Still reeling from the loss of the Guess fragrance license, which contributed to a 37% decline in sales for the third quarter, and in light of recent frustrations surrounding the launch of Reb'l Fleur by Rihanna, Parlux Fragrances CEO Frederick E. Purches maintains that it’s time for the company to change direction.

"We have enough celebrities,” he said in a Feb. 7 interview. “A celebrity sings, but they don’t understand anything about the licensing business whether fragrance or jeans, whatever it might be.”

Pop/R&B singer Rihanna was embroiled in a change of representation at the time when Parlux was trying to put out her fragrance, which forced the company to push back the launch due to scheduling challenges.

Paris Hilton Passport

“It took more than a while” to straighten that situation out and put the launch back on track, Purches said.

Reb'l Fleur is slated to debut this month (Also see "With Reb’l Fleur, Parlux Looks To Rihanna To Follow $70 Mil. Paris Path" - HBW Insight, 17 January, 2011.).

Rapper Kanye West, who has a fragrance slated for launch in March 2012, had a contract that made Purches “want to jump.” It entailed “money that was stupid,” he said.

West was signed in April 2009, but Parlux “took a breather” on that project following the rapper's controversial stage-storming act during the 2009 MTV Video Music Awards.

Given the drama that can come with celebrity partnerships, West will likely be the last new celebrity Parlux will sign. Purches is determined to line up designers who “are easier to work with and understand the business,” the CEO said.

“At the end of the day, you want to work with someone who when you say, ‘You have to do this and this and this because it takes that long to build a product,’ will understand," he said.

Market Saturation Has Firm Revising Strategy

Purches indicated an interest in returning to designer fragrances back in June 2010, as he was seeing a change in the market.

The market was becoming saturated with meaningless pairings for celebrity scents, with Parlux fielding calls from reps for Tommy Lee Jones and Burt Reynolds. “You can’t take every offer,” Purches said.

The exec decided to steer down a familiar path, reverting to the business that the company he founded was built upon – prestige and designer fragrances. Shortly after taking the helm in January 2010, he began looking for leads.

At the time, Parlux was hurting, having nearly been delisted from NASDAQ in 2007 for delayed filings. In the years before Purches' return, there were repeated failed attempts by former CEO Ilia Lekach and shareholder Glenn Nussdorf to take over the firm under circumstances considered shady by some analysts (“Parlux to Defend Before NASDAQ,” “The Rose Sheet” Mar. 5, 2007) and (Also see "Parlux Investor Seeks Consent To Remove Board For Administrative “Failings”" - HBW Insight, 29 January, 2007.).

Parlux executives turned to GE Capital for $20 million in credit in June 2010, in hopes of turning the firm's dire financial situation around. Losses reached $5.4 million for the third quarter of last year. This year, third-quarter losses were trimmed to $273,000. Parlux's struggle to achieve profitability was compounded when Guess fragrances devolved to Coty Inc. (Also see "Sales & Earnings In Brief" - HBW Insight, 7 February, 2011.)

Purches' saving grace came through a call to a friend who connected him with Vince Camuto, a designer whom Purches “has great faith in” and who represents a brand with “huge growth potential.”

“People look at me and say, 'Who is Camuto?' But he’s spending huge amounts of money to build his brand,” said Purches, who estimates that Camuto has spent $5 million thus far to build his name in print advertisements and with new denim and sportswear licenses. “Huge amounts on all fronts.”

Known for founding women's fashion brand Nine West, Camuto is the driving force behind the success of Parlux's Jessica Simpson brand. He also helped designer Tory Burch launch her footwear collection.

“His shoes break records at Macy’s,” said Purches. “The price is right and the quality is right. I’m optimistic that he’ll sell lots of fragrance.”

In its first year, Parlux expects Camuto’s fragrance to net $12 million in sales. The firm is also considering its options for launching the scent internationally.

Parlux Not Ready To Leave Paris

While Parlux has the carpet rolled out for designers, it has not closed the door on Paris Hilton, the firm’s cash cow. Paris Hilton is now a billion-dollar brand.

Purches spoke highly of Hilton, characterizing her as a standout among the firm's celebrity partners. “She’s a fantastic one. Paris is very, very dependable. She’s always on,” the exec said.

“What you need to know is that this woman has longevity,” he added. While her television shows “The Simple Life” and “Paris Hilton’s My New BFF” have come and gone, Paris has stayed relevant and is working on a new show for the Oxygen network. Parlux plans to bookend the show with commercials for Paris Hilton Passport.

Passport, a collection of three eau de toilettes – Paris, Tokyo and South Beach – launches this month in retail doors including Belk and Macy’s at $25 for 1 oz. and $45 for 3.4 oz.

The “whimsical take” on Paris’ lifestyle was conceived originally for the Asian market, but the firm decided to do a rollout in the U.S. as well, piggybacking on launch events for Rihanna’s fragrance. Both celebrities have appearances planned at California malls this month to promote their olfactory creations.

Paris' Paris is dubbed “enchanting and innocently flirty," opening with mandarin, red berry and peach notes, while South Beach is “sexy, vibrant and so much fun!” with notes of nectarine, lotus flower and white freesia.

Tokyo was designed with a lighter scent to specifically appeal to the Asian market, with top notes of Italian lemon and Fuji apple, a heart of frangipani, white jasmine, French iris and Mediterranean orange flower, and a cedar, musk and sandalwood drydown.

“Passport is a personal and private invitation to imagine yourself splashing in the surf with me in Miami, indulging in a shopping spree at the poshest boutiques in Paris or nibbling sushi side by side in Tokyo!” says Hilton in a recent release.

Passport is also Parlux's ticket to Europe. “Europeans are going crazy for it,” said Purches. This marks Parlux's second effort at launching Paris fragrances in European markets, after a distribution deal went bad the first time around.

“We’re recalibrating, restarting and redoing,” Purches said. “We’re weak in Europe and that’s what we’re correcting.

As for Kanye, Parlux is optimistic that it can spark his designer within. “He dresses extremely well,” Purches said. “We will have a very classy fragrance that we will launch for him.”

The scent will likely trend upscale, with starting price points as high as $80. Packaging may be modeled after a luxury bag, reportedly Goyard, which the Grammy-winning artist carries.

“I had my doubts when I first took over,” Purches said. But with West’s music getting rave reviews, the exec believes the rapper "has resuscitated himself.”

Parlux aims to do the same, forecasting a profitable FY 2011.

By Suzanne Blecher

Parlux Has “Enough" Celeb Fragrances, Says CEO, Reaffirming New Direction

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