Why Elizabeth Arden Shares Took a Spill

Is this meaningful? Or just another movement?

Jeremy Bowman
Jeremy Bowman
Jan 17, 2014 at 6:21PM
Consumer Goods

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Elizabeth Arden (NASDAQ:RDEN) were looking harsh today, falling 19% after reporting weak holiday sales.

So what: In a preliminary update released last night, the cosmetics maker said it expects revenue of $415 to $418 million for the current quarter, and adjusted earnings of $1.05 to $1.08. Both figures were well short of analyst estimates of sales at $456 million and EPS of $1.48. Citing a common refrain this holiday season, CEO Scott Beattie said, "Our results were significantly affected by an increased level of highly promotional and discounted activity."

Now what: Retailers and consumer-products makers have reported disappointing holiday sales nearly across the board in recent days, so perhaps the update shouldn't be so surprising. Still, slashing its earnings guidance by that much in the all-important holiday quarter means full-year EPS is now projected to be nearly 20% less than the current consensus at $2.15. I don't think this update connotes any special long-term weakness, but this was already a low-growth company. With profits now expected to fall from last year, investors can likely find better places to put their money.