Perfumania stock dips as CFO exit causes stink
February 1, 1999 01:27 PM
(Recasts, adds details about stock price, CFO resignation and analysts' comments)
NEW YORK, Feb 1 (Reuters) - Perfumania Inc. PRFM smelled Valentine's Day profits Monday when it launched an online perfume store, but investors held their noses and sent the stock price down after learning the retailer's chief financial officer would resign.
The perfume retailer launched its Internet fragrance store - www.perfumania.com on Monday after announcing on Friday that CFO Simon Falic would step down and Chief Executive Ilia Lekach would assume his duties.
Shares of the Miami, Fla. perfume store chain fell as much as $4.75 per share to $6.375 in the morning. By mid-afternoon, it had bounced back slightly from session lows to trade at $7.125, down $4.00 per share on volume of more than 2.5 million shares.
Analysts blamed Falic's resignation for the slide.
"It's probably not the online store," said Todd Allan of Kenny Securities Corp.
Analysts see a natural trend toward companies selling fragrances and cosmetics online. Majors like Estee Lauder Cos. Inc. EL and Avon Products Inc. AVP are now playing catch-up with much smaller companies.
In early January Perfumania's stock price rose more than 150 percent when the company said it would launch an Internet site ahead of the Valentine's Day perfume shopping spree.
Lekach sees no problem in people being unable to smell what they are buying.
"The majority of people who buy on the net are going to be buying a fragrance they already know," Lekach said in a telephone interview.
Perfumania gets more than 15 million visits a year to its 290 U.S. discount retail stores.
Lekach said the retail network gives Perfumania an advantage over online rival Fragrance Counter.com. Fragrance Counter, a division of Brentwood, N.Y. based Allou Health and Beauty Care Inc. ALU , is the exclusive perfume and cosmetics merchant on Internet shopping sites of America Online Inc., AOL Yahoo! Inc., YHOO Excite Inc., XCIT Lycos Inc. LCOS and Microsoft Corp.'s MSFT MSN.
"They're selling perfume on the Internet but they don't have 290 stores to cross-merchandise their products," Lekach said.
((New York News Desk 212 859-1721 andrew.hay@reuters.com)) REUTERS
|
