Taylor Swift Wonderstruck Launch At Sephora Glendale
Taylor Swift poses with her Wonderstruck fragrance at a launch event in 2011. John Sciulli—WireImage

Bieber, Taylor Swift get the blame for Elizabeth Arden’s 28% sales drop

Aug 19, 2014

After years of great effort trying to become the pre-eminent purveyor of celebrity fragrances, troubled beauty company Elizabeth Arden (rden) has placed the blame for its collapsing business on two of its biggest stars.

Net sales for the quarter ended June 30 fell 28.4% to $191.7 million because it introduced fewer new fragrances. But it also said popular ones are fading fast.

"The decline in sales of celebrity fragrances, particularly the Justin Bieber and Taylor Swift fragrances, was steeper than anticipated," the company said.

And the company warned that the lack of new product launches in the fiscal year that started July 1 will continue to drag down sales. That stands in stark contrast to Estee Lauder (el), whose fragrance business is booming again after a long though less pronounced slump, thanks to a ramped-up calendar of launches in a sector that consumers expect to see new products regularly, Estee Lauder group president John Demsey told Fortune last week.

Elizabeth Arden has struggled with declining sales as lower income shoppers have cut back on non-essentials such as celebrity perfumes and was badly hit by Wal-Mart Stores (wmt) slashing its orders in the last two years. Arden said retailers had again cut back on orders of its lower-end products last quarter, without naming them.

In July, Arden, whose best known products include Prevage anti-aging cream, said it would embark on a cost-cutting effort, including discontinuing unprofitable businesses and fragrance-license agreements, and laying off workers. And earlier in 2014, it said its board was looking into strategic options.

That effort culminated in private equity Rhône Capital taking a 7.6% stake in Elizabeth Arden, which the company announced on Tuesday. Rhône told Arden it planned to raise its stake over time but agreed to cap any potential stake at 30%.

Despite the atrocious numbers, there some glimmers of hope in Elizabeth Arden's report. Sales at its namesake Elizabeth Arden flagship stores, which it has been gussying up, rose 9%.

And the company said it expects net sales to return to growth in early 2015.

In the meantime, its shares fell 23% in premarket trading.

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