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UPDATE 1-Interparfums' profit leaps despite higher marketing costs
September 7, 2017 / 11:44 AM / 2 months ago

UPDATE 1-Interparfums' profit leaps despite higher marketing costs

(Adds detail, analyst and CFO quotes, share price)

Sept 7 (Reuters) - France’s Interparfums’ first-half operating profit jumped 53 percent as higher marketing and advertising costs were outweighed by profit from in-house brands, its deal with luxury shoemaker Jimmy Choo and an improved profit margin.

Marketing and advertising costs, mainly dedicated to the launch of new fragrance lines under the Jimmy Choo and Rochas labels, rose 40 percent.

Jimmy Choo was recently acquired by Michael Kors, but Interparfums -- which was initially interested in taking a minority stake in the shoe retailer -- still holds an agreement to manufacture its fragrances until the end of 2021.

“The job they’re doing with Jimmy Choo is fantastic” said CM-CIC analyst Arnaud Cadart.

“Michael Kors paid far too much to acquire Jimmy Choo in the first place, so they will have to make their investment profitable and extend their range of products, most probably with make-up. Cosmetics were for a long time left aside by Interparfums but they might want to change that by 2021 to renew their license agreement with Jimmy Choo.”

The perfume maker on Thursday reported operating profit of 33.1 million euros ($39.7 million) and an operating margin of 15.8 percent, up from 13.3 percent a year earlier.

Shares in the company were up 4.3 percent at 1139 GMT.

Cadart said the result was slightly better than the market had expected, with Interparfums attributing the improvement to tight control of fixed costs.

Interparfums confirmed its 2017 revenue guidance of 400 million euros and an operating margin of between 13 percent and 13.5 percent.

“This target means that in five years, in terms of recurring operating profit, we will have erased the termination of (our) Burberry’s licence,” Chief Financial Officer Philippe Santi said. ($1 = 0.8345 euros)

Reporting by Manon Jacob; Editing by David Goodman

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