The luxury sector, fragrance market in particular, has been less unstable over the past five or six years. Though there are no high expectations ahead, there is no bad weather either to be worried about, says chief executive of French fragrance company Interparfums.
Philippe Benacin, on his recent visit to Dubai to launch Repetto fragrance, spoke with TRENDS on the business dynamics of the luxury market. Please click here to see the video.
After your arrival in Dubai, do you intend to enter other GCC markets?
We have plans for Qatar, Oman and Saudi Arabia. One thing I want to say about the region is that the Middle East consumers have strong brand awareness even if the brand is not physically present in the region.
On the business side, tell us about the Burberry departure?
We stopped Burberry at the end of June this year. We handled Burberry since July 1993, and the group was associated with them for 20 years.
The key reason is that the company became too big and too complicated to handle with too many requests and demands, and for the last three years the business was very complicated. So, we decided finally that the damage and the indemnity for this termination of the contract was more interesting for us than continuing. Also, on top of this it gives a chance to my team to concentrate more on the other brands because Burberry was extremely time consuming.
If you look at what Burberry has done in the past three to four years, they integrated a lot of their different businesses and they wanted to handle them internally and no more through licensee, so we felt that there was a wish from their side to integrate, and finally it was the right moment for them to integrate and for us to leave.
How would you explain the fluctuations in your share prices on Nasdaq, which was $16 last year in September and in the same month in 2013 it spiked to $28?
First of all, the analysts and the investors understood that we have a growth potential with other brands in the portfolio. We signed up Boucheron, Repetto and Karl Lagerfeld. We also added Shanghai Tang to our portfolio, and on top of that we have about 200 million euros in cash. The fact that the company has paid two times the book price, which is very normal because the market cap is $900m.
In 2012, your turnover was 445 million euros, while in 2013 it’s expected to be 340 million euros, and for 2014 the forecast of turnover is about 290 million euros. How do you view this?
If you withdraw Burberry from 445 million euros, we only had 210 million euros in the rest of the portfolio, these 210 will become 260 in 2014 and I hope that these 260 will become 320 after that because this year we have 100 million from Burberry on the top of the 260. So this is why it is decreased. The figure looks like it is going down, but we are growing. If you look at the past three years we went 210, 250, 255, 290 million euros sans Burberry.
You have said Interparfums is looking for acquisitions, are there any Arab brands you are looking at?
We are looking at acquisitions, but it is too soon for us. There are specialized perfume makers in this region, and because they are niche brands they are doing business worth two million or three million euros a year, and too small to be added to our 350 million euros portfolio.
In 2014, we will be looking at segments with 30 to 40 million euros, but the Arab brands cannot be developed in Europe because the scent is too original and strong.
How many boutique stores your group operates around the world?
There are 19 boutique stores at key locations in France, and 20 outlets abroad.
Which is the best performing region for your group?
For Repetto, it is sure that it is France, and nobody will beat France because of the name and the awareness. Then we have huge expectations in Asia because the name is spreading, and in the rest of the world we have no expectations because we know that we will start from scratch, we have very little awareness.
For the company as a whole the first market is America, and then we have three or four different markets that are on the same level which are the UK, France, Russia, China, and Saudi Arabia. These markets are very strong for us and are doing 30 to 40 million euros each.
How many boutiques Repetto plans to open in the region?
Repetto will probably open boutique stores, in Qatar, Abu Dhabi etc. They should have 10 boutiques in the Middle East soon.