Fragrance maker and distributor Inter Parfums (NASDAQ:IPAR) issued an earnings report on Thursday that was in line with its preannounced results at the end of last month. Sales, at $70.9 million, were off slightly from last year's first quarter, though if you factor in a stronger dollar, net sales actually increased 5.5% overall. Earnings for the quarter came in at $0.22 per share, the same as last year.

Is the licensee of such perfume lines as Burberry, Lanvin, Christian Lacroix, and Diane von Furstenberg about to begin smelling as fetid as a septic tank? Well, it's not quite that dire, but it's no bouquet of roses either. There are signs that the company is struggling to expand its distribution lines, even as it prepares some major product launches.

Sales for the past few quarters have been relatively flat, and growth for the full year is expected to be only around 10%, down from 15% the year before, and 27% the year before that. Earnings have also been hurt, since the company has had to negotiate more expensive licensing agreements. Despite being Inter Parfums' strongest seller, its premium Burberry line has also eaten away at profits, since the British company has demanded more royalties.

Two recent licensing deals, though, make you wonder whether the company will soon be marketing the smell of sweat. In March, the company announced an expanded licensing deal with Motley Fool Stock Advisor pick Gap (NYSE:GPS) to market a fragrance line for its Banana Republic stores. Last month, it announced a similar deal to market fragrances with surf-and-skate-world clothing manufacturer Quiksilver (NYSE:ZQK). Trudging through a rain forest and grinding on a skate board don't conjure the most aromatic images. Yet the new lines do open up the opportunity to attract new customers who might not reach for the latest offering from Celine.

With competitors Estee Lauder (NYSE:EL) and Elizabeth Arden (NASDAQ:RDEN) also sporting star-power fragrances, the market is getting a mite crowded. Estee Lauder markets Donald Trump's personal fragrance (the smell of money?) along with P. Diddy's Sean Jean line, which was the top selling fragrance in the country. Elizabeth Arden has both Britney Spears and Elizabeth Taylor, not to mention its own sweaty tie-in with NASCAR, while Parlux Fragrances (NASDAQ:PARL) markets Paris Hilton's line and also has a deal with Guess? (NYSE:GES). Seems every star and entertainer has their own fragrance these days -- though I thought the trend had certainly jumped the shark when the TV show American Idol came out with its own fragrance line.

Inter Parfums needs its premium brands to keep selling, because its mass-market lines continue to fade. The prestige brands accounted for 89% of revenues, while the mass-market brands made up only 11% for the quarter. Yet mass-market product sales were also off 11% -- a slower rate of loss than before, yet not as good as the company had hoped. In other words, it stinks, but not as badly.

Because the fragrance maker services a rather fickle market, it needs to find another Burberry -- a brand with cachet, longevity, and the ability to command a premium price. Sure, it'll have to pay up for the privilege, but the scent will linger longer than simply bringing on another overexposed media starlet. With $49 million in the bank, Inter has the wherewithal to acquire the next hit fragrance if it has to. But it will need to do more than simply align itself with the next sweat-inducing sport to get its stock moving again.

Get on the scent with these related Foolish articles:

In addition to its selection by Motley Fool Inside Value, Gap is a recommendation of Tom and David Gardner'sMotley Fool Stock Advisor. Take the newsletter dedicated to the Gardners' very best picks for a30-day free spin.

Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. The Motley Fool has a disclosure policy .