Perfumania Holdings makes dollars with scents. The holding company owns scent-seller Perfumania, which numbers about 345 stores in 35 states (about a third are located in California, Florida, and Texas) and Puerto Rico, offering some 2,000 fragrance products at discounted prices for men and women. Perfumania also sells cosmetics, skin care, and bath and body products. The company sells perfume online through perfumania.com and operates Scents of Worth, which sells fragrances in retail stores (including Kmart) on consignment. Perfumania Holdings, which acquired fragrance manufacturer Parlux in 2012, is also a wholesale supplier of fragrances to other retailers through its Quality King Fragrance unit.
The purchase of Parlux, which closed in April, extended Perfumania's vertical integration, adding manufacturing to its wholesale distribution and retail activities. (Valued at about $118 million, the deal was overwhelming approved by shareholders.)
Parlux, which was one of its largest suppliers, moves forward as an operating subsidiary of Perfumania. Parlux makes and markets prestige fragrances and other beauty products to department stores (Macy's, Belk, Boscov's) and specialty stores, including Perfumania shops, in the US and more than 90 countries. It holds licenses to manufacture and distribute designer fragrance brands including Paris Hilton, Nicole Miller, Queen Latifah, Rihanna, Kanye West, and Fred Hayman Beverly Hills.
By acquiring Parlux, which had $123 million in 2011 sales, Perfumania expects its own sales to increase to more than $550 million (on a pro forma basis), vs. $493 million in fiscal 2012 (ends January). The purchase will accelerate sales growth for the company, which saw an increase in total sales of less than 2% in 2012 vs. the previous year. The retail segment saw sales increase 9.5%, while wholesale sales fell by nearly 9%.
In response to disappointing total sales, Perfumania Holdings has focused on increasing sales and profits from its retail operation, and closing underperforming stores (about 25 locations over the past two years). The retail business, which accounts for about 70% of total sales, contributed more than 80% of Perfumania's profits in fiscal 2012. On the wholesale side, Quality King Fragrance is looking to broaden its product offering to its wholesale customers, which include mass market retailers (Wal-Mart and Target), drugstore chains (Walgreen) and other chains (TJ Maxx, Kohl's, and Sears).
Chairman Stephen Nussdorf and his family (his brother, Glenn, and sister, Arlene) are Perfumania Holdings' largest shareholders. Together they control Model Reorg, a New York-based wholesale and retail fragrance company, which became a wholly-owned subsidiary of Perfumania in 2008 in exchange for the issuance of more than 6 million shares of Perfumania stock. The deal boosted the family's share from 36% to more than 80% of Perfumania's shares at present. The company changed its name to Perfumania Holdings from E Com Ventures in 2008, in order to strengthen its position in the marketplace. – less