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Abercrombie & Fitch Inks Licensing Deal with Inter Parfums - Analyst Blog

Zacks Equity Research
Updated

Teen retailer, Abercrombie & Fitch Co. (ANF) and Inter Parfums Inc. (IPAR) have sealed a seven-year exclusive global fragrance license agreement, wherein the latter will create and distribute a variety of new perfumes and fragrance-related products for the former. Inter Parfums new collection for Abercrombie will include its latest men's and women's fragrances that will feature in both Abercrombie & Fitch and Hollister’s stores in 2016.

Inter Parfums plans to supply these scents internationally in specialty retailers, high-end department stores and duty free shops. Domestically, it plans to allocate the perfumes in duty free shops as well as Abercrombie and Hollister retail outlets.

Through this partnership, Abercrombie expects to take its well-established fragrance business to the next level, expanding globally gaining from Inter Parfums’ competence in this business line and its strong global distribution network. Further, Abercrombie’s management is looking to gain from the fragrance and beauty company’s track record of developing and expanding the fragrance lines for renowned fashion and luxury goods brands like Jimmy Choo, Lanvin, Montblanc, The Gap Inc.’s (GPS) Gap and Banana Republic brands, bebe stores inc. (BEBE) and many others.

On the other hand, Inter Parfums remains optimistic about the deal and hopes that the new line of fragrances together with Abercrombie’s popularity will help the former in capturing a larger market share.

While Abercrombie’s latest endeavor into the fragrance line in partnership with Inter Parfums look promising, this Zacks Rank #5 (Strong Sell) stock has been underperforming lately due to the fading popularity of the brand among teenagers. Further, the company has been losing its charm with the rising popularity of fast-fashion retailers like H&M and Forever 21 among its target customers.

However, the company’s sales declined in the recent quarter due to soft store traffic, particularly in Europe and continued weakness in its Hollister brand. Some offsetting factors in the quarter included the slight improvement in November sales as well as the Black Friday event. Nevertheless, the company warned of difficult conditions through the fourth quarter and the holiday season, anticipating continued weakness in top line.

Abercrombie & Fitch ended the third quarter with a total of 1000 stores, including 834 in the United States and 166 across Canada, Europe, Asia, Australia and the Middle East.


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INTER PARFUMS (IPAR): Free Stock Analysis Report
 
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