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Elizabeth Arden, Inc. Announces Fourth Quarter and Fiscal 2008 Results

Fiscal 2008 Net Sales of $1.14 Billion; EPS of $1.31 (Excluding Items)

Introduces Fiscal 2009 Guidance for a Net Sales Increase of 12.5% to 14.0% and EPS of $1.65 to $1.85 (Excluding Items)

NEW YORK, Aug. 14, 2008 (PRIME NEWSWIRE) -- Elizabeth Arden, Inc. (Nasdaq:RDEN), a global prestige beauty products company, today announced financial results for the fourth fiscal quarter and year ended June 30, 2008.

FISCAL 2008 RESULTS

For the fiscal year ended June 30, 2008, net sales rose 1.2% to $1,141.1 million. Excluding the favorable impact of foreign currency translation, net sales decreased 0.4% as compared to the prior year period.

Net income, excluding charges, for fiscal 2008 was $38.1 million, or $1.31 per diluted share, versus net income of $39.1 million, or $1.36 per diluted share, for fiscal 2007. On a reported basis, net income for fiscal 2008 was $19.9 million, or $0.68 per diluted share, compared to $37.3 million, or $1.30 per diluted share, for the prior year period.

In May 2008, the Company announced an exclusive long-term global licensing agreement for the Liz Claiborne fragrance brands, which became effective on June 9, 2008. In the fourth fiscal quarter, the Company incurred expenses related to the Liz Claiborne transaction of $19.6 million (pre-tax). In addition, in connection with this new license, the Company discontinued certain brands and products resulting in a product discontinuation charge of $7.5 million (pre-tax). The reported results also include restructuring charges, primarily relating to the Company's previously announced supply chain re-engineering project, of $3.0 million (pre-tax). The non-cash portion of these above mentioned charges was $11.5 million.

E. Scott Beattie, Chairman, President and Chief Executive Officer of Elizabeth Arden, Inc., commented, "We finished the year in-line with the expectations that we outlined last quarter. Our international business grew 9.2%, or 4.2% in constant currency rates this year. Our North America fragrance business declined 1.5%, largely due to the decline in the U.S. department store business, while our mass retail business was flat year on year, reflecting the difficult consumer environment."

Mr. Beattie continued, "As we look to fiscal 2009, we expect the Liz Claiborne transaction to provide us with significant incremental sales and earnings growth, particularly in our North America fragrance business. The integration of the Liz Claiborne fragrance business is currently on track. We have strengthened our sales organization with minimal incremental headcount additions to our sales force, and all of the key marketing personnel associated with the Liz Claiborne fragrances already have joined us in our New York City offices. Lastly, we are scheduled to exit the Liz Claiborne distribution facility as originally planned by the end of August 2008."

Mr. Beattie added, "We also are on track with the re-engineering of our extended supply chain, logistics and transaction processing systems and continue to anticipate savings of approximately $10.0 million to $12.0 million by the end of fiscal 2009 and an additional approximately $13.0 million to $15.0 million by the end of fiscal 2010. We expect these savings and the contribution from the Liz Claiborne fragrances to drive strong growth in sales and earnings for fiscal 2009. Our outlook reflects the integration of the Liz Claiborne fragrances and the execution of a number of new launches, including fall introductions of a new Juicy Couture fragrance, Viva la Juicy, our first fragrance under our Rocawear license and new fragrances from Mariah Carey and Usher, as well as a spring launch of a new Elizabeth Arden fragrance."

FOURTH QUARTER RESULTS

Net sales decreased 2.6% to $236.3 million for the three months ended June 30, 2008, from $242.7 million in the comparable period of the prior year. Excluding the favorable impact of foreign currency translation, net sales decreased 3.8%.

Net income, excluding charges, for the three months ended June 30, 2008 was $6.3 million, or $0.22 per diluted share, compared to $9.9 million, or $0.34 per diluted share, for the prior year period. On a reported basis, the net loss for the fourth quarter of fiscal 2008 was $0.38 per diluted share, compared to net income per diluted share of $0.33 for the prior year period.

OUTLOOK

For fiscal 2009, the Company expects net sales to increase by 12.5% to 14.0%. The sales guidance assumes modest growth in the Company's U.S. and European businesses before sales contribution from the Liz Claiborne fragrance brands. Diluted earnings per share are expected to be in the range of $1.65 to $1.85. The earnings guidance is based on a full fiscal year estimated effective tax rate of 28.0%.

For the first half of fiscal 2009, the Company expects net sales to increase by 8.0% to 10.0% and diluted earnings per share to be in the range of $1.28 to $1.40. For the first quarter of fiscal 2009, the Company expects net sales to increase by 5.0% to 7.0% and earnings per share to be in the range of $0.04 to $0.08. The first quarter guidance reflects additional advertising and marketing expenses to support the fall 2008 launch activity.

The guidance excludes Liz Claiborne-related expenses and restructuring charges associated with the Company's extended supply chain, logistics and transaction processing re-engineering project. Liz Claiborne-related transition expenses are estimated at $3.5 million to $4.5 million (pre-tax) and are expected to be incurred primarily in the first fiscal quarter ending September 30, 2008. The Company's reported gross margins for the first half of fiscal 2009 will be impacted by expenses relating to Liz Claiborne inventory purchased by the Company at a higher cost prior to the effective date of the license agreement. This non-cash expense is expected to be approximately $19.0 million (pre-tax), of which approximately $15.4 million is expected to be recorded in the first fiscal quarter.

The Company notes that it utilizes foreign currency hedges which are reflected in its results and guidance. As noted, the Company's guidance is based on a number of assumptions, including those regarding the current retail environment and consumer confidence levels and anticipated improvement in operating performance.

CONFERENCE CALL INFORMATION

The Company will host a conference call today at 10:30 a.m. Eastern Time. All interested parties can listen to a live web cast of the Company's conference call by visiting the "Corporate Info" section on the Company's web site at http://www.elizabetharden.com. An online archive of the broadcast will be available within one hour of the completion of the call and will be accessible on the Company's web site until September 14, 2008.

Elizabeth Arden is a global prestige beauty products company with an extensive portfolio of prestige beauty brands sold in over 90 countries. The company's brand portfolio includes Elizabeth Arden skincare, color, and fragrance products, PREVAGE(r) anti-aging treatments, the celebrity fragrance brands of Elizabeth Taylor, Mariah Carey, Britney Spears, Hilary Duff, Danielle Steele, and Usher; the designer fragrance brands of Juicy Couture, Alberta Ferretti, Alfred Sung, Badgley Mischka, Bob Mackie, Gant, Geoffrey Beene, Liz Claiborne, Halston, Lucky Brand, Nanette Lepore and Rocawear; and the lifestyle fragrance brands Curve, Giorgio of Beverly Hills, and PS Fine Cologne.



                ELIZABETH ARDEN, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENT OF OPERATIONS DATA
                             (Unaudited)
        (In thousands, except percentages and per share data)

                           Three Months Ended    Twelve Months Ended
                           -------------------  ----------------------
                           June 30,   June 30,   June 30,    June 30,
                             2008       2007       2008        2007
                           --------   --------  ----------  ----------

 Net Sales                 $236,289   $242,675  $1,141,075  $1,127,476
 Cost of Sales              146,165    137,014     674,957     666,157
                           --------   --------  ----------  ----------
 Gross Profit                90,124    105,661     466,118     461,319
 Gross Profit Percentage       38.1%      43.5%       40.8%       40.9%

 Selling, General and
  Administrative Expenses    97,483     85,099     392,320     362,795
 Depreciation and
  Amortization                6,307      5,779      24,768      24,518
                           --------   --------  ----------  ----------
 Total Operating Expenses   103,790     90,878     417,088     387,313

 Interest Expense, Net        5,774      6,756      27,595      29,198
                           --------   --------  ----------  ----------
 (Loss) Income Before
  Income Taxes              (19,440)     8,027      21,435      44,808
 (Benefit from) Provision
  for Income Taxes           (9,005)    (1,608)      1,534       7,474
                           --------   --------  ----------  ----------
 Net (Loss) Income         $(10,435)  $  9,635  $   19,901  $   37,334
                           ========   ========  ==========  ==========



 As reported:
 ------------------------
  Net (Loss) Income Per
   Basic Share             $  (0.38)  $   0.35  $     0.71  $     1.35
  Net (Loss) Income Per
   Diluted Share           $  (0.38)  $   0.33  $     0.68  $     1.30

  Basic Shares               27,821     27,649      27,981      27,607
  Diluted Shares             27,821     29,242      29,303      28,826

  EBITDA(a)                $ (7,359)  $ 20,562  $   73,798  $   98,524
  EBITDA margin                (3.1)%      8.5%        6.5%        8.7%

 Adjusted to exclude the
  effect of Liz
  Claiborne-related,
  restructuring and product
  discontinuation expenses,
  net of taxes(b):
 ------------------------

  Gross Profit             $105,110   $105,661  $  481,104  $  461,319
  Gross Profit Percentage  $   43.9%  $   43.5% $     42.0% $     40.9%

  Net Income               $  6,290   $  9,876  $   38,119  $   39,078

  Net Income Per Basic
   Share                   $   0.23   $   0.36  $     1.36  $     1.42
  Net Income Per Diluted
   Share                   $   0.22   $   0.34  $     1.31  $     1.36

  EBITDA(a)                $ 20,567   $ 20,851  $  103,798  $  100,618
  EBITDA margin                 8.6%       8.6%        9.1%        8.9%

 (a) EBITDA is defined as net income plus the provision for income
 taxes (or net loss less benefit from income taxes), plus interest
 expense, plus depreciation and amortization. EBITDA should not be
 considered as an alternative to operating income or net (loss) income
 (as determined in accordance with generally accepted accounting
 principles (GAAP)) as a measure of our operating performance or to net
 cash provided by operating, investing and financing activities (as
 determined in accordance with GAAP) or as a measure of our ability to
 meet cash needs. We believe that EBITDA is a measure commonly reported
 and widely used by investors and other interested parties as a measure
 of a company's operating performance and debt servicing ability
 because it assists in comparing performance on a consistent basis
 without regard to capital structure, depreciation and amortization or
 non-operating factors (such as historical cost). Accordingly, as a
 result of our capital structure, we believe EBITDA is a relevant
 measure. This information has been disclosed here to permit a more
 complete comparative analysis of our operating performance relative to
 other companies and of our debt servicing ability. EBITDA may not,
 however, be comparable in all instances to other similar types of
 measures. EBITDA margin represents EBITDA divided by Net Sales.


 The following is a reconciliation of net (loss) income, as determined
 in accordance with GAAP, to EBITDA: (For a reconciliation of net
 income (loss) to EBITDA for prior periods, see the Company's filings
 with the Securities and Exchange Commission which can be found on the
 Company's website at www.elizabetharden.com).

 (In thousands)                 Three Months Ended  Twelve Months Ended
                                ------------------  -------------------
                                June 30,  June 30,  June 30,  June 30,
                                  2008      2007      2008      2007
                                --------  --------  --------  --------
 Net (loss) income              $(10,435) $  9,635  $ 19,901  $ 37,334
 Plus:
  (Benefit from) provision for
   income taxes                   (9,005)   (1,608)    1,534     7,474
  Interest expense, net            5,774     6,756    27,595    29,198
  Depreciation and amortization    6,307     5,779    24,768    24,518
                                --------  --------  --------  --------
 EBITDA                           (7,359)   20,562    73,798    98,524
 Liz Claiborne-related
  expenses(c)                     19,580        --    19,580        --
 Restructuring charges               884       289     2,958     2,094
 Product discontinuation
  expenses                         7,462        --     7,462        --
                                --------  --------  --------  --------
 EBITDA adjusted                $ 20,567  $ 20,851  $103,798  $100,618
                                ========  ========  ========  ========

 (b) The following tables reconcile the calculation of gross profit and
 net (loss) income per share on a basic and diluted basis from the
 amounts reported in accordance with GAAP to such amounts before giving
 effect to Liz Claiborne-related, restructuring, and product
 discontinuation expenses. This disclosure is being provided for
 comparability purposes because we believe it is meaningful to our
 investors and other interested parties to understand the Company's
 operating performance on a consistent basis without regard to the
 effect of Liz Claiborne-related, restructuring and product
 discontinuation expenses. The presentation in the table below of the
 non-GAAP information titled "Gross profit as adjusted" and "Net (loss)
 income per share as adjusted" is not meant to be considered in
 isolation or as a substitute for gross profit, net (loss) income or
 net (loss) income per share prepared in accordance with GAAP.

 (c) Includes $12.9 million reimbursed to Liz Claiborne for
 advertising, marketing and transition expenses and $6.7 million of
 non-cash expenses relating to Liz Claiborne inventory purchased by the
 Company at a higher cost prior to the effective date of the license
 agreement.


 (In thousands, except per      Three Months Ended  Twelve Months Ended
  share data)                   ------------------  -------------------
                                June 30,  June 30,  June 30,  June 30,
                                  2008      2007      2008      2007
                                ========  ========  ========  ========
 Adjusted to exclude the effect
  of Liz Claiborne-related,
  restructuring and product
  discontinuation expenses
 ------------------------------
 Gross Profit:
  Gross profit as reported      $ 90,124  $105,661  $466,118  $461,319
  Liz Claiborne-related and
   product discontinuation
   expenses                       14,986        --    14,986        --
                                --------  --------  --------  --------
  Gross profit as adjusted      $105,110  $105,661  $481,104  $461,319
                                ========  ========  ========  ========
 Net (Loss) Income and EPS:
  Net (loss) income as reported $(10,435) $  9,635  $ 19,901  $ 37,334
  Liz Claiborne-related,
   restructuring and product
   discontinuation expenses, net
   of tax                         16,725       241    18,218     1,744
                                --------  --------  --------  --------
  Net income as adjusted        $  6,290  $  9,876  $ 38,119  $ 39,078
                                ========  ========  ========  ========
  Basic
  -----
  Net (loss) income per basic
   share as reported            $  (0.38) $   0.35  $   0.71  $   1.35
  Liz Claiborne-related,
   restructuring and product
   discontinuation expenses, net
   of tax                           0.61      0.01      0.65      0.07
                                --------  --------  --------  --------
  Net income per basic share as
   adjusted                     $   0.23  $   0.36  $   1.36  $   1.42
                                ========  ========  ========  ========
  Diluted
  -------
  Net (loss) income per diluted
   share as reported            $  (0.38) $   0.33  $   0.68  $   1.30
  Liz Claiborne-related,
   restructuring and product
   discontinuation expenses, net
   of tax                           0.60      0.01      0.63      0.06
                                --------  --------  --------  --------
  Net income per diluted share
   as adjusted                  $   0.22  $   0.34  $   1.31  $   1.36
                                ========  ========  ========  ========


                   CONSOLIDATED BALANCE SHEET DATA
                           (In thousands)

                                                    June 30,  June 30,
                                                      2008      2007
                                                    --------  --------
 Cash                                               $ 26,396  $ 30,287
 Accounts Receivable, Net                            217,446   214,972
 Inventories                                         408,563   380,232
 Property and Equipment, Net                          52,148    42,471
 Exclusive Brand Licenses, Trademarks and
  Intangibles, Net                                   221,253   224,611
 Total Assets                                        970,734   939,175
 Short-Term Debt                                     119,000    97,640
 Current Portion of Long-Term Debt                     1,261     1,125
 Current Liabilities                                 385,934   367,428
 Long-Term Liabilities                               248,199   250,820
 Total Debt                                          343,957   323,295
 Shareholders' Equity                                336,601   320,927
 Working Capital                                     305,863   298,165

In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Elizabeth Arden, Inc., is hereby providing cautionary statements identifying important factors that could cause our actual results to differ materially from those projected in forward-looking statements (as defined in such act). Any statements that are not historical facts and that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, indicated through the use of words or phrases such as "will likely result," "are expected to," "will continue," "is anticipated," "estimated," "intends," "plans," "believes" and "projects") may be forward-looking and may involve estimates and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements. These statements include, but are not limited to, our guidance and expectations regarding net sales and earnings, and the costs, savings and benefits we expect in connection with our re-engineering project and related restructuring plan. In addition, any such statements are qualified in their entirety by reference to, and are accompanied by, the following key factors that have a direct bearing on our results of operations:

  • factors affecting our relationships with our customers or our customers' businesses, including the absence of contracts with customers, our customers' financial condition, and changes in the retail, fragrance and cosmetic industries, such as the consolidation of retailers and the associated closing of retail doors as well as retailer inventory control practices, including but not limited to levels of inventory carried at point of sale and practices used to control inventory shrinkage;
  • our reliance on third-party manufacturers for substantially all of our owned and licensed products and our absence of contracts with suppliers;
  • delays in shipments, inventory shortages and higher costs of production due to the loss of or disruption in our distribution facilities or at key third party manufacturing or fulfillment facilities that manufacture or provide logistic services for our products;
  • our ability to respond in a timely manner to changing consumer preferences and purchasing patterns and other international and domestic conditions, and events that impact consumer confidence and demand, such as economic downturns;
  • our ability to protect our intellectual property rights;
  • the success, or changes in the timing or scope, of our new product launches, advertising and merchandising programs;
  • the quality, safety and efficacy of our products;
  • the impact of competitive products and pricing;
  • risks of international operations, including foreign currency fluctuations, hedging activities, economic and political consequences of terrorist attacks, and political instability in certain regions of the world;
  • our ability to implement our growth strategy and acquire or license additional brands or secure additional distribution arrangements, to successfully and cost-effectively integrate acquired businesses or new brands, such as the Liz Claiborne fragrance brands, and to finance our growth strategy and our working capital requirements;
  • our level of indebtedness, debt service obligations and restrictive covenants in our revolving credit facility and the indenture for our 7 3/4% senior subordinated notes;
  • changes in product mix to less profitable products;
  • the retention and availability of key personnel;
  • changes in the legal, regulatory and political environment that impact, or will impact, our business, including changes to customs or trade regulations or accounting standards or critical accounting estimates;
  • the success of, and costs associated with, our re-engineering project and related restructuring plan; and
  • other unanticipated risks and uncertainties.

We caution that the factors described herein could cause actual results to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. This press release is qualified in its entirety by the cautionary statements and risk factor disclosure contained in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the year ended June 30, 2007.

CONTACT: Elizabeth Arden, Inc.
Marcey Becker, Senior Vice President, Finance
(203) 462-5809

Integrated Corporate Relations
Investor/Press Contact:
Allison Malkin
Michael Fox
(203) 682-8200