margin was 53.2% as compared to 52.3% in the same period in 2019.

The 2021 rollout of new products for several of our brands, including GUESS, Anna Sui, and Oscar de la Renta and very importantly MCM help boost our margins for U.S. operations. With the unanticipated and sustained surge in sales through the first nine months of 2021, reaching our planned spend of 21% of net sales on advertising and promotions means that a big chunk of that investment is being made in the fourth quarter. Since year-to-date, only 14.2% of net sales has been expensed on advertising and promotion. In the final quarter of the year, we are investing in major promotion and advertising campaigns for our leading brands and new product launches.

If you have been following Inter Parfums for any length of time, you will know that we are usually somewhat conservative; conservative in our guidance and conservative in our balance sheet. So for us to invest almost $90 million in TV airtime, print ads in magazines and flyers, billboards in high traffic areas and online and social media advertising, the payback we expect is going to be exponential. Our goal is to accelerate sell-through during this holiday season, setting the stage for large reorders in the New Year, all leading to further in-market share. And we're doing this all at a time when the fragrance category is in high demand.

Closed the third quarter with working capital of $491 million, including approximately $324 million in cash, cash equivalents and short term investments and a working capital ratio of 3.3 to 1. The $126 million of long term debt relates to our new headquarters for our Paris-based majority owned subsidiary Interparfums SA, which was financed by a 10-year EUR120 million bank loan. That's approximately $139 million in dollars. In addition, finally, cash provided by operating activities aggregated over $100 million through September 30 in the 2021 year.

Now I will turn the call over to Jean.

Jean Madar -- Chairman & Chief Executive Officer

Thank you, Russ, and good morning, everyone. On our second quarter conference call in August, I summed up our message with three sentences. Business is booming, demand is strong, and virtually all our brands are outperforming what we budgeted at the start of the year. I cannot say in any better on today's call but what I can add is that we have made two important accretive brand license acquisitions that have the potential to accelerate our growth rate even further. I spoke about Ferragamo at length on our last call but there are a few more points I would like to make.

Ferragamo has been in the fragrance business for a long time and was operated by the Ferragamo fashion house. If you go on to the Ferragamo website you will see that in 2019, its fragrance sales were EUR87 million, around a $100 million. That number was slashed in half in 2020. When the Ferragamo family made the strategic decision to go to an outside partner, they choose us. I believe that we earned their trust and confidence because we were committed to understanding and interpreting what the Ferragamo name means. To preserve existing know-how and experience, stay close to Ferragamo roots, and promote the future development of Ferragamo perfumes in observance of the brand's values, we are operating the business through a dedicated, wholly owned Italian subsidiary.

We hired about 25 of their employees to work in finance, marketing, operation, and sales, and we are manufacturing Ferragamo fragrance in Italy and sourcing most of the components from Italy. Initially, our focus is on Ferragamo's large suite of legacy fragrance that we are planning to launch a new blockbuster scent toward the end of 2023. We have made the commitment to the Salvatore Ferragamo Group to devote the attention and resources necessary to grow the Ferragamo fragrance business in selective luxury distribution framework. We are confident that we can transcend the Ferragamo business in the Far East where the name is already highly esteemed and hugely popular.

And in the U.S., we have remained well-known that the fragrance distribution is underdeveloped. Last month, we signed the Donna Karan and DKNY licensing agreement with the brand owners, G-III, and this deal would be effective July 1, 2022. The Donna Karan and DKNY brands drew from the energy and attitude of New York City and are powerhouses in fashion and fragrance. With this agreement, we are taking over several well-established and valuable fragrance franchises, most notably, Donna Karan Cashmere Mist and DKNY Be Delicious. We also have a new fragrance planned for 2023. Based upon historical sales, these two brands should rank among our largest.

A quick review of our business thus far this year, our largest brands, Montblanc, Jimmy Choo, Coach, GUESS and Lanvin generated sales increase of 11% from Montblanc, 39% for Jimmy Choo, 56% from Coach, 44% from GUESS, and 12% for Lanvin versus the first nine months of 2019. Moving on to markets, in our press release, we mentioned that sales in our largest market, North America, are on fire, up 87% compared to the first nine months of 2019. Gains in Western Europe and Asia were a more modest [Indecipherable] compared to year-to-date 2019. While improving slowly and marginally, international passenger traffic remains curtailed worldwide.

With the U.S. now allowing international travelers who have been vaccinated into the country, we may have turned the corner. Throughout most of this year, the biggest challenge we have been facing is a consequence of the COVID-19 pandemic, namely a disruption in the supply chain. What we are encountering is a component shortage because our suppliers do not have the sufficient capacity to meet our needs. And so when they produce, they cannot secure transportation, shipping of trucking to bring the goods to our warehouses. The confluence of the shortfall in capacity and the difficulty finding transportation makes this struggle both extraordinary and complex.

And all this is happening of course when demand for fragrance far exceeds what we or anyone else had forecasted. Early in 2021, we anticipated a looming logjam and began accelerating our purchasing. And at the end of the first quarter, we received a fair amount of components, which is enabling us to ship a decent amount of goods in the fourth quarter. Maneuvering as best we can under the circumstances, we have announced our inventory, increased our future orders and taking into account longer lead times for components and outsourcing the same components from multiple suppliers.

We plan of course to carry more inventory in 2022 and once possible manufacture products closer to where the sales are concentrated. We think Italy will play an important role in this scenario as a point of manufacturing and distribution well beyond our Ferragamo business. It looks like there may be a light at the end of the supply chain tunnel sometime in the 2022 first quarter, but as of today, it is a very intense problem. Like many of our peers, we are offsetting higher costs with modest price increases in the New Year. We haven't raised prices in a number of years, so there has been no blowback from customers.

Our debuting scents from Moncler, Moncler Pour Homme and Moncler Pour Femme, will roll out in early 2022 to thousands of doors, accompanied by a full-scale advertising and promotional campaign. I must say that even 400% result extraordinary products where high tech meets luxury. The refillable bottles take their shape from mountaineering flask and the quilted construction of the Moncler jacket, an LED screen announces the bottle with an illuminated message banner, customizable via Bluetooth power smartphone app.

This innovation allows the buyer to write a personal note that appears in sprawling red letters across the bottles mirror facade when activated by the Moncler global shift push. I really invite people to look at it in Moncler stores or in certain department stores where the products are today. In advance of the global rollout next year, we selectively previewed the Moncler scents in several hundred doors, including the Moncler Boutique and in New York, for example, Bloomingdale's and the sell-through has been overwhelmingly positive.

In the New Year, we have men's fragrance pillar debuting for Coach, GUESS and Boucheron. For Inter Parfums I see 2022 as the year of flankers as we build upon recent launches and some of our best seller. We can look for flankers for Montblanc Legend, the Coach woman's signature scent, Jimmy Choo I Want Choo, GUESS Bella Vita, Lanvin Eclat d Arpege. Brand extensions are also being readied for our first ever scent of MCM and Kate Spade, which debuted earlier this year. There are several more extensions unveiling across many of our brands. Naturally, the addition of Ferragamo fragrance for the full year and Donna Karan and DKNY for half year should be a major growth driver in 2022.

While the outlook for our business in 2022 is exceedingly good, there may be some upside as international travel resumes in earnest. Supply chain disruptions are largely behind us and the spread of COVID-19 is under better control. Before I turn the call over for questions, let me tell you that we will present at the Jefferies West Coast Consumer Conference that's on November 17. We will also participate in Citi's Global Consumer Conference, which is on December 7. And we are also stop on D.A. Davidson Annual Holiday Beauty and Wellness Bus Tour on December 14. I will be present.

So thank you Stephanie, Wendy and Linda for this invitation. And now operator, please open the line for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question today is coming from Linda Bolton Weiser from D.A. Davidson. Your line is now live.

Linda Bolton Weiser -- D.A. Davidson & Co. -- Analyst

Yes. Hi. So congratulations on a great quarter. So I'm just curious about the gross margin and all your comments on the drivers there. It sounds like some of those things will continue in the fourth quarter as well. And sometimes the gross margin is actually lower in third quarter because of holiday gift sets and then higher in fourth quarter. So what do you think the gross margin -- can we see such a strong gross margin in the fourth quarter as well?

Russell Greenberg -- Executive Vice President and Chief Financial Officer

I think that to the extent that the one of the major increases and the reasons for the increases in the margins was the growth in the U.S. business where we sell direct to the retailers. That is definitely going to continue in Q4. That has continued and been very, very strong all year. Our sell through at the retail level is very strong so we're expecting consistent reorders in that regard. So I would think that the margins are going to continue to be high for the rest, certainly at least the rest of this year. With respect to some of the other gains in margins because of product mix, yes, usually there is a little bit more of gift sets selling in the fourth quarter than there is in the third quarter. But I don't think that that's going to be outweighed by the gains we're going to see on the retail -- on the sales at wholesale level to the retailers.

Linda Bolton Weiser -- D.A. Davidson & Co. -- Analyst

Okay. And then is there any way of quantifying how much sales -- how much in sales was pulled forward from fourth quarter into third quarter?

Russell Greenberg -- Executive Vice President and Chief Financial Officer

That's really difficult to determine. We really haven't been able to quantify it to a great extent.

Jean Madar -- Chairman & Chief Executive Officer

What we can say that the first quarter sales were extraordinary. I was looking at the numbers yesterday before the call and I asked Russ if it was a record third quarter? We had to go back at something like 10 years when we started our Burberry license.

Russell Greenberg -- Executive Vice President and Chief Financial Officer

Yeah. For sales, it was a record without a doubt.

Jean Madar -- Chairman & Chief Executive Officer

So, for sales, it was record. What's happened is quite interesting, as we said in our remarks, the U.S. is really booming because we think that in the last 12 to 18 months, the consumer habits in the U.S. have changed. They used to buy fragrance to wear outside. But these are confinement, they stayed at their home and they used -- they had the possibility to buy fragrance online and try different things. So, today, we have consumers who are buying fragrance for themselves, and they feel good about wearing them. That's the only way we can explain such growth in the fragrance business in the West. Not all the segments have been growing that fast. Perfume are definitely the fastest growing segment for 2021.

Russell Greenberg -- Executive Vice President and Chief Financial Officer

Yeah. To quantify it just a little bit, for the nine-month period sales in North America for us was up over 87%, which was more than twice as fast as the next highest growing market from a geographic standpoint. So, clearly, this is something that -- and that's what makes it a little bit hard to quantify, but it's something that we're seeing that really has been unprecedented in the years past.

Jean Madar -- Chairman & Chief Executive Officer

And I will add also that to -- on the top of this strong business in the U.S., we saw some long-term changes in our business in China. I'm not sure you remember, but we said for a long time that fragrance was never a priority for our China -- Chinese customer. Of course, they prefer to skincare and makeup. But again, there is a change here, and we see strong, strong interest from young customers shopping fragrance, and we are going to capitalize on that, and that's why -- if you want, we can speak about it at length -- we have decided to spend so much advertising in the fourth quarter, something that is not the normal advertising that you will have expected.

Linda Bolton Weiser -- D.A. Davidson & Co. -- Analyst

Okay. Sounds good. And then, my last question is just on Ferragamo. How is the inventory situation there? And will there be -- is there any way you can quantify or give some feel for how much sales there might be in the fourth quarter?

Jean Madar -- Chairman & Chief Executive Officer

We have the best inventory in -- when we signed the license agreement with Ferragamo. Very sufficient inventory at least for the beginning. The first three months of Ferragamo business, which is October, November, December are going to be a transitional month. So I'm not expecting these numbers. The real business is going to start in January but.

Russell Greenberg -- Executive Vice President and Chief Financial Officer

As Jean mentioned in his remarks, the Ferragamo business was over $80 million back several years ago and was cut in half due to the pandemic, which would imply that on an annual basis, it would be somewhere around $40 million or $45 million to be somewhere at 20% or 25% of that number wouldn't be unrealistic. So it's really not a material number compared to what our sales are on an annual basis. But as Jean said, the real business for Ferragamo is really gearing up for 2022.

Linda Bolton Weiser -- D.A. Davidson & Co. -- Analyst

Okay, thank you very much.

Russell Greenberg -- Executive Vice President and Chief Financial Officer

Thank you, Linda.

Operator

Thank you. Our next question today is coming from Wendy Nicholson from Citi. Your line is now live.

Wendy Nicholson -- Citigroup Global Markets, Inc. -- Analyst

Hi. So Ferragamo, $40 million but used to be $80 million, did you see what the Donna Karan sales were and what you think next year? I know it doesn't start until next summer but on a run rate annually how big Donna Karan could be?

Russell Greenberg -- Executive Vice President and Chief Financial Officer

We did not say -- Ferragamo is a publicly held company, so their information is public. [Indecipherable] is a different.

Jean Madar -- Chairman & Chief Executive Officer

It's their public company, too. We estimate that DKNY business was around historically in $100 million when it was [Indecipherable]. Our goal will be to bring it back to this level in the next two to three years.

Wendy Nicholson -- Citigroup Global Markets, Inc. -- Analyst

Got it. Okay. Wow. That's awesome. That's great. Question on the A&P. I understand you're spending a lot in the fourth quarter, but for the full year -- as a percentage of sales, you're kind of in the 21%, which is where you were sort of pre-pandemic, like '17 and '18. So kind of do you think longer term, '22, '23, just generally speaking, is that 21% of sales on A&P kind of the right place to be or given that the business is more global or whatever, do you think it needs to be bigger than that?

Russell Greenberg -- Executive Vice President and Chief Financial Officer

You're right. Historically, I think it even goes through 2019. We were pretty much at 21% three, four years in a row and that included the growth that we had in sales. 21% seems to work for us. It's a kind of an internal, I don't want to say target but an internal budgeting mechanism that we have. Depending upon certain markets around the world, you spend more in certain territories than you do in other territories. But, overall, I think it's going to hover right around that mark. I really don't see it increasing or decreasing by any sufficient -- by any significant amount.

Wendy Nicholson -- Citigroup Global Markets, Inc. -- Analyst

Okay, got it. That's all I had. Congratulations.

Russell Greenberg -- Executive Vice President and Chief Financial Officer

Okay. Thank you so much.

Jean Madar -- Chairman & Chief Executive Officer

Thank you very much.

Operator

Thank you. The next question is coming from Stephanie Wissink from Jefferies. Your line is now live.

Grace Menk -- Jefferies LLC -- Analyst

Hi, good morning. Thank you for the question. This is Grace on for Steph. Our first question is on kind of the post-pandemic world and what do you think the channel mix will look like in the business as we kind of look out the next few years?

Jean Madar -- Chairman & Chief Executive Officer

Yes. I can try to answer this. Of course, you have -- we have seen stronger growth of e-commerce sales. For us, in particular, we started with low numbers. The percentage increase is very high, but the numbers are still limited. We still believe in brick-and-mortar distribution. And this is where we are spending for this quarter a lot of money with beauty consultants with sampling, physical sampling because we want people to smell our fragrance. We are also spending money in digital advertising and on websites.

And what I think is we're going to see finally a comeback from the duty-free market. The travel retail is going to come back. We have even started to buy some advertising in airports. And I did that not too long time ago. I took the decision three months ago. And I think we did it at the right time because we benefited from some good rates. And we are going to see, from next month until the next two quarters, very nice increase in the travel retail. So -- and we have the right brands for that. And that's why we want to spend so much in advertising in the fourth quarter.

Grace Menk -- Jefferies LLC -- Analyst

Thanks. That's helpful. You spoke a little bit about it, but just kind of double-clicking on the marketing mix, what are you seeing in terms of the changes in your marketing mix, and how have ad rates changed relative to prior periods in different verticals?

Russell Greenberg -- Executive Vice President and Chief Financial Officer

Well, certainly the mix is definitely more and more concentrated on the social media aspect. We're doing a lot of work with influencers. We're doing a lot of work with creating content for different customers and different social media aspect. Your traditional magazine type of advertising is definitely on the way down. We do a lot -- we spend a lot on billboards. We spend a lot on physical presence type of advertising.

Jean Madar -- Chairman & Chief Executive Officer

And on television also in certain markets like Russia, Eastern Europe, TV works. We do also a lot of billboard in the Middle East. But in the U.S., most of our expenses are digital.

Grace Menk -- Jefferies LLC -- Analyst

Great. Thank you.

Jean Madar -- Chairman & Chief Executive Officer

Thank you.

Russell Greenberg -- Executive Vice President and Chief Financial Officer

Thank you, Steph.

Operator

Thank you. Our next question today is coming from Hamed Khorsand from BWS Financial. Your line is now live.

Hamed Khorsand -- BWS Financial, Inc. -- Analyst

Hi. So first question was just your expectation on the ad spending for Q4. Is that the timeline that you expect follow on orders in the first half of 2022 or more long term oriented? How can you measure that, actually?

Russell Greenberg -- Executive Vice President and Chief Financial Officer

This is an investment into not just Q1 or Q2 of 2022. This is really an investment in our brands, investment in the brands that are in our portfolio. Throughout 2021, the amount of spending was minimal because our expectations were minimal. We had very, very -- I don't want to call it conservative but very low visibility as far as where our sales were going to be. Sales turned out to be much greater than expected. As I mentioned before, we've now raised our guidance 3 times. But the brands themselves and to keep and maintain and build market share for the different brands requires us to spend money.

So this is really an opportunity to take some of the dollars that we've gained and invest it in the most valuable assets that we have, right? And by putting it into these advertising and promotional programs, we're expecting to not only see growth in sales in Q1 or Q2 but really see a market share change especially with respect to some of the larger brands and the newer brands within our portfolio. So we're really kind of taking this -- taking some of these gains that we've had and making an investment in the future. And that's what we're kind of doing. Jean, maybe you [Indecipherable]?

Jean Madar -- Chairman & Chief Executive Officer

This is a strategic decision that we have made. Basically, the level of profitability of the company is very high and we do not need to keep this many -- this extra money. We have more than as Russ said we raised three times already our guidance. So the idea is to -- in order to continue the momentum and to accelerate this momentum in 2022, we are going to spend a lot, a lot of money in advertising, so our market share will automatically increase. It's quite simple and we think that the first -- we started this at the very beginning of October. We see -- we follow the results on a weekly basis. We have information on sell through on almost on a daily basis. And as we have put a lot of merchandise in the stores because of this amount of sales that we have, we have to make sure that these products sell through quickly in order to get a stronger reorder in the first and second quarter 2022.

Russell Greenberg -- Executive Vice President and Chief Financial Officer

The last thing I'm just going to add to that is that we've seen recently a huge change in fragrance as a category. And when you look at some of the NPD data, we're seeing growth in the fragrance as a category as a whole far greater than we have ever seen in the past. The fragrance business was always very stagnant. It would grow at zero, 1%, 2%. Today we're seeing gains that are far greater than that and we are trying to take advantage. We are in the fragrance business and a pure player in the fragrance business, and we're trying to take advantage of the growth that the category is seeing as a whole. And I think you see it even with many of our competitors. I think the numbers that are out there and are being reported are far greater than they had ever been before, and we're just looking to take advantage of that.

Hamed Khorsand -- BWS Financial, Inc. -- Analyst

Okay. And then my other question was, as far as the duty-free stores are concerned, how much inventory buying did you see in Q3? Is that happening at all to any extent or are these stores just using inventory from when they were closed?

Jean Madar -- Chairman & Chief Executive Officer

No, we have no inventory at duty-free. We are starting to buy it again. The traffic really came back toward the second part of Q3. It is accelerating very fast. So, of course, we are trying to get the hands on inventory. But it's not easy for people who have not planned this purchase to find the inventory. We have commitments from retailers. We have commitments from our longtime partner who have been buying on a regular basis. So to find today millions of dollars to support travel retail is not that easy. We will support them, of course, going forward. But it's good news for the industry to see that people are back shopping in travel retail.

Hamed Khorsand -- BWS Financial, Inc. -- Analyst

And my last question was, how prepared are you if the retail channel that you've sold into and distributors in Q3 come back in Q4 with new purchases? Can you handle that logistically?

Jean Madar -- Chairman & Chief Executive Officer

It has been very difficult already in Q3 to deliver these numbers with all the challenges that we have in the supply chain and in the transportation. No, we will -- I think that we'll not have enough products to support Q4 as big as it was in Q3. But that's why we took a conservative stand for Q4. The important thing for us is going to be the 2022. We need to prepare 2022 with the right amount of inventory, the right amount of investments. So Russ, you want to add something?

Russell Greenberg -- Executive Vice President and Chief Financial Officer

No. Yeah. The inventory levels right now because of the surge in sales in Q3, the inventory levels are very low at the end of September. Lower than we would have liked them to be. So it is going to be a little bit difficult to meet the demand in Q4. But we are building especially on the new product lines and the new launches that we have for 2022. So we are sourcing from multiple different suppliers. We have increased our lead times, as Jean mentioned on his remarks. We're taking the steps necessary or the steps that we deem to believe that are necessary in order to have sufficient inventory to move into 2022.

Hamed Khorsand -- BWS Financial, Inc. -- Analyst

Okay, great. Thank you.

Jean Madar -- Chairman & Chief Executive Officer

Thank you.

Russell Greenberg -- Executive Vice President and Chief Financial Officer

Thank you, Hamed.

Operator

Thank you. Our next question is a follow up from Linda Bolton Weiser from D.A. Davidson. Your line is now live.

Linda Bolton Weiser -- D.A. Davidson & Co. -- Analyst

Yeah. Sorry. Just a little housekeeping thing, usually in the 10-Q you give the million dollar amount of advertising and promo spend. This time you gave like a percentage. I guess I can figure it out but do you have a particular dollar amount you can give us for A&P in the quarter?

Jean Madar -- Chairman & Chief Executive Officer

I'm sure we can find something for you live, for the year.

Russell Greenberg -- Executive Vice President and Chief Financial Officer

No, what I did -- all I disclosed was the 14.2%. So you've got to -- you're going to have to do a little bit of math. So if you want, just call me after and we can discuss it.

Linda Bolton Weiser -- D.A. Davidson & Co. -- Analyst

Okay, I'll figure it out. And as long as I have you again, can I just ask you in terms of setting up this subsidiary in Italy, do you have any like plans that you could expand the usage of that organization? Like are there other Italian fragrances? I know some of the big ones are owned already by others but do you see that you can sort of fold in other fragrances or products into that unit to be managed?

Jean Madar -- Chairman & Chief Executive Officer

It's very good question, Linda. Absolutely, our presence in Italy is not only to handle the sales of Ferragamo. It's not only to manufacture products in Italy. It's also to be closer to this market. Italy is a great market for luxury. There is a lot of brands and to have a presence in Italy will make, we think will help us get in contact with brands that can be potentially licensed for us. So it's definitely part of our plan.

Linda Bolton Weiser -- D.A. Davidson & Co. -- Analyst

Great. Thank you very much.

Russell Greenberg -- Executive Vice President and Chief Financial Officer

Thank you, Linda.

Jean Madar -- Chairman & Chief Executive Officer

Thank you. Yeah, I'm sorry.

Operator

No. No problem, sir. We reached the end of our question-and-answer session. I'd like to turn the call back over to you for any further or closing comments.

Russell Greenberg -- Executive Vice President and Chief Financial Officer

Oh, that's great. Thank you. Thank you once again. And thank you, all, for tuning in to our conference call today. Jean and I wish you all a very happy holiday season and the very best for New Year. And as usual, please, if you have further questions, please contact me by email. Stay well and stay safe. Thanks again. Bye.

Operator

[Operator Closing Remarks]

Duration: 44 minutes

Call participants:

Russell Greenberg -- Executive Vice President and Chief Financial Officer

Jean Madar -- Chairman & Chief Executive Officer

Linda Bolton Weiser -- D.A. Davidson & Co. -- Analyst

Wendy Nicholson -- Citigroup Global Markets, Inc. -- Analyst

Grace Menk -- Jefferies LLC -- Analyst

Hamed Khorsand -- BWS Financial, Inc. -- Analyst

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