1
table of contents
LETTER TO OUR SHAREHOLDERS 02
THE COMPANY 06
CORPORATE SOCIAL RESPONSIBILITY 12
THE PRODUCTS 20
THE ORGANIZATION 68
INTERPARFUMS, INC. 2022 ANNUAL REPORT
2
2022 FINANCIAL HIGHLIGHTS
Our 2022 net sales exceeded our expectations in each succes-
sive quarter, resulting in full-year net sales of $1.087 billion, 24%
ahead of $880 million in 2021. At comparable foreign currency
exchange rates, consolidated 2022 net sales increased by 30%.
Our four largest brands, Montblanc, Jimmy Choo, Coach, and
GUESS, grew sales by 15%, 23%, 18%, and 24%, respectively for
2022. Most of our other brands also topped the prior year, in-
cluding Abercrombie & Fitch (+28%), Kate Spade (+26%), Oscar
de la Renta (+19%), and Hollister (+16%).
Sales of our European based operations increased by 12% in
dollars and 20% in constant currency. The year-over-year gains
are all the more impressive considering flankers and extensions
dominated our new product pipeline. We brought several entire-
ly new lines to market, including the official launch of our first
Moncler duo, Kate Spade Sparkle, Singulier by Boucheron, and
Open Road and Wild Rose by Coach. Sales of United States based
operations increased by 58%, driven by strong like-for-like sales
(+47%). This growth is reflected in the continued sales of estab-
2022
Letter to our
Shareholders
DEAR FELLOW SHAREHOLDERS,
2022 was a landmark year for Inter Parfums, Inc. In addition
to setting new records in net sales and earnings, we expanded
lished lines, along with the launches of GUESS Uomo and Alibi by
our portfolio of brands; moved into our new Paris headquar-
Oscar de la Renta, numerous extensions across our mid-sized
ters; completed our first full year of operations in Italy; and set
brands, and the continued success of Ferragamo. The addition of
in motion several initiatives, establishing a solid foundation for
our newer brands, Donna Karan and DKNY, which joined our
continued growth in the years ahead.
portfolio in the summer of 2022, contributed 14% to our growth.
We continued to see growth in both consumer penetration and
consumption across all regions. Our three largest markets, North
America, Western Europe, and Asia, increased sales by 22%, 28%,
and 19%, respectively. We also achieved top line growth in Cen-
tral and South America by 24%, the Middle East by 44% and East-
ern Europe by 6%, despite the impact of the war in Ukraine. With
the resumption of international travel, our travel retail business
bounced back, apart from China. As pandemic-related lockdowns
have started abating, we look forward to a gradual increase in our
duty-free business, particularly in emerging markets.
On the bottom line, in 2022, we were able to expand our
operating margin by 110 bps to 17.9%, and earnings per diluted
share by 38% to $3.78. These gains were driven by a combina-
tion of foreign exchange fluctuations, price increases, product
mix, and scale benefits from our growth, which more than offset
the inflationary impacts on shipping and supplies.
We continue to have a very strong balance sheet, closing the
year with working capital of $443 million, including approxi-
mately $256 million in cash, cash equivalents, and short-term
investments, and a working capital ratio of 2.3 to 1. Our balance
sheet included $151 million of long-term debt relating to the
headquarters acquisition by our Paris subsidiary, Interparfums
SA, plus a $53 million four-year loan agreement in connection
Philippe Benacin and Jean Madar
letter to shareholders
3
with Interparfums SA’s acquisition of the license for the Lacoste
coste boutique network. The launch of our first new fragrance
trademark. Cash provided by operating activities aggregated
line is targeted for late 2024.
$115 million in 2022, compared to $120 million in 2021. The de-
Lacoste is an emblematic brand in the world of fashion
crease was primarily driven by the higher working capital re-
and sport with a very high level of awareness and desirability
quirements from our growing operations, namely the inventory
throughout the world. The management team has a clear and
buildup that we needed to protect against supply chain volatility.
precise vision of the brand’s great development potential, which
Additionally, our employee productivity, measured in sales per
will also allow us to take the perfumes higher and further. This is
employee, continued to increase reaching $2.06 million in 2022,
an important new strategic step in the life of Interparfums. We
compared to $1.88 million in 2021, based on 527 and 467 full-
are delighted and thrilled about this exciting partnership.
time employees worldwide, respectively.
In early 2023, our Board of Directors approved a 25% in-
With 2022 sales approaching $200 million, Montblanc, and
its owner Richemont, have agreed to extend our fragrance li-
crease in our annual cash dividend to $2.50 per share, payable
cense through December 31, 2030, adding five more years to
quarterly, reflecting the Board’s confidence in the prospects for
our partnership. With a seven-year window, we can confidently
our business over the near and long term. Our strong financial
plan new product launches, promotion and advertising, and dis-
position enables us to invest in growth opportunities within our
tribution strategies well into the future. The Montblanc license
family of brands and expand our brand portfolio, while continu-
was inked in 2010, and it has been a great partnership for both
ing to reward our shareholders.
Inter Parfums and the brand owner as fragrance sales were less
than $10 million in that first year.
EXPANSION OF OUR PORTFOLIO
Donna Karan and DKNY fragrances joined our portfolio of
brands under license in July 2022. Donna Karan is a global life-
In early 2023, Abercrombie & Fitch granted us the right to
distribute its number one men’s fragrance, Fierce, in selective
markets. The first phase of the agreement, which becomes ef-
style brand founded in 1984 by the fashion pioneer of the same
fective September 1, 2023, covers the distribution of Fierce in
name. In addition to fashion and fragrance, one can find the
several major markets. The second phase, which activates in
Donna Karan label on shoes, accessories, and home fashions.
February 2024, covers distribution in additional regions, and
Launched in 1994, the brand’s lead fragrance, Cashmere Mist,
may include other flankers of the Fierce family of products. Our
was awarded the Fragrance Foundation Hall of Fame Award
relationship with Abercrombie & Fitch began in 2014 when we
in 2019. In February 2022, Cashmere Mist was ranked amongst
signed our initial license agreement. In the ensuing years, we
the 100 Greatest Fragrances of All Time by WWD. The DKNY
have brought several major blockbuster pillars to market, in-
brand emerged in 1989 as the next-generation fashion response
cluding First Instinct, Authentic, and Away. With nearly a decade
to Donna Karan’s then-teenage daughter raiding her mom’s
under our belt, we have earned Abercrombie & Fitch’s confi-
closet. Today, DKNY designs, markets, and globally distributes
dence, as evidenced by this agreement, entrusting us to distrib-
collections of apparel, accessories, footwear, and select licensed
ute the iconic Fierce collection on a test basis for three years.
products. Be Delicious, the brand’s best-known scent, which
Our plans call for growing penetration in existing Fierce markets,
launched in 2004, was named one of The 25 Perfumes of All
including department, specialty, duty-free stores, and online
Time in April 2022 by Marie Claire magazine. Brand extensions
sales, while exploring opportunities in untapped markets.
are in the works for 2023, with a blockbuster launch scheduled
for 2024. These two brands have already proven to be terrific
additions to our fragrance portfolio, and we are looking for sig-
nificant sales gains over the coming years.
In December 2022, we announced that our majority owned
OTHER MEANINGFUL MILESTONES
After over a year of planning and hard work, our new Enterprise
Resource Planning (ERP) system went live in early 2023 for
our United States based operations. It has been a widely wel-
Paris-based subsidiary, Interparfums SA and Lacoste, the iconic
fashion sport brand, have signed a worldwide exclusive 15-year
comed improvement, giving us greater capability to support
our growth. We have enlisted component suppliers, fillers, and
fragrance license agreement effective January 1, 2024. Under
customers across the globe to keep track of inventory in real
this agreement, including an entrance fee of €90 million, Inter-
time. From any secure device, anywhere in the world, autho-
parfums will be responsible for the creation, development, pro-
rized personnel can now easily access whatever they need, from
duction and marketing of all perfume and cosmetics lines under
quantities and location of goods to the status of existing orders.
the Lacoste brand, in selective distribution as well as in the La-
They can also reserve goods pending a sale, and we are in the
INTERPARFUMS, INC. 2022 ANNUAL REPORT
4
process of implementing an Enterprise Data Interchange (EDI)
for many of our largest customers. A significant portion of the
brand extensions, including Jimmy Choo Blossom, Eau de Rochas
Citron Soleil, Montblanc Signature Absolue, and Kate Spade Chérie.
ERP system has been deployed, with additional modules in the
Also in the pipeline for 2023 are new brand pillars for Coach,
works, including more vendor portals. This was a big invest-
Montblanc, Rochas, Van Cleef & Arpels, and Moncler. For U.S.
ment, with bumps along the way and creases still being ironed
operations, we started 2023 off with brand extensions within
out, but the payoff has been gratifying, and we plan to continue
established lines for Abercrombie & Fitch, Hollister, Oscar de
to build on this new capability going forward.
La Renta, Ferragamo, MCM, and DKNY Be Delicious. As the year
Since 2020, and for the foreseeable future, we have over-
unfolds, we will unveil new scents for GUESS, Ferragamo, Un-
come supply chain challenges in several ways. We continue
to build inventory, source similar components from multiple
suppliers, and, when possible, produce goods closer to where
they are sold. With just over a year under our belt, our Ital-
garo, and Anna Sui.
IN CLOSING
We are proud of our progress and milestone achievements made
ian operations have helped alleviate log jams for manufacturing
in 2022. Following our fast start in the first quarter of 2023,
and distribution.
where we delivered record-setting sales and earnings, we are
While we have always prided ourselves on being a good corpo-
equally confident in our expectations for 2023. We will contin-
rate citizen, in 2022, we intensified our commitment to corporate
ue to draw customers across all ages, nationalities, and income
social responsibility through our ESG Initiatives. Throughout our
supply chain—from procurement of components to the distri-
brackets through our diverse portfolio of fragrance brands.
We are a top-of-mind choice among brand owners seeking
bution of finished products—and through our business partners,
new fragrance partners, and with several competitors leaving
we act responsibly as an active contributor to protecting the en-
the prestige/designer space, the door has opened even wider for
vironment. We are applying a multifunctional and comprehensive
new licensing opportunities. We have a highly effective distribu-
approach to addressing the issues of corporate, environmental, and
tion network serving 120 countries; we even own or control the
social responsibility and transparency. For the first time, our 2022
distribution organizations in several of our most important mar-
Annual Report includes a lengthy and detailed discussion of our en-
kets. Our robust infrastructure can accommodate significant
deavors regarding responsible employment, corporate citizenship
growth, especially with our new state-of-the-art ERP system,
and governance practices, and environmental responsibility.
new Paris headquarters, operations in Florence, expanded space
On February 13, 2023, we celebrated 35 years as a pub-
lic company by ringing the closing bell on Nasdaq. Back then,
our company was among the first to go public after the stock
in New York City, and talented worldwide staff. Our strong fi-
nancial position supports the agility of our business, along with
the trust of our suppliers and prospective licensors.
market crash of October 1987. In all our years as a public com-
In addition to gaining market share, we also continue to bene-
pany, through armed conflicts, trade wars, recessions, terrorist
fit from the strong tailwinds within the fragrance industry, which
attacks, inflation, and pandemics, we have always been profit-
continues to post robust growth rates building upon the gains of
able. We are celebrating 40 years in business in 2023, and the
two of us remain at the helm, leading by example and guiding
the past two years. Another significant opportunity for growth
is the underdeveloped fragrance market in China. While the in-
the next generation of management while learning from them
dustry and operational parameters may evolve over time, one
as well. Our interests, as the two largest shareholders of Inter
thing remains unchanged: we are confident in our company
Parfums, remain aligned with those of our investors.
and the people who are responsible for its success – our
staff, our suppliers, our distributors, and our customers.
WHAT’S IN STORE FOR 2023?
Similar to 2022, the coming year will continue to be dominated by
brand extensions for our major and mid-sized brands. We continue
to enjoy the benefits of the exceptional number of new product
launches in 2021, including many delayed from 2020. Flankers and
extensions of thriving pillars allow us to further capitalize upon
those successes while leveraging design elements such as packaging,
components, photography, and labels, as well as advertising and
With sincere thanks and appreciation,
promotional materials, across all fragrance family members.
Chairman of the Board
Vice Chairman of the Board
Early in 2023, our European operations launched several
& Chief Executive Officer
& President
letter to shareholders
5
Donna Karan Cashmere Mist
INTERPARFUMS, INC. 2022 ANNUAL REPORT
6
The
Company
Founded in 1982, we operate in the fragrance
business, and manufacture, market and dis-
tribute a wide array of prestige fragrance,
and fragrance related products.
Our worldwide headquarters and the office of our whol-
ly-owned United States subsidiaries, Jean Philippe Fragrances,
LLC and Interparfums, USA LLC, are located at 551 Fifth
Avenue, New York, New York 10176, and our telephone num-
ber is 212.983.2640. We also have wholly-owned subsidiaries in
Italy, Interparfums Italia Srl and Hong Kong, Inter Parfums USA
Hong Kong Limited.
Our consolidated wholly-owned subsidiary, Inter Parfums
Holdings, S.A., and its majority owned subsidiary, Interparfums
SA, maintain executive offices at 10 rue de Solférino, 75007 Par-
is, France. Our telephone number in Paris is 331.5377.0000. In-
terparfums SA is the sole owner of Interparfums Luxury Brands,
Inc., a Delaware corporation, for distribution of prestige brands
in the United States. Interparfums SA is also the majority owner
of Parfums Rochas Spain, SL, a Spanish limited liability company,
which specializes in the distribution of Rochas fragrances. In ad-
dition, Interparfums SA is also the sole owner of Interparfums
(Suisse) Sarl, a company formed to hold and manage certain
brand names, and Interparfums Asia Pacific Pte., Ltd., an Asian
sales and marketing office.
Our common stock is listed on The Nasdaq Global Se-
lect Market under the trading symbol “IPAR”. The common
shares of our subsidiary, Interparfums SA, are traded on the
Euronext.
The Securities and Exchange Commission (“SEC”) maintains
an internet site at http://www.sec.gov that contains financial re-
ports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. We main-
tain our internet website at www.interparfumsinc.com, which is
linked to the SEC internet site. You can obtain through our web-
site, free of charge, our annual reports on Form 10-K, quarterly
reports on Form 10-Q, interactive data files, current reports
on Form 8-K, beneficial ownership reports (Forms 3, 4 and 5)
and amendments to those reports filed or furnished pursuant to
Section 13(a) of the Securities Exchange Act of 1934 as soon as
reasonably practicable after they have been electronically filed
with or furnished to the SEC.
We operate in the fragrance business and manufacture,
market and distribute a wide array of fragrance and fragrance
related products. We manage our business in two segments,
European based operations and United States based oper-
Ferragamo Signorina Libera
ations. Certain prestige fragrance products are produced
and marketed by our European operations through our 72%
the company
7
Montblanc Legend Spirit
INTERPARFUMS, INC. 2022 ANNUAL REPORT
8
owned subsidiary in Paris, Interparfums SA, which is also a
Rochas, S.T. Dupont and Van Cleef & Arpels, whose prod-
publicly traded company as 28% of Interparfums SA shares
ucts are distributed in over 120 countries around the world.
trade on the Euronext.
European operations will also become the exclusive worldwide
Our business is not capital intensive, and it is important to
licensee for Lacoste fragrances on January 1, 2024.
note that we do not own manufacturing facilities. We act as a
general contractor and source our needed components from
our suppliers. These components are either received and stored
United States Operations
Prestige brand fragrance products are also produced and mar-
directly at our third-party fillers or received at one of our dis-
keted through our United States operations, and represented
tribution centers and then, based upon production needs, the
approximately 32% of net sales for the year ended December
components are sent to one of several third party fillers, which
31, 2022. These fragrance products are sold under trademarks
manufacture the finished product for us and then deliver them
owned by us or pursuant to license or other agreements with
to one of our distribution centers.
the owners of brands, which include Abercrombie & Fitch, Anna
Our fragrance products focus on prestige brands, each with
Sui, Dunhill, Donna Karan, DKNY, Ferragamo, Graff, GUESS,
a devoted following. By concentrating in markets where the
Hollister, MCM, Oscar de la Renta and Ungaro.
brands are best known, we have had many successful product
launches. We typically launch new fragrance families for our
brands every few years, and more frequently seasonal and limit-
ed edition fragrances are introduced as well.
BUSINESS STRATEGY
Focus On Prestige Beauty Brands
Prestige beauty brands are expected to contribute significantly
The creation and marketing of each product family is intimate-
to our growth. We focus on developing and launching quality
ly linked with the brand’s name, its past and present positioning,
fragrances utilizing internationally renowned brand names. By
customer base and, more generally, the prevailing market at-
identifying and concentrating in the most receptive market
mosphere. Accordingly, we generally study the market for each
segments and territories where our brands are known, and
proposed family of fragrance products for almost a full year be-
executing highly targeted launches that capture the essence of
fore we introduce any new product into the market. This study
the brand, we have had a history of successful launches. Certain
is intended to define the general position of the fragrance family
fashion designers and other licensors choose us as a partner,
and more particularly its scent, bottle, packaging and appeal to
because our Company’s size enables us to work more closely
the buyer. In our opinion, the unity of these four elements of the
with them in the product development process as well as our
marketing mix makes for a successful product.
successful track record.
As with any business, many aspects of our operations are sub-
ject to influences outside our control. We believe we have a
strong brand portfolio with global reach and potential. As part
of our strategy, we plan to continue to make investments in
Grow Portfolio Brands Through
New Product Development And Marketing
We grow through the creation of fragrance family extensions
fast-growing markets and channels to grow market share. We
within the existing brands in our portfolio. We regularly create
discuss in greater detail risk factors relating to our business in
a new family of fragrances for each brand in our portfolio. We
Item 1A of this Annual Report on Form 10-K for the fiscal year
frequently introduce seasonal and limited edition fragrances
ended December 31, 2022, and the reports that we file from
as well. With new introductions, we leverage our ability and
time to time with the SEC.
European Operations
We produce and distribute our fragrance products primarily
experience to gauge trends in the market and further leverage
the brand name into different product families in order to
maximize sales and profit potential. We have had success in
introducing new fragrance families (sub-brands, flanker brands
under license agreements with brand owners, and fragrance
or flankers) within our brand franchises. Furthermore, we
product sales through our European operations represented
promote the performance of our prestige fragrance operations
approximately 68% of net sales for 2022. We have built a portfo-
through knowledge of the market, detailed analysis of the image
lio of prestige brands, which include Boucheron, Coach, Jimmy
and potential of each brand name, and a highly professional
Choo, Karl Lagerfeld, Kate Spade, Lanvin, Moncler, Montblanc,
approach to international distribution channels.
the company
9
Continue To Add New Brands
To Our Portfolio, Through New Licenses
Or Acquisitions.
Prestige brands are the core of our business, and we intend
to add new prestige beauty brands to our portfolio. Over
the past 35 years, we have built our portfolio of well-known
prestige brands through acquisitions and new license agree-
and personal care products under some of our existing brands. We
believe such product offerings meet customer needs, generate trial
and further strengthen customer loyalty.
Continue To Build
Global Distribution Footprint.
Our business is a global business, and we intend to continue to
ments. We intend to further build on our success in prestige
build our global distribution footprint. In order to adapt to changes
fragrances and pursue new licenses and acquire new brands
in the environment and our business, in addition to our arrange-
to strengthen our position in the prestige beauty market. To
ments with third party distributors globally, we are operating
that end, in 2020, we signed a new license for the Moncler
distribution subsidiaries or divisions in the major markets of the
brand. We also acquired a minority interest in Divabox,
United States, France, Italy and Spain for distribution of prestige
which owns the Origines-parfums online platform. As a web-
fragrances. We may look into future joint arrangements or acquire
site of reference for all selective fragrance brands, Origines-
distribution companies within other key markets to distribute
parfums is a key French player in the online beauty market
certain of our prestige brands. While building a global distribution
recognized for its customer relationship expertise. This ac-
footprint is part of our long-term strategy, we may need to make
quisition enhances the introduction of dedicated fragrance
certain decisions based on the short-term needs of the business.
lines and products designed to address a specific consumer
We believe that in certain markets, vertical integration of our dis-
demand for this distribution channel and accelerate our dig-
tribution network may be one of the keys to future growth of our
ital development. During 2021, we closed on a transaction
Company, and ownership of such distribution should enable us to
agreement with Salvatore Ferragamo S.p.A., whereby an
better serve our customers’ needs in local markets and adapt more
exclusive and worldwide license was granted for the produc-
quickly as situations may determine.
tion and distribution of Ferragamo brand perfumes. In 2021,
we also entered into a long-term global licensing agreement
for the creation, development and distribution of fragranc-
es and fragrance-related products under the Donna Karan
RECENT DEVELOPMENTS
Lacoste
In December 2022, we closed a transaction agreement with
and DKNY brands. This exclusive license became effective
Lacoste, whereby an exclusive and worldwide license was granted
in July 2022. During 2022, we closed a transaction agree-
to Interparfums SA for the production and distribution of Lacoste
ment with Lacoste, whereby an exclusive and worldwide
brand perfumes and cosmetics. Our rights under this license are
license was granted to Interparfums SA for the production
subject to certain minimum advertising expenditures and royalty
and distribution of Lacoste brand perfumes and cosmetics.
payments as are customary in our industry. The license becomes
As of December 31, 2022, we had cash, cash equivalents and
effective in January 2024 and will last for 15 years.
short-term investments of approximately $256 million, which
we believe should assist us in entering new brand licenses or
outright acquisitions. We identify prestige brands that can be
Dunhill
In April 2022, we announced that the Dunhill fragrance license
developed and marketed into a full and varied product fami-
will expire on September 30, 2023 and will not be renewed. The
lies and, with our technical knowledge and practical experi-
Company will continue to produce and sell Dunhill fragrances until
ence gained over time, take licensed brand names through
the license expires and will maintain the right to sell-off remaining
all phases of concept, development, manufacturing, marketing
Dunhill fragrance inventory for a limited time as is customary in
and distribution.
the fragrance industry.
Expand Existing Portfolio
Into New Categories.
We selectively broaden our product offering beyond the fra-
Ferragamo
In October 2021, we closed on a transaction agreement with
Salvatore Ferragamo S.p.A., whereby an exclusive and world-
grance category and offer other fragrance related products
wide license was granted for the production and distribution of
INTERPARFUMS, INC. 2022 ANNUAL REPORT
10
Ferragamo brand perfumes. Our rights under this license are
subject to certain minimum advertising expenditures and roy-
PRODUCTION AND SUPPLY
The stages of the development and production process for all
alty payments as are customary in our industry. The license be-
fragrances are as follows:
came effective in October 2021 and will last for 10 years with a
• Simultaneous discussions with perfume designers and creators
5-year optional term, subject to certain conditions.
(includes analysis of esthetic and olfactory trends, target clien-
With respect to the management and coordination of activ-
tele and market communication approach)
ities related to the license agreement, the Company operates
• Concept choice
through a wholly-owned Italian subsidiary based in Florence,
• Produce mock-ups for final acceptance of bottles and packaging
that was acquired from Salvatore Ferragamo on October 1,
• Receive bids from component suppliers (glass makers,
2021. The acquisition together with the license agreement was
plastic processors, printers, etc.) and packaging companies
accounted for as an asset acquisition.
• Choose suppliers
Emanuel Ungaro
In October 2021, we also entered into a 10-year exclusive global
• Schedule production and packaging
• Issue component purchase orders
• Follow quality control procedures for incoming components;
licensing agreement with a 5-year optional term subject to cer-
and
tain conditions, with Emanuel Ungaro Italia S.r.l, for the creation,
• Follow packaging and inventory control procedures
development and distribution of fragrances and fragrance-related
products, under the Emanuel Ungaro brand. Our rights under this
Suppliers who assist us with product development include,
license are subject to certain minimum advertising expenditures
but are not limited to:
and royalty payments as are customary in our industry.
• Independent perfumery design companies (Aesthete, Carré
Basset, PI Design, Cent Degrés)
Donna Karan and DKNY
In September 2021, we entered into a long-term global licensing
• Perfumers (IFF, Givaudan, Firmenich, Robertet, Takasago,
Mane) who create a fragrance consistent with our expectations
agreement for the creation, development and distribution of fra-
and, that of the fragrance designers and creators
grances and fragrance-related products under the Donna Karan
• Fillers (Voyant, CPFPI, Omega Packaging, Societe de Diffusion
and DKNY brands. Our rights under this license are subject to
de Produits de Parfumerie, TSM Brands, ICR, Cosmint, Tatra,
certain minimum advertising expenditures and royalty payments as
Arcade Beauty)
are customary in our industry. With this agreement, we are gaining
• Bottle manufacturers (Pochet du Courval, Verescence,
several well-established and valuable fragrance franchises, most
Verreries Brosse, Bormioli Luigi, Stoelzle Masnières, Heinz),
notably Donna Karan Cashmere Mist and DKNY Be Delicious, as
caps (Qualipac, ALBEA, RPC, Codiplas, LF Beauty, Texen
well as a significant loyal consumer base around the world. In con-
Group, S.A.R.L. J3P, SBG Packaging Group), Pumps (Silgan
nection with the grant of license, we issued 65,342 shares of Inter
Dispensing Systems Thomaston Corp, Aptar, Rexam) or boxes
Parfums, Inc. common stock valued at $5.0 million to the licensor.
(Autajon, Diamond Packaging, TPC Printing)
The exclusive license became effective on July 1, 2022, and we are
• Logistics (Bansard and Bolloré Logistics for storage, order
planning to launch new fragrances under these brands in 2024.
preparation and shipment)
Rochas Fashion
Effective January 1, 2021, we entered into a new license agreement
Suppliers’ accounts for our European operations are primarily
settled in euro and for our United States operations, suppliers’
modifying our Rochas fashion business model. The new agreement
accounts are primarily settled in U.S. dollars. For our Europe-
calls for a reduction in royalties to be received. As a result, in the
an operations components for our prestige fragrances are pur-
first quarter of 2021, we took a $2.4 million impairment charge
chased from many suppliers around the world and are primarily
on our Rochas fashion trademark. In the fourth quarter of 2022,
manufactured in France.
we again took a $6.8 million impairment charge on the Rochas
For United States operations, components for our prestige
fashion trademark after an independent expert concluded that the
fragrances are sourced from many suppliers around the world
valuation of the trademark was $11.3 million. The new license also
and are primarily manufactured in the United States and Italy.
contains an option for the licensee to buy-out the Rochas fashion
Additionally, we occasionally utilize third party manufacturers in
trademarks in June 2025 at its then fair market value.
China and Turkey.
the company
11
MARKETING AND DISTRIBUTION
Our products are distributed in over 120 countries around the
sidiaries provides us with a significant presence in over 120
countries around the world.
world through a selective distribution network. For our interna-
Over 50% of our European based prestige fragrance net sales
tional distribution, we either contract with independent distribu-
are denominated in U.S. dollars. We address certain financial ex-
tion companies specializing in luxury goods or distribute prestige
posures through a controlled program of risk management that
products through our distribution subsidiaries. In each country,
includes the use of derivative financial instruments. We primarily
we designate anywhere from one to three distributors on an
enter into foreign currency forward exchange contracts to re-
exclusive basis for one or more of our name brands. We also
duce the effects of fluctuating foreign currency exchange rates.
distribute our products through a variety of duty free operators,
The business of our European operations has become in-
such as airports and airlines and select vacation destinations.
creasingly seasonal due to the timing of shipments by our distri-
As our business is a global one, we intend to continue to
bution subsidiaries and divisions to their customers, which are
build our global distribution footprint. For the distribution
weighted to the second half of the year.
of brands within our European based operations, we operate
For our United States operations, we distribute products to re-
through our distribution subsidiaries or divisions in the major
tailers and distributors in the United States as well as international-
markets of the United States, France, Italy and Spain, in addi-
ly, including duty free and other travel-related retailers. We utilize
tion to our arrangements with third party distributors global-
our in-house sales team to reach our third party distributors and
ly. Our third party distributors vary in size depending on the
customers outside the United States. In addition, the business of
number of competing brands they represent. This extensive
our United States operations has become increasingly seasonal as
and diverse network together with our own distribution sub-
shipments are weighted toward the second half of the year.
Interparfums Headquarters in Paris, 10 rue de Solférino
INTERPARFUMS, INC. 2022 ANNUAL REPORT
12
Campaign
2022
for Fiscal Year Fiscal 2019 Fiscal 2020 Fiscal 2021
81/100
ESG Rating
2021
2020
69/100
76/100
This score is calculated on the basis of 140 criteria divided
into 4 pillars: Environmental, Social, Governance and External
Stakeholders.
Interparfums SA applies a comprehensive approach in addressing
the issues of corporate, environmental and social responsibility and
transparency. It has developed from one year to the next its corporate
social responsibility (“CSR”) policy, implemented by its Operational
and Support Departments by involving all personnel, and has identified
issues to be addressed in three key areas: its responsibilities toward
operational stakeholders, staff and the company. Social and societal
values have been an important component of Interparfums SA’s de-
velopment for a number of years, exemplified notably by an attractive
policy of employee benefits and solid relations with its partners.
In October 2022, Interparfums SA announced that it had retained
the services of Muriel Buiatti, as its CSR Project Manager to assist
the CSR Executive Committee in achieving its goals. A graduate of
the French Engineering School, Ecole Polytechnique, Ms. Buiatti ex-
ercised various responsibilities, including research and development,
at L’Oréal for 13 years. After completing her Master’s Degree in Sus-
tainable Development, she founded Commenterre, which specializes
Corporate
Social
Responsibility
ENVIRONMENTAL, SOCIAL & GOVERNANCE
Both our U.S. operations and our European operations are good
corporate citizens and take our responsibilities seriously. We
in helping companies address their CSR issues.
comply with all applicable laws, rules and regulations in general,
To support its strategy, at the beginning of 2021 and at the
and in particular with regard to chemicals and hazardous mate-
initiative of management, Interparfums SA created an CSR Ex-
rials. Throughout our supply chain, from procurement of com-
ecutive Committee, consisting of members of the Operations &
ponents to distribution of finished products, we act responsibly
Supply Chain, Human Resources, Legal Affairs and Communica-
and monitor and comply with all legal requirements. While we
tions teams, tasked with formalizing the company’s CSR strategy
do not own our manufacturing facilities, we set a high bar with
focusing on the following priorities, aligned with the UN Sustain-
our industrial partners by placing an emphasis on quality, the use
able Development Goals:
of good manufacturing practices and innovation, and encouraging
• reinforce its status as a responsible employer, by notably cre-
them to build strong ESG programs of their own. Like many of
ating a “Responsible Employer Charter” and strengthening the
our industry competitors, we are applying a multifunctional and
employee training plan;
comprehensive approach in addressing the issues of corporate,
• reduce its environmental footprint, notably by adopting envi-
environmental and social responsibility and transparency, build-
ronmentally optimized design specifications to reduce packaging
ing off the UN Sustainable Development Goals. Our European
and the introduction of recycled and recyclable materials for
Operations have led the way on this initiative, but our US opera-
each product developed;
tions are actively catching up.
• strengthen its sustainable development approach by formal-
EUROPEAN OPERATIONS
Interparfums SA, our European operations with their headquarters
izing a code of business conduct and ethics that is enforceable
against operational stakeholders.
in Paris, has made further progress in the areas of environmental,
(1) Gaïa Research, a member of the EthiFinance Group is an extra-fi-
social, and corporate governance (ESG) based on the results of the
nancial rating agency specializing in rating the ESG performance
2022 campaign of the rating agency Gaïa Research (1) which ranks
of small and midsize companies and mid-cap companies listed on
the top performing companies in this area.
European markets.
corporate social responsibility
13
Environmental
Interparfums SA does not own its own manufacturing facilities, having chosen to support its industrial partners by placing an empha-
sis on quality, the use of good manufacturing practices and innovation. The construction of a high quality environmentally certified
warehouse in 2011 and sourcing in Europe more than 80% of its needs highlight the efforts undertaken in recent years. In addition,
reflecting the stakes in terms of protecting the planet, Interparfums SA now intends to also exercise an increasingly active role in
contributing to the environment.
As part of its CSR strategy, Interparfums SA has partnered with EcoVadis to assess the CSR performance of its supply chain and
suppliers. EcoVadis operates a global platform to assess corporate social responsibility and share performance data using their assess-
ment method based on international CSR standards.
In 2022, 119 suppliers were evaluated or were in the process of being evaluated, representing over 68% of Interparfums SA’s pro-
curement activity. As part of a continuous improvement process, Interparfums SA’s objective will be to monitor and encourage the
CSR performance of its suppliers in four major areas: the environment, social and human rights, ethics and responsible procurement.
EcoVadis assessment results:
Number of Suppliers
Evaluated
91
Average
Ecovadis Score
66.7
Average
Environmental
Score
69.5
Average
Labor and
Human Rights
Score
Average
Ethics Score
66.9
60,7
Average
Sustainable
Procurement
Score
65.3
In addition, in 2022, Interparfums SA has calculated its total carbon footprint in accordance with international standards, and
namely the Green House Gas Protocol (GHG Protocol) for the conversion of all emission sources into tons of CO2 equivalent and
the Base Carbone®, a public database of emission factors made available by the French Agency for Ecological Transition (ADEME).
• 2021 Carbon footprint: 174,930 tCO2e
• 2021 Carbon intensity: 312 KgCO2e per € thousand of revenue (in the low range of our industry)
In Tons CO2 Equivalent
Scope 1 (gas and fuel energy consumption)
Scope 2 (electricity consumption)
Scope 3 (other indirect emissions)
Total
2021
226
29
174,675
174,930
Weight
0.1%
0.0%
99.9%
100%
This first measurement is a crucial step before determining a low carbon trajectory in accordance with the European green deal
regulation which aims to be climate-neutral by 2050.
Moreover, Interparfums SA complies with IS 22716, International Standards for Good Manufacturing Practices, with all aspects of the
manufacturing process, including receiving of raw materials and packaging materials, production and quality control. In this regulatory
environment, regular audit campaigns are carried out for all packaging plants by the quality department based on the ISO 22716 stan-
dard in place. The ultimate purpose of these audits is to ensure that packaging service providers maintain a good level of traceability for
their activities. All plant activities were reviewed: receiving process for raw materials and packaging materials, manufacturing, packaging
and quality controls. These reports demonstrated that Interparfums SA’s subcontractors comply with ISO 22716 Good Manufacturing
Practices and in particular, traceability requirements for all perfume production operations. It is also in compliance with the EU directive
entitled Regulation on Registration, Evaluation, Authorization and Restriction of Chemicals (“REACH”), which governs and regulates the
safe use of chemicals. Although not a manufacturer, per se, Interparfums SA has taken the initiative and monitors its suppliers for compli-
ance with REACH, and has commitments from each of them concerning “Substances of Very High Concern” as listed in appendix XIV of
REACH. No supplier of Interparfums SA has advised it of any such hazardous materials in any of its products to date.
Interparfums SA monitors the outsourcing of the entire production process of its manufacturing partners with expertise and
accountable leadership in their respective areas. These include producers of juice, glass, caps and cardboard boxes and packaging
companies. We take environmental issues into account at each of these phases, and in particular regarding the choice of materials
INTERPARFUMS, INC. 2022 ANNUAL REPORT
14
used for components, waste management and reducing the carbon footprint. Moreover, all the alcohol used by Interparfums SA is
from vegetal origin (essentially from beets).
Proposing Environmentally and Socially Responsible Packaging
2021
2022
Target
Year
Monitor:
Monitor the EcoVadis Scores
of our suppliers
Increase:
Increase the PCR Glass Part
of Our Packaging
Initiating a low-carbon trajectory
Reduce:
Reduce scope 1, 2, 3 greenhouse
gases emission intensity
Contribute:
Average score Average score
66.7/100
65/100
Average score
>70/100
2025
47%
46%
60%
2025
-3% /year
Define the Appropriate
Regenerative
Agriculture Program
One 5-year
Program
Defined
Neutrality
2040
Sustainability & The Environment
At every stage of the purchasing process, Interparfums SA seeks to determine the precise needs and considers the requirement of
limiting sources of unnecessary costs and a waste of resources:
• reducing waste, in particular at the phases of production, consumption and the end of the product life;
• recycling flawed production, notably at the production phase;
• repairing palettes to increase their lifespan.
Interparfums SA regularly monitors energy and water consumption indicators to assess possibilities for improving energy efficien-
cies in the area of lighting, heating and air-conditioning for the entire warehousing site, for example by adjusting ventilation flows and
using a program that reduces heating and ventilation over weekends.
With this objective, measures are planned to automatically turn off lights in the warehouse when employees are taking outside
breaks and maintain the warehouse temperature at 11°C (51°Fahrenheit). These energy savings initiatives include measures providing
for managing the hours for reloading the electric forklifts during non-peak hours during the night, requiring low consumption for a
maximum of 280,000 kW instead of 600,000 kW during the day. Monthly reports on electricity consumption are prepared, allowing
the company to analyze the causes for overconsumption, when applicable, in order to take corrective actions as applicable. The mea-
surement of energy consumption highlighted stable levels for electricity and gas over the last four years, whereas water consumption
has on average declined marginally. Finally, in the spirit of contributing to protecting the environment, the company has installed park-
ing places at the logistic site for bicycles and electric recharging stations for cars.
By strategically locating its warehouse at the crossroads for its subcontractors, Interparfums SA has reduced distances for ship-
ments of finished products.
Measures undertaken in collaboration with the warehouse and trade goods shipping manager, within the framework of the improve-
ment and optimization of shipments between production sites and the logistics platform have contributed to reducing the number of
back-and-forth trips for trucks.
In the area of transport to distributors, Interparfums SA uses road transport for France and Europe and maritime transport for
the Americas, Asia and the Middle East. Use of air transport is very limited and reserved only for urgent situations where no other
solutions are available. Certain promotional materials manufactured in Asia are shipped directly to American distributors without
being imported and stored in France.
corporate social responsibility
15
In addition, in 2018 Interparfums SA put into service a new warehouse located in Singapore to promote the use of short channels
within the Asia Pacific region. This warehouse makes it possible to maintain a permanent inventory in this region and, in this way,
encourages the use of maritime transport for goods shipped from France to Asia.
Measures to prevent environmental risks and pollution involve firstly the choice of techniques and materials.
To reduce the impacts of its activities, a water-soluble solution in part biodegradable that does not harm the environment is used in
the coloring of some of its bottles. For the remainder of the product lines, the coating process provides for the gradual elimination
of solvent-based coatings and the progressive adoption of hydro-coating for all the company’s products, in compliance with the law
of 2005 for reducing emissions of Volatile Organic Compounds (VOC) in the air. In addition, certain sub-contractors for glass making
have electrostatic air filters to reduce dust and smoke emissions in addition to wastewater recycling.
Interparfums SA has, in addition, eliminated thermosetting plastics from its line of bath and body care products in favor of
recyclable plastic.
To balance product quality and aesthetics with environmental considerations, Interparfums SA takes care to reduce packaging
volumes and select the appropriate materials at each stage of production to ensure optimal conditions for their recycling or disposal.
The manufacture of recyclable glass bottles includes a system for the recovery, crushing and remolding the waste. Indicators in
place since 2013 for tracking wastage have improved Interparfums SA’s ability to monitor wastage rates by glass bottle decorators. Its
first objective is to apply a continuous improvement approach and reduce rates of wastage over the long term. The second objective
is to succeed in reducing this wastage and reintroduce bottles back into the manufacturing cycle.
In addition, Interparfums SA has adopted procedures for recovering waste from subcontractors originating from surplus produc-
tion or components of discontinued products. The recovered waste is then sorted for the purpose of their elimination.
Interparfums SA has also revised the bulk and secondary packaging (product boxes and perfume sets) in order to optimize the
palletizing process, reduce the purchase of cardboard packaging materials and reduce volumes transported by decreasing the amount
of empty space. The company henceforth requires a minimum number of palettes per truck.
Finally, cardboard packaging materials for testers are 100% recyclable.
SOCIAL
Donations and sponsorship initiatives:
• Interparfums SA contributes to volunteer-sector organizations intervening in the areas of solidarity, childhood, combating exclu-
sion and promoting health, by providing financial assistance to support their projects and initiatives.
• Since 2018, through the Givaudan Foundation,
− Interparfums provided support to five schools for the management of their libraries.
− In 2021, the program for the installation of school libraries continued in Sulawesi with a new library in Moramo (South East Su-
lawesi), benefiting 1,040 children and 66 school teachers, and providing a total of 5,180 books.
− In 2021, €136,000 of charitable initiatives and donations were made by Interparfums SA.
• Educational establishments:
− As part of its desire to share its experience and train future generations, Interparfums SA is a regular contributor, particularly in the
fields of marketing and finance, at different leading schools (business schools, Sciences Po, École supérieure de parfumerie).
− Interparfums SA also regularly welcomes and trains interns at Interparfums SA offices as well as work-study contract beneficiaries.
Assisting Local Economies
• Production facilities of Interparfums SA’s subcontractors as well as warehousing facilities for finished products are located primarily
in the Haute Normandie region of France. These activities contribute to developing the local economy.
• Interparfums SA provides support for patchouli-producing communities in Indonesia.
Sustainable Development Goals
In line with Interparfums SA’s Corporate Social Responsibility strategy, the main goals set by Interparfums SA are presented in the
following table.
INTERPARFUMS, INC. 2022 ANNUAL REPORT
16
Social Initiatives
Current Situation
Expected Performance Deadline
Attracting, Supporting
and Developing All Talents
Attract:
Develop:
Strengthen training
Develop:
Write a Responsible
Employer Charter Employer Charter
Share the Responsible
50% of the Employees
70% of the Employees
CSR training for employees
-
80% in 2 Years
2023
2025
2023
Diversify:
Raising employee awareness
about disabilities Once a Year
Once a Year
Governance
ª• Interparfums SA only engages in recognized ethical practices.
Environmental
In connection with a new product launch in 2023, Hollister
• It has adopted the Middlenext Corporate Governance Code
Feelin’ Good, this new fragrance highlights our ESG efforts we
since 2010, which was revised in September 2016 and September
made in 2022:
2021 to ensure effective governance.
• Glass containing 10% PCR (post-consumer recycled) glass, and
• Board of Directors – Interparfums SA has a Board of Directors
is 100% recyclable.
consisting of 11 members, with 5 members being independent. It
• Our folding cartons meet the requirements of SFI, the
also intends to set up a committee of shareholders.
Sustainable Forestry Initiative, and are 100% recyclable
− Director Ethics - in accordance with the new Middlenext
Code Recommendation 2 reinforcing the management of con-
• Liners are 100% recyclable.
• All components sourced from North/South America – closer
flicts of interest, each Director declares before each meeting
supply chain for Hollister brand fragrances and are filled and
any potential conflicts of interest and, on an annual basis, any ac-
warehoused in the United States.
tual or potential conflicts of interest between their obligations
In addition, all folding cartons for all licensed brands in United
to Interparfums SA and their private interests, in particular with
States operations now consist of FSC, the Forest Stewardship
respect to their other offices and functions.
Council, or SFI certified paper. We are also making efforts to
− In any event, the members of the Board shall refrain from
participating in the proceedings and voting on any matter in
regionally source components to filling and warehousing loca-
tions where practicable in order to lessen shipping and thereby
which they would be in a situation of real or potential conflict
lower energy costs. For 2023 most giftsets will be reduced in
of interest.
format and size, and we have eliminated plastic from the follow-
• Existence of a CSR Executive Committee
ing branded gift sets completely, Abercrombie & Fitch, Donna
• Audit committee consisting of 5 independent directors.
Karan, DKNY, Hollister, MCM and Oscar de la Renta.
Our largest filler in the United States has been awarded Bronze
UNITED STATES OPERATIONS
In the U.S. we are also a good corporate citizen. Like our French
status in 2022 from EcoVadis. One of our largest pump manufac-
turers is the recipient of a 2021 Gold Medal from EcoVadis for
subsidiary, Interparfums USA also retained Muriel Buiatti to
Sustainability and a 2020 Bronze Medal from EcoVadis for its cor-
advise and guide us on our path to become a better corporate
porate social responsibility rating, and a large glass bottle manu-
citizen, as we attempt to increase our efforts in ESG. Also, like
facturer was awarded gold metals from EcoVadis for its corporate
our French subsidiary, we are also not a true manufacturer, but
social responsibility rating two years in a row. In addition in 2021,
we regularly monitor our subcontractors, suppliers and fillers
a large glass bottle manufacturer that we utilize received an “A”
for their compliance. In addition, our subcontractors and fillers
rating for leadership in corporate sustainability by CDP, a global
are subject to inspection and audit from our various licensors for
environmental non-profit group, ranking ‘A’ for tackling water se-
compliance with all aspects of law.
curity and ‘A-’ for leading effort against climate change.
corporate social responsibility
17
In our U.S. operations, we do not use any banned ingre-
on Good Manufacturing Practices and U.S. sourcing
dients or components and use sustainable ingredients where
• Today, our aim is to elevate the issue of environmental responsibility
practicable. Some componentry (glass/folding cartons) is also
recyclable where practicable. For example, our Abercrombie
Practices recognized in the areas of responsible employment, social
& Fitch Away fragrance uses glass and folding cartons that are
responsibility and governance.
100% recyclable, and the carton liner is 100% recyclable and
• Employer values: A responsible employer
biodegradable.
− An “Interparfums spirit” cultivating a sense of belonging
Lastly, our product development team works with our fra-
#OneIP #OneTeam #OneDream
grance houses – all very sustainable in their own right – to
− A proactive employee relations policy
incorporate sustainably sourced ingredients in the fragrance
• Social values: Long-standing practices
oils used.
In addition to our production operations complying with ap-
− Ethical conduct
− Close relations with our partners
plicable law, our managers, supervisors and traffic coordinators
• Governance values: Long-proven practices
in our New Jersey distribution center undergo training in order
− Quality of profiles, balance between independent/non-inde-
for us to comply with Dangerous Goods Regulations. Compli-
pendent board members
ance requires training and certification to deal in hazardous ma-
− Following Inter Parfums, Inc. Board of Directors’ Diver-
terials to prevent damage to the environment. The two main
sity Policy
certifications are:
International Maritime Dangerous Goods (IMDG) Danger-
Interparfums USA contributes to protecting the environment
ous Goods Training – 3 year Certification for Ocean Shipment
• Application of Good Manufacturing Practices
and International Air Transport Association (IATA) Dangerous
• Audits of packaging service providers
Goods Training – 2 year Certification for Global Air Shipments.
• U.S. sourcing: 64%
Further, our distribution center in New Jersey has in-rack
sprinklers to accommodate our hazardous material products.
Targets
Our fragrances, Class 9 – Consumer Commodity ID8000, are
• Formalizing employee relations practices through an employ-
registered with American Chemistry Council, Inc. (known
ee Workplace Safety Committee
in the chemicals industry as Chemtrec). Chemtrec has a 24/7
hazardous materials emergency communications center, which
provides immediate assistance for incidents involving hazardous
Social Values
Current situation: Recognized business ethics
materials of any kind.
Social & Governance
We have an Ethical Code of Conduct, which governs our behav-
Relations with brands under license agreements
• A focus on developing genuine partnerships through close and
regular relations with the management of each brand
ior in the following subject matters:
• Developing products that respect the codes of each brand
CSR & Governance
Employer Values
Social Values
Corporate Governance
Brand Initiatives
The Environment
• Dedicated Interparfums USA marketing teams
Relations with customers
• Long (or very long-term) relationships with distributors
• Taking into account the specific characteristics of each mar-
ket and country
Dangerous Goods Regulations
• Developing products in some cases specifically adapted to de-
CSR & Governance
Introduction
mands
• Sharing projects at a very early stage
• Responsible employment, corporate citizenship and governance
Relations with industrial partners
practices have been an integral part of our values from day one
• Long or very long-term relationships with manufacturers in
• In our recent past, environmental practices were mainly based
the sector
INTERPARFUMS, INC. 2022 ANNUAL REPORT
18
• Implementing guidelines on “Good Manufacturing Practices”
For Her meet the following criteria:
- Supporting innovation
- Financial support (2020 pandemic)
Targets
• Raising awareness of our partners about CSR challenges
Corporate governance
Current situation: Long-proven practices
Board of Directors
- Do not contain substances of animal origin (i.e., carmine,
beeswax, honey, royal jelly, marine collagen, lanolin, fish ex-
tract, musk, silk, gelatin, milk, keratin, etc.)
- Formula has not been tested on animals
- Do not contain raw materials that have been tested on
animals since March 11, 2009 for cosmetic purposes
ABERCROMBIE & FITCH
ABERCROMBIE & FITCH AWAY PACKAGING SUSTAINABILITY
• Uses glass and folding cartons that are 100% recyclable
• 10 members: 6 independent directors (60%)
• Carton liner is 100% recyclable and biodegradable
Audit Committee, Executive Compensation Committee
and Nominating Committee
The Environment
Focus of 2022 work
• 3 members: 3 independent directors (100%)
Today, Interparfums USA is pursuing an environmental approach
Important Business Policies
in the following areas:
• Manufacturing of components
• Prohibition on fraud, bribes, kickbacks and other benefits to
• The design of fragrances (juice)
suppliers and customers
• Industrial packaging
• Prohibition on trading in the company’s securities on the basis
of non-public material information
Production of components
• Requirement of Company-wide confidentiality for non-public sen-
- Glass bottles: Reducing consumption of glass and systemat-
sitive or proprietary information
• Prohibition on sexual harassment
ic use of recycled glass for launches
- Packaging: Reducing consumption of cardboard, use of sus-
• Prohibition on use of child labor and slave labor
tainable FSC-certified cardboard
Targets
• Consolidating our existing corporate governance practices
Design of fragrances (“juice”)
• Strengthening alignment with Inter Parfums, Inc. Board
EcoVadis
- Gift sets: Use of FSC cardboard
Diversity Policy
Brand initiatives
MCM
MCM EAU DE PARFUM PACKAGING SUSTAINABILITY
• Outer packaging is 100% recyclable and Forest Stewardship
Council (FSC) certified
• FSC sets standards for responsible forest management
• A platform used by the main perfumes & cosmetics industry
players
• 4 pillars:
- The environment
- Social & Human Rights
- Ethics
- Responsible sourcing
• FSC is the gold standard in forest certification
Targets
• Glass bottle is made from post-industrial recycled materials
• Become an active contributor to protecting the environment
• Only environmentally friendly ink and colorants were used for
as well as through our business partners
the bottle and carton
HOLLISTER
As we continue in our endeavors of responsible employment,
corporate citizenship and governance practices, and continue
HOLLISTER CANYON ESCAPE named “GOOD FOR VEGAN”
to elevate the issue of environmental responsibility, we will up-
by Sephora
date our policies and procedures accordingly. As such, this Ethi-
• Hollister Canyon Escape For Him and Hollister Canyon Escape
cal Code of Conduct will be updated from time to time.
corporate social responsibility
19
MCM Ultra
INTERPARFUMS, INC. 2022 ANNUAL REPORT
20
Coach
DKNY
plus a 5-year optional term
if certain sales targets are met
June 30, 2026
December 31, 2032,
plus a 5-year optional term
if certain sales targets are met
Donna Karan
December 31, 2032,
plus a 5-year optional term
if certain sales targets are met
Dunhill
September 30, 2023
Emanuel Ungaro
December 31, 2031,
plus a 5-year optional term
if certain sales targets are met
French Connection
December 31, 2027, plus a 10-
Graff
GUESS
Hollister
Kate Spade
Jimmy Choo
Karl Lagerfeld
Lacoste*
MCM
Moncler
year optional term if certain
sales targets are met
December 31, 2026,
plus 3 optional 3-year terms
if certain sales targets are met
December 31, 2033
Extends until either party
terminates on 3 years’ notice
June 30, 2030
December 31, 2031
October 31, 2032
December 31, 2038
December 31, 2030,
plus 4 option years
December 31, 2026,
plus a 5-year optional term if
certain conditions are met
Montblanc
December 31, 2030
Oscar de la Renta
December 31, 2031,
plus a 5-year optional term
if certain sales targets are met
Ferragamo
December 31, 2031, plus a 5-year
optional term if certain sales
targets are met
S.T. Dupont
December 31, 2023
Van Cleef & Arpels
December 31, 2024
The
Products
We are the owner of the Rochas brand, and
the Lanvin brand name and trademark for
our class of trade. In addition, we have built
a portfolio of licensed prestige brands where-
by we produce and distribute our prestige fra-
grance products under license agreements
with brand owners. Under license agreements,
we obtain the right to use the brand name, cre-
ate new fragrances and packaging, determine
positioning and distribution, and market and
sell the licensed products, in exchange for
the payment of royalties. Our rights under li-
cense agreements are also generally subject
to certain minimum sales requirements and
advertising expenditures as are customary in
our industry.
Our licenses expire on the following dates:
Brand Name
Abercrombie & Fitch
Expiration Date
Extends until either party
In connection with the acquisition of the Lanvin brand names
terminates on 3 years’ notice
and trademarks for our class of trade, we granted the seller the
Anna Sui
December 31, 2026,
right to repurchase the brand names and trademarks in 2025
plus one 5-year optional term
for the greater of €70 million (approximately $86 million) or
bebe Stores
Boucheron
June 30, 2023
December 31, 2025,
one times the average of the annual sales for the years ending
December 31, 2023 and 2024.
*The Lacoste license commences on January 1, 2024
the products
21
Fragrance
Portfolio
INTERPARFUMS, INC. 2022 ANNUAL REPORT
22
In 2010, we entered into an exclusive license agreement to
create, develop and distribute fragrances and fragrance related
products under the Montblanc brand. In 2015, we extended the
agreement which now runs through December 31, 2025.
Montblanc has achieved a world-renowned position in the
luxury segment and has become a purveyor of exclusive prod-
ucts, which reflect today’s exacting demands for timeless design,
tradition and master craftsmanship. Through its leadership posi-
tions in writing instruments, watches and leather goods, prom-
ising growth outlook in women’s jewelry, international retail
footprint through its network of more than 600 boutiques, high
standards of product design and quality, Montblanc has grown
to be our largest fragrance brand.
In 2011, we launched our first new Montblanc fragrance,
Legend, which quickly became our best-selling men’s line and
has given rise to a plethora of flankers including Legend Night
and Legend Spirit. In 2014, we launched our second men’s line,
Emblem and like its predecessor, Emblem gave rise to brand
extensions. In 2019, we unveiled Montblanc Explorer, which
has added flankers, most recently Montblanc Explorer Ultra
Blue. The Legend continues, as in 2022, we introduced a new
flanker, Montblanc Legend Red. For 2023, extensions for the
Montblanc signature scent for women and Explorer line for men
are in the pipeline.
the products
23
Montblanc Explorer Platinum
INTERPARFUMS, INC. 2022 ANNUAL REPORT
24
In 2009, we entered into an exclusive 12-year worldwide license
agreement for the creation, development and distribution of
fragrances and fragrance related products under the Jimmy
Choo brand, and in 2017, we extended the license agreement
which now runs through December 31, 2031.
Jimmy Choo encompasses a complete luxury accessories
brand. Women’s shoes remain the core of the product offer-
ing, alongside handbags, small leather goods, scarves, eyewear,
belts, fragrance and men’s shoes. Jimmy Choo has a global store
network encompassing more than 200 stores and is present in
the most prestigious department and specialty stores world-
wide. Jimmy Choo is part of the Capri Holdings Limited luxury
fashion group.
Our initial Jimmy Choo fragrance was launched in 2011, a
signature scent for women. In the decade that followed, Jimmy
Choo has grown to become our second largest brand with new
pillars and flankers debuting regularly, both for men and women.
Our newest women’s fragrance pillar, I Want Choo, was launched
in 2021 and for 2022, two flankers debuted, Jimmy Choo Man
Aqua and I Want Choo Forever. For 2023, Jimmy Choo Rose Passion
is scheduled to be unveiled.
the products
25
Jimmy Choo Rose Passion
INTERPARFUMS, INC. 2022 ANNUAL REPORT
26
In 2015, we entered into an exclusive 11-year worldwide license
to create, produce and distribute new men’s and women’s fra-
grances and fragrance related products under the Coach brand
name. We distribute these fragrances globally to department
stores, specialty stores and duty-free shops, as well as in Coach
retail stores.
Founded in 1941, Coach is the ultimate American leather goods
brand and has always been renowned for its quality craftsman-
ship. Now the luxury brand that best embodies New York’s ca-
sual elegance, Coach also offers collections of ready-to-wear,
lifestyle accessories and fragrances. Its contemporary approach
to luxury combines authenticity and innovation, exported world-
wide thanks to its thoroughly American non-conformist vision.
In 2016, we launched our first Coach fragrance, a women’s
signature scent, and in 2017, a men’s scent, both of which became
and remain top selling prestige fragrances. Subsequent flankers
and extensions have enlarged the Coach fragrance enterprise
as have entirely new collections, including Coach Dreams which
debuted in early 2020, and its sister scent, Dreams Sunset, which
debuted in 2021. For 2022, we unveiled Coach Wild Rose, and
Coach Open Road, a new fragrance for men. Coach is part of the
Tapestry house of brands.
the products
27
Coach Coach Green
INTERPARFUMS, INC. 2022 ANNUAL REPORT
28
In 2018, we entered into an exclusive, 15-year worldwide license
agreement with GUESS, Inc. for the creation, development and
distribution of fragrances under the GUESS brand.
Established in 1981, GUESS began as a jeans company and has
since successfully grown into a global lifestyle brand. GUESS,
Inc. designs, markets, distributes and licenses a lifestyle collec-
tion of contemporary apparel, denim, handbags, watches, foot-
wear and other related consumer products. GUESS products
are distributed through branded GUESS stores as well as better
department and specialty stores around the world.
We began selling GUESS legacy scents in 2018. In 2019 the
GUESS brand quickly became the largest within our U.S. oper-
ations, with legacy fragrances dominating the sales mix. In 2019,
we began shipments of 1981 Los Angeles and Seductive Noir, both
flankers of established scents, which accelerated brand growth.
Nearly three years in the making, our first new blockbuster
scent, Bella Vita, debuted for the GUESS brand both domesti-
cally and internationally in 2021. In addition, Effect, a new men’s
grooming line and fragrance collection was launched in 2021.
Uomo, a new men’s fragrance for GUESS, came to market in
2022 with a flanker debuting in 2023.
the products
29
Guess Uomo Acqua
INTERPARFUMS, INC. 2022 ANNUAL REPORT
30
In July 2022, our long-term global fragrance license for the Donna
Karan brand became effective. Donna Karan is recognized as a
fashion pioneer, and in 2004 she received a lifetime achievement
award from the Council of Fashion Designers of America. With
roots that date back to 1984, the Donna Karan brand of today
has been reimagined for a new era of modern women, expanding
into an all-encompassing wardrobe of sportswear, handbags,
footwear, accessories and select licensed products. The brand’s
lead fragrance, Cashmere Mist launched in 1994 and was honored
with the Fragrance Foundation Hall of Fame Award in 2019.
the products
31
T H E U LT I M AT E L AY E R O F L U X U R Y
Donna Karan Cashmere Mist
INTERPARFUMS, INC. 2022 ANNUAL REPORT
32
DKNY fragrances joined the Inter Parfums fragrance portfolio
on July 1, 2022. The DKNY brand emerged in 1989 as the
“next generation” fashion response to Donna Karan’s then
teenage daughter raiding her mom’s closet. Today, DKNY
designs, markets and globally distributes collections of apparel,
accessories, footwear and select licensed products. Be Delicious,
the brand’s best known scent which launched in 2004, was
named one of the 25 Perfumes of All Time in April 2022 by
Marie Claire magazine. Like our Donna Karan fragrance license,
our exclusive DKNY license was awarded by G-III Apparel
Group in September 2021. DKNY, along with its associated
brand, Donna Karan, have emerged as superstars among our
U.S. operations.
the products
33
DKNY Be Delicious Orchard St.
INTERPARFUMS, INC. 2022 ANNUAL REPORT
34
In December 2022, we closed a transaction agreement with
Lacoste, whereby an exclusive and worldwide license was
granted to Interparfums SA for the production and distri-
bution of Lacoste brand perfumes and cosmetics. Our rights
under this license are subject to certain minimum advertising
expenditures and royalty payments as are customary in our
industry. The license becomes effective in January 2024 and
will last for 15 years.
the products
35
Lacoste
INTERPARFUMS, INC. 2022 ANNUAL REPORT
36
In October 2021, we closed on a transaction agreement with
Salvatore Ferragamo S.p.A., whereby an exclusive and world-
wide 10-year license was granted for the production and dis-
tribution of Ferragamo brand perfumes, with a 5-year optional
term if certain conditions are met. Salvatore Ferragamo S.p.A.
is the parent company of the Salvatore Ferragamo Group, one
of the world’s leaders in the luxury industry and whose origins
date back to 1927. Named after its founder, the brand still rep-
resents and lives by the original values of Salvatore Ferragamo.
The uniqueness and exclusivity of its creations, along with the
perfect blend of style, creativity and innovation enriched by
the quality and superior craftsmanship of the ‘Made in Italy’
tradition, have always been the hallmarks of the Salvatore
Ferragamo’s products notably shoes, leather goods, apparel, silk
products and other accessories for men and women.
The current fragrance lineup includes Storie di Seta, a col-
lection of four refined, luminous olfactory works of art. Each
fragrance is made with rare, sustainable raw materials, and can
be worn alone or in combination, creating a personalized mul-
tifaceted scent. The genderless collection is comprised of four
fragrances in four colors. Four exclusive motifs drawn from the
House’s textile heritage adorn each flacon. Established scents in
the Ferragamo portfolio include Ferragamo, a collection of fra-
grances for men, Signoria, a collection of fragrances for women,
the Tuscan Creations series, the Amo series and the Uomo series.
New flankers are in the works for 2023 and 2024 with a major
new pillar in the works for 2025.
.
the products
37
Ferragamo Signorina Libera
INTERPARFUMS, INC. 2022 ANNUAL REPORT
38
In 2007, we acquired the worldwide rights to the Lanvin brand
names and international trademarks listed in Class 3, our class
of trade. A synonym of luxury and elegance, the Lanvin fashion
house, founded in 1889 by Jeanne Lanvin, expanded into fra-
grances in the 1920s.
Lanvin fragrances occupy an important position in the selec-
tive distribution market in France, Eastern Europe and Asia, and
we have several lines currently in distribution, including Éclat
d’Arpège, Lanvin L’Homme, Jeanne Lanvin, Modern Princess and A
Girl in Capri. The Éclat d’Arpège line accounts for almost 50% of
brand sales. Les Fleurs de Lanvin, a new floral fragrance collec-
tion, was released during the second half of 2021. For 2022, we
unveiled a new extension to our Éclat d’Arpège line, Mon Éclat.
the products
39
Lanvin Éclat d’Arpège, Mon Éclat
INTERPARFUMS, INC. 2022 ANNUAL REPORT
40
In 2015, we acquired the Rochas brand from The Procter
& Gamble Company. Founded by Marcel Rochas in 1925, the
brand began as a fashion house and expanded into perfumery in
the 1950s under Hélène Rochas’ direction.
Our first new fragrance for Rochas, Mademoiselle Rochas, had
a successful launch in 2017 in its traditional markets of France
and Spain. Over the next few years, we debuted flankers for leg-
acy scents Eau de Rochas and Mademoiselle Rochas, plus others,
and in 2018 we launched our first new men’s line, Rochas Mous-
tache. Byzance debuted in early 2020 and Rochas Girl in 2021, and
the first flanker for both came to market in 2022 as well as one
for L’Homme Rochas. Flankers for many of these pillars debuted
in 2022 with more to come in 2023.
the products
41
Rochas Eau de Rochas
INTERPARFUMS, INC. 2022 ANNUAL REPORT
42
In 2014, we entered into a worldwide license to create, produce
and distribute new fragrances and fragrance related products
under the Abercrombie & Fitch brand name. We distribute
these fragrances in specialty stores, department stores and duty
free shops, and in the U.S., in select Abercrombie & Fitch re-
tail stores. Our initial men’s scent, First Instinct was launched in
2016 followed by a women’s version in 2017. Since that time, we
unveiled several new fragrances most notably the Authentic and
Away duos as well as brand extensions.
Abercrombie & Fitch Co. is a leading, global, omnichannel
specialty retailer of apparel and accessories for men, women
and kids. The iconic Abercrombie & Fitch brand was born in
1892 and aims to make every day feel as exceptional as the start
of a long weekend.
the products
43
Abercrombie & Fitch Fierce
INTERPARFUMS, INC. 2022 ANNUAL REPORT
44
In 2014, we entered into a worldwide license to create, produce
and distribute new fragrances and fragrance related products un-
der the Hollister brand name. We distribute these fragrances in
specialty stores, department stores and duty free shops, as well
as select Hollister retail stores in the U.S. In 2016 we launched
our first men’s and women’s fragrance duo, Wave, which led to
flankers and extensions as did subsequent fragrance families,
Festival and Canyon Escape. We have a new pillar debuting in
2023, Feelin’ Good.
The quintessential apparel brand of the global teen consumer,
Hollister celebrates the liberating spirit of the endless summer
inside everyone. Inspired by California’s laidback attitude, Hol-
lister’s clothes are designed to be lived in and made your own,
for wherever life takes you.
the products
45
Hollister Canyon Sky
INTERPARFUMS, INC. 2022 ANNUAL REPORT
46
In 2013, we entered into an exclusive worldwide license to
create, produce and distribute fragrances and fragrance relat-
ed products under the Oscar de la Renta brand. In 2019, the
agreement was extended through December 31, 2031, with
an additional five-year option potentially extending the agree-
ment through December 31, 2036. After taking over distribu-
tion of the brand’s legacy fragrances in 2014, we introduced
Extraordinary the following year. Oscar de la Renta Bella Blanca
debuted in 2018, followed by Bella Rosa and Bella Essence and
soon to join them, Bella Bouquet. Debuting in 2021 was an en-
tirely new fragrance pillar, Alibi which welcomed a sister scent in
2022, Alibi Eau de Toilette.
Oscar de la Renta is one of the world’s leading luxury goods
firms. The New York-based company was established in 1965,
and encompasses a full line of women’s accessories, bridal, chil-
dren’s wear, fragrance, beauty and home goods, in addition to
its internationally renowned signature women’s ready to wear
collection. Oscar de la Renta products are sold globally in fine
department and specialty stores, www.oscardelarenta.com and
through wholesale channels.
the products
47
Oscar de la Renta Alibi Eau Sensuelle
INTERPARFUMS, INC. 2022 ANNUAL REPORT
48
In 2018, we renewed its license agreement for an additional six
years with Van Cleef & Arpels for the creation, development,
and distribution of fragrance products through December 2024.
Our initial 12-year license agreement with Van Cleef & Arpels
was signed in 2006.
the products
49
Van Cleef & Arpels Collection Extraordinaire
INTERPARFUMS, INC. 2022 ANNUAL REPORT
50
In 2012, we entered into a 20-year worldwide license agreement
with Karl Lagerfeld B.V., the internationally renowned haute
couture fashion house, to create, produce and distribute fra-
grances under the Karl Lagerfeld brand.
Under the creative direction of the late Karl Lagerfeld, one
of the world’s most influential and iconic designers, the Lager-
feld Portfolio represents a modern approach to distribution, an
innovative digital strategy and a global 360 degree vision that
reflects the designer’s own style and soul. Karl Lagerfeld created
the first fragrance that bears his name in 1978, and that legacy
has expanded to include several growing multi-scent collections,
Les Parfums Matières and more recently, Karl Cities, a new collec-
tion featuring entries for New York, Paris, Hamburg, Tokyo and
Vienna was unveiled.
the products
51
Karl Lagerfeld Les Parfums Matières
INTERPARFUMS, INC. 2022 ANNUAL REPORT
52
In 2019, we entered into an exclusive, 11-year worldwide li-
cense agreement with Kate Spade to create, produce and dis-
tribute new perfumes and fragrance related products under the
Kate Spade brand which we distribute globally to department
and specialty stores and duty free shops, as well as in Kate
Spade retail stores. Our first original scent, Kate Spade New
York, debuted in January 2021 and for 2022, we added a flanker
to our line, Kate Spade Sparkle. Kate Spade Chérie debuted in
early 2023.
Since its launch in 1993 with a collection of six essential
handbags, Kate Spade has always stood for optimistic feminin-
ity. Today, the brand is a global life and style house with hand-
bags, ready-to-wear, jewelry, footwear, gifts, home décor and
more. Polished ease, thoughtful details and a modern, sophis-
ticated use of color—Kate Spade’s founding principles define
a unique style synonymous with joy. Under the vision of its
creative director, the brand continues to celebrate confident
women with a youthful spirit. Kate Spade is part of the Tapestry
house of brands.
the products
53
Kate Spade Chérie
INTERPARFUMS, INC. 2022 ANNUAL REPORT
54
In 2019, we entered into an exclusive, 10-year worldwide license
agreement with German luxury fashion house MCM for the cre-
ation, development and distribution of fragrances and fragrance
related products under the MCM brand. The agreement has a
4-year automatic renewal option, potentially extending the li-
cense until December 31, 2034.
MCM is a luxury lifestyle goods and fashion house founded
in 1976 with an attitude defined by the cultural Zeitgeist and
its German heritage with a focus on functional innovation, in-
cluding the use of cutting-edge techniques. Today, through its
association with music, art, travel and technology, MCM em-
bodies the bold, rebellious and aspirational. Always with an eye
on the disruptive, the driving force behind MCM centers on
revolutionizing classic design with futuristic materials. MCM’s
millennial and Gen Z audience is genderless, ageless, empow-
ered and unconstrained by rules and boundaries.
Following through on our plan to develop extraordinary
fragrances that capture the creative spirit of MCM, our first
new fragrance, MCM, was released during the first quarter of
2021 to great, and somewhat unexpected success. We released
a flanker in 2022, along with a limited edition called Graffiti.
Our distribution strategy encompasses MCM stores, high-end
department stores and prestige beauty retailers, with a geo-
graphic focus on Asia, the Americas and Europe. Our first ever
men’s scent for the brand is debuting in 2023.
the products
55
MCM Onyx
INTERPARFUMS, INC. 2022 ANNUAL REPORT
56
In 2010, we entered into an exclusive 15-year worldwide license
agreement for the creation, development and distribution of
fragrances and fragrance related products under the Boucheron
brand. For over a century, since becoming the first jeweler to
open a boutique on Place Vendôme in 1893, Boucheron has em-
bodied very high-end creation, luxury and French know-how.
The mysterious and seductive collection of Boucheron fragranc-
es unquestionably continues this prestigious line of creations.
Boucheron’s legacy scents, Femme and Homme, and the leg-
endary Jaipur perfume form the foundation of brand sales. Our
team has enriched the portfolio with Quatre for men and wom-
en, along with several special editions, a growing collection of
unique scents aptly named, La Collection, and Serpent Bohème.
During 2022, we introduced a new men’s fragrance, Bouche-
ron Singulier, as well as still another addition to our Boucheron
Collection. Currently, Boucheron operates through several bou-
tiques worldwide as well as an e-commerce site.
the products
57
BOUCHERON_SINGULIER_MODEL_POS_137_159x218_FR.indd 1
Boucheron Singulier
30/03/2023 15:37
INTERPARFUMS, INC. 2022 ANNUAL REPORT
58
In June 2020, we entered into an exclusive, 5-year worldwide li-
cense agreement with a potential 5-year extension with Moncler
for the creation, development and distribution of fragrances
under the Moncler brand. Moncler was founded at Monestier-
de-Clermont, Grenoble, France, in 1952 and is currently head-
quartered in Italy. Over the years, the brand has combined
style with constant technological research assisted by experts
in activities linked to the world of the mountain. The Moncler
outerwear collections marry the extreme demands of nature
with those of city life.
Our first fragrance for the Moncler brand has a revolution-
ary LED design, and the flask-shaped bottles of Moncler Pour
Femme and Moncler Pour Homme forge a powerful bond with the
House Moncler’s alpine roots and pioneering spirit. This playful
and unique innovation enables its owner to write a personalized
note that scrolls in red letters on the screen of the mirror bot-
tle. Our first fragrance was pre-launched in 250 select outlets in
the second half of 2021, and was met with an excellent response.
The rollout to approximately 3,000 doors took place during
2022. Moncler will also launch a new collection in Q1 2023.
59
Moncler Les Sommets Moncler
INTERPARFUMS, INC. 2022 ANNUAL REPORT
60
In 2011, we entered into an exclusive worldwide fragrance
license to create, produce and distribute fragrances and fra-
grance related products under the Anna Sui brand. Anna Sui is
one of New York’s most accomplished fashion designers known
for creating contemporary clothing inspired by vintage style
that capture the brand’s very sweet feminine girly aspect, com-
bined with a touch of hipness and rock-and-roll. Today, Anna
Sui has over 50 boutiques and her collection and products are
sold in 300 stores in over 30 countries, but her brand is by far
most popular and well received throughout Asia. Over the past
decade, we have worked in partnership with Anna Sui and her
creative team to build upon the brand’s customer appeal and
develop and market a family of fragrances including Fantasia, Sui
Dreams and the newest scent, Sky, which was ranked as the sec-
ond best perfume launch of 2021 by WWD Japan.
the products
61
Anna Sui Sundae
INTERPARFUMS, INC. 2022 ANNUAL REPORT
62
In October 2021, we also entered into a 10-year exclusive
global licensing agreement with Emanuel Ungaro for the
creation, development and distribution of fragrances and
fragrance-related products, under the Emanuel Ungaro brand.
Founded in 1965 in Paris, the house of Emanuel Ungaro is an
icon of French refinement and haute couture. Its unique style is
expressed through unquestioning sensuality, purity of silhouette,
flamboyant prints, and exquisite attention to details. Season
after season, Emanuel Ungaro dared to be different, combining
unexpected yet sensual clashes of bright colors and prints with
beautiful draping. Today Ungaro fragrances uphold the same
values of audacity and elegance, and the brand is best known and
most prized internationally, and such presence will remain our
sales focus as we continue to produce and distribute the brand’s
legacy scents, notably Diva. Beginning in 2023, we plan to unveil
a Diva brand extension.
the products
63
Emanuel Ungaro Diva Rouge
INTERPARFUMS, INC. 2022 ANNUAL REPORT
64
In 2019, we entered into an exclusive, 8-year worldwide license
agreement with London-based Graff for the creation, develop-
ment and distribution of fragrances under the Graff brand. The
8-year agreement has three 3-year automatic renewal options,
potentially extending the license until December 31, 2035.
Since Laurence Graff OBE founded the company in 1960,
Graff has been dedicated to sourcing and crafting diamonds and
gemstones of untold beauty and rarity and transforming them
into spectacular pieces of jewelry that move the heart and stir
the soul. Throughout its rich history, Graff has become the
world leader for diamonds of rarity, magnitude and distinction.
Each jewelry creation is designed and manufactured in Graff’s
London atelier, where master craftsmen employ techniques to
emphasize the beauty of each individual stone. The company
remains a family business, overseen by Francois Graff, Chief
Executive Officer.
For Graff, a six-scent collection for women, Lesedi La Rona, de-
buted exclusively at Harrods beginning in March 2020, which we
further extended through 2020 as a result of the mandatory store
closings throughout that year. In 2021, a select market rollout be-
gan in the Middle East, with limited luxury distribution to only
the most exclusive, upmarket retail outlets. In 2021 and 2022, we
added two new scents to the Lesedi La Rona collection.
the products
65
Graff Lesedi La Rona Fragrances
INTERPARFUMS, INC. 2022 ANNUAL REPORT
66
40%
CONSOLIDATED NET SALES TO CUSTOMERS BY REGION
(in millions)
Year Ended December 31,
North America
Europe
Asia
Middle East
Central and
South America
Other
2022
$431.9
333.4
152.7
87.8
69.9
11.0
$1,086.7
2021
$354.1
271.7
128.0
61.0
56.4
8.4
$879.6
2020
$193.5
180.2
79.7
46.8
32.5
6.3
$539.0
CONSOLIDATED NET SALES TO CUSTOMERS
IN MAJOR COUNTRIES ARE AS FOLLOWS:
(in thousands)
Year Ended December 31,
United States
France
Russia
United Kingdom
2022
2021 2020
$420,900 $351,300 $187,300
37,600
44,000
14,100
43,400
24,600
38,500
44,800
33,964
37,900
6767
31%
14%
8%
INTERPARFUMS, INC. 2022 ANNUAL REPORT
68
The
Organization
All Corporate Functions:
Including product analysis and development, production and
sales, and finance are coordinated at the Company’s corpo-
rate headquarters in New York and at the corporate offic-
es of Interparfums SA in Paris. Each company is organized
into two operational units that report directly to general
management, and European operations ultimately report to
Mr. Benacin and United States operations ultimately report to
Mr. Madar.
Finance, Investor Relations
And Administration:
Michel Atwood in the United States and Philippe Santi in France:
• Financial policy and communication, investor relations;
• Financial accounting, cost accounting, budgeting and
cash flow management;
• Disclosure requirements of the Securities and Exchange
Commission and Commission des Operations de Bourse;
• Labor relations, tax and legal matters and management
information systems.
Operations:
Franck Moisio in the United States and Axel Marot in France:
• Product development;
• Logistics and transportation;
• Purchasing and industrial relations;
• Quality control and inventory cost supervision.
Export Sales:
Hervé Bouillonnec in the United States and Frédéric Garcia-
Pelayo and Stanislas Archambault in France:
• International development strategy;
• Establishment of distributor networks and negotiation of
contracts;
• Monitoring of profit margins and advertising expenditures.
Domestic (Home Country) Sales:
Hervé Bouillonnec in the United States and Jérôme Thermoz in
France:
• Establish and apply domestic sales strategy and
distribution policy;
• Sales team management and development;
• Monitoring of profit margins and advertising expenditures.
the organization
69
SIMPLIFIED CHART OF THE ORGANIZATION
44%
PHILIPPE BENACIN
JEAN MADAR
56%
PUBLIC
SHAREHOLDERS
100%
100%
100%
INTER PARFUMS
HOLDINGS, SA
INTER PARFUMS
USA, LLC
INTER PARFUMS
ITALIA SRL
72%
100%
INTERPARFUMS SA
[ EURONEXT -
PARIS ]
INTER PARFUMS
USA
HONG KONG LTD
100%
100%
100%
51%
INTERPARFUMS
LUXURY BRANDS,
INC
INTERPARFUMS
[ SUISSE ] SARL
INTERPARFUMS
SINGAPORE PTE,
LTD
PARFUMS ROCHAS
SPAIN, SL
INTERPARFUMS, INC. 2022 ANNUAL REPORT
70
contents
management’s discussion and analysis of financial
condition and results of operations
71
report on internal control
over financial reporting
report of independent registered
public accounting firm
financial statements
notes to consolidated financial statements
corporate and marKet information
directors and executive officers
81
83
87
103
104
80
management’s discussion and analysis
of financial condition and results of operations
71
Substantially all of our prestige fragrance brands are licensed
from unaffiliated third parties, and our business is dependent upon
the continuation and renewal of such licenses. With respect to the
Company’s largest brands, we license the Montblanc, Jimmy Choo,
Coach and GUESS brand names.
As a percentage of net sales, product sales for the Company’s
largest brands were as follows:
Years ended December 31,
Montblanc
Jimmy Choo
Coach
GUESS
2022 2021 2020
21%
16%
17%
11%
19%
18%
16%
12%
18%
18%
15%
12%
Management’s Discussion
And Analysis Of
Financial Condition And
Results Of
Operations
OVERVIEW
We operate in the fragrance business, and manufacture, market
Quarterly sales fluctuations are influenced by the timing of
new product launches as well as the third and fourth quarter
holiday season. In certain markets where we sell directly to re-
tailers, seasonality is more evident. We primarily sell directly to
retailers in France and the United States.
We grow our business in two distinct ways. First, by adding
new brands to our portfolio, either through new licenses or
other arrangements or out-right acquisitions of brands. Sec-
ond, we grow through the introduction of new products and
and distribute a wide array of fragrances and fragrance related
by supporting new and established products through adver-
products. We manage our business in two segments, European
tising, merchandising and sampling, as well as by phasing out
based operations and United States based operations. Certain
underperforming products, so we can devote greater resourc-
prestige fragrance products are produced and marketed by our
es to those products with greater potential. The economics
European operations through our 72% owned subsidiary in Paris,
of developing, producing, launching and supporting products
Interparfums SA, which is also a publicly traded company as 28%
influence our sales and operating performance each year. The
of Interparfums SA shares trade on the NYSE Euronext.
introduction of new products may have some cannibalizing ef-
We produce and distribute our European based fragrance
fect on sales of existing products, which we take into account
products primarily under license agreements with brand own-
in our business planning.
ers, and European based fragrance product sales represented
Our business is not capital intensive, and it is important to
approximately 68%, 75% and 78% of net sales for 2022, 2021 and
note that we do not own manufacturing facilities. We act as a
2020, respectively. We have built a portfolio of prestige brands,
general contractor and source our needed components from
which include Boucheron, Coach, Jimmy Choo, Karl Lagerfeld, Kate
our suppliers. These components are received at one of our dis-
Spade, Lanvin, Moncler, Montblanc, Rochas, S.T. Dupont and Van
tribution centers and then, based upon production needs, the
Cleef & Arpels, whose products are distributed in over 120 coun-
components are sent to one of several third party fillers, which
tries around the world.
manufacture the finished product for us and then deliver them
Through our United States operations, we also market fra-
to one of our distribution centers.
grance and fragrance related products. United States opera-
As with any global business, many aspects of our opera-
tions represented 32%, 25% and 22% of net sales in 2022, 2021
tions are subject to influences outside our control. We be-
and 2020, respectively. These fragrance products are sold
lieve we have a strong brand portfolio with global reach and
primarily pursuant to license or other agreements with the
potential. As part of our strategy, we plan to continue to
owners of the Abercrombie & Fitch, Anna Sui, DKNY, Donna
make investments behind fast-growing markets and channels
Karan, Ferragamo, Graff, GUESS, Hollister, MCM, Oscar de la
to grow market share.
Renta and Ungaro brands.
Our reported net sales are impacted by changes in foreign
INTERPARFUMS, INC. 2022 ANNUAL REPORT
72
currency exchange rates. A strong U.S. dollar has a negative
2023. Therefore, despite recent business improvement, the im-
impact on our net sales. However, earnings are positively af-
pact of the COVID-19 pandemic might continue to have adverse
fected by a strong dollar, because over 50% of net sales of our
effects on our results of our operations, financial position and
European operations are denominated in U.S. dollars, while al-
cash flows through at least the first half of 2023.
most all costs of our European operations are incurred in euro.
Conversely, a weak U.S. dollar has a favorable impact on our
net sales while gross margins are negatively affected. We ad-
dress certain financial exposures through a controlled program
RECENT IMPORTANT EVENTS
Lacoste
In December 2022, we closed a transaction agreement with
of risk management that includes the use of derivative financial
Lacoste, whereby an exclusive and worldwide license was
instruments, and primarily enter into foreign currency forward
granted for the production and distribution of Lacoste brand
exchange contracts to reduce the effects of fluctuating foreign
perfumes and cosmetics. Our rights under this license are sub-
currency exchange rates.
IMPACT OF COVID-19 PANDEMIC
A novel strain of coronavirus (“COVID-19”) surfaced in late
ject to certain minimum advertising expenditures and royalty
payments as are customary in our industry. The license becomes
effective in January 2024 and will last for 15 years.
2019 and in March 2020, the World Health Organization de-
clared COVID-19 a pandemic. In response, various national,
Dunhill
In April 2022, we announced that the Dunhill fragrance license
state, and local governments issued decrees prohibiting certain
will expire on September 30, 2023 and will not be renewed. The
businesses from operating and certain classes of workers from
Company will continue to produce and sell Dunhill fragrances
reporting to work. Retail store closings, event cancellations and
until the license expires and will maintain the right to sell-off
a shutdown of international air travel brought our sales to a
remaining Dunhill fragrance inventory for a limited time as is
virtual standstill and caused a significant unfavorable impact on
customary in the fragrance industry.
our results of operations in 2020.
Business significantly improved in the second half of 2020 and
continued to improve throughout 2021 and 2022, as retail stores
Salvatore Ferragamo
In October 2021, we closed on a transaction agreement with
reopened, and consumers increased online purchasing. While
Salvatore Ferragamo S.p.A., whereby an exclusive and world-
we expect this trend to continue, the introduction of variants of
wide license was granted for the production and distribution
COVID-19 in various parts of the world has caused the tempo-
of Ferragamo brand perfumes. Our rights under this license
rary re-implementation of governmental restrictions to prevent
are subject to certain minimum advertising expenditures and
further spread of the virus. In addition, international air travel
royalty payments as are customary in our industry. The license
remains curtailed in several jurisdictions due to both governmen-
became effective in October 2021 and will last for 10 years with
tal restrictions and consumer health concerns. While COVID-19
a 5-year optional term, subject to certain conditions.
had significantly restricted international travel, the travel retail
With respect to the management and coordination of activ-
business has picked up. We remain confident that travel retail will
ities related to the license agreement, the Company operates
once again be a source of growth over the long-term. Lastly, the
through a wholly-owned Italian subsidiary based in Florence,
improved economy has put significant strains on our supply chain
that was acquired from Salvatore Ferragamo on October 1,
causing disruptions affecting the procurement of components,
2021. The acquisition together with the license agreement was
the ability to transport goods, and related cost increases. These
accounted for as an asset acquisition.
disruptions have come at a time when demand for our product
lines has never been stronger or more sustained. We have been
addressing this issue since the beginning of 2021, by ordering well
Emanuel Ungaro
In October 2021, we also entered into a 10-year exclusive
in advance of need and in larger quantities. Since 2021, we have
global licensing agreement a with a 5-year optional term sub-
strived to carry more inventory overall, source the same com-
ject to certain conditions, with Emanuel Ungaro Italia S.r.l, for
ponents from multiple suppliers and when possible, manufacture
the creation, development and distribution of fragrances and
products closer to where they are sold. We do not expect the
fragrance-related products, under the Emanuel Ungaro brand.
supply chain bottlenecks to begin lifting until the second half of
Our rights under this license are subject to certain minimum
management’s discussion and analysis
of financial condition and results of operations
73
advertising expenditures and royalty payments as are customary
was delivered on February 28, 2022, includes the building
in our industry.
Donna Karan and DKNY
In September 2021, we entered into a long-term global licensing
structure, development of the property, façade waterproofing,
general and technical installations and interior fittings that will
be depreciated over a range of 7 to 50 years. The Compa-
ny has elected to depreciate the building cost based on the
agreement for the creation, development and distribution of fra-
useful lives of its components. Approximately $3.4 million of
grances and fragrance-related products under the Donna Karan
cash held in escrow is also included in property, equipment and
and DKNY brands. Our rights under this license are subject to
leasehold improvements on the accompanying balance sheet as
certain minimum advertising expenditures and royalty payments
of December 31, 2022.
as are customary in our industry. With this agreement, we are
The acquisition was financed by a 10-year €120 million (ap-
gaining several well-established and valuable fragrance franchis-
proximately $128.0 million) bank loan which bears interest at
es, most notably Donna Karan Cashmere Mist and DKNY Be
one-month Euribor plus 0.75%. Approximately €80 million of
Delicious, as well as a significant loyal consumer base around the
the variable rate debt was swapped for variable interest rate
world. In connection with the grant of license, we issued 65,342
debt with a maximum rate of 2% per annum.
shares of Inter Parfums, Inc. common stock valued at $5.0 mil-
lion to the licensor. The exclusive license became effective on
July 1, 2022, and we are planning to launch new fragrances under
these brands in 2024.
Rochas Fashion
Effective January 1, 2021, we entered into a new license agreement
DISCUSSION OF CRITICAL ACCOUNTING POLICIES
We make estimates and assumptions in the preparation of our
financial statements in conformity with accounting principles
generally accepted in the United States of America. Actual re-
sults could differ significantly from those estimates under dif-
ferent assumptions and conditions. We believe the following
modifying our Rochas fashion business model. The new agreement
discussion addresses our most critical accounting policies, which
calls for a reduction in royalties to be received. As a result, in the
are those that are most important to the portrayal of our fi-
first quarter of 2021, we took a $2.4 million impairment charge
nancial condition and results of operations. These accounting
on our Rochas fashion trademark. In the fourth quarter of 2022,
policies generally require our management’s most difficult and
we again took a $6.8 million impairment charge on the Rochas
subjective judgments, often as a result of the need to make esti-
fashion trademark after an independent expert concluded that the
mates about the effect of matters that are inherently uncertain.
valuation of the trademark was $11.3 million. The new license also
Management of the Company has discussed the selection of sig-
contains an option for the licensee to buy-out the Rochas fashion
nificant accounting policies and the effect of estimates with the
trademarks in June 2025 at its then fair market value.
Audit Committee of the Board of Directors.
Land and Building Acquisition
- Future Headquarters in Paris
In April 2021, Interparfums SA, our 72% owned French subsid-
Long-Lived Assets
We evaluate indefinite-lived intangible assets for impairment
at least annually during the fourth quarter, or more frequently
iary, completed the acquisition of its future headquarters at 10
when events occur or circumstances change, such as an unex-
rue de Solférino in the 7th arrondissement of Paris from the
pected decline in sales, that would more likely than not indicate
property developer. This is an office complex combining three
that the carrying value of an indefinite-lived intangible asset may
buildings connected by two inner courtyards, and consists of
not be recoverable. When testing indefinite-lived intangible as-
approximately 40,000 total sq. ft.
sets for impairment, the evaluation requires a comparison of the
The purchase price includes the complete renovation of the
estimated fair value of the asset to the carrying value of the as-
site. As of December 31, 2022, $148.1 million of the purchase
set. The fair values used in our evaluations are estimated based
price, including approximately $4.4 million of acquisition costs,
upon discounted future cash flow projections using a weighted
is included in property, equipment and leasehold improvements
average cost of capital of 9.80%. The cash flow projections are
on the accompanying balance sheet as of December 31, 2022.
based upon a number of assumptions, including, future sales lev-
The purchase price has been allocated approximately $61.1 mil-
els and future cost of goods and operating expense levels, as
lion to land and $87.0 million to the building. The building, which
well as economic conditions, changes to our business model or
INTERPARFUMS, INC. 2022 ANNUAL REPORT
74
changes in consumer acceptance of our products which are
including future sales levels and future cost of goods and oper-
more subjective in nature. If the carrying value of an indefi-
ating expense levels, as well as economic conditions, changes
nite-lived intangible asset exceeds its fair value, an impairment
to our business model or changes in consumer acceptance of
charge is recorded.
our products which are more subjective in nature. In those cas-
We believe that the assumptions we have made in projecting
es where we determine that the useful life of long-lived assets
future cash flows for the evaluations described above are reason-
should be shortened, we would amortize the net book value in
able. However, if future actual results do not meet our expecta-
excess of the salvage value (after testing for impairment as de-
tions, we may be required to record an impairment charge, the
scribed above), over the revised remaining useful life of such as-
amount of which could be material to our results of operations.
set thereby increasing amortization expense. We believe that the
At December 31, 2022 indefinite-lived intangible assets ag-
assumptions we have made in projecting future cash flows for the
gregated $105.0 million. The following table presents the impact
evaluations described above are reasonable.
a change in the following significant assumptions would have had
In determining the useful life of our Lanvin brand names and
on the calculated fair value in 2022 assuming all other assump-
trademarks, we applied the provisions of ASC topic 350-30-35-
tions remained constant:
Increase
(decrease)
$ in millions Change to fair value
Weighted average cost of capital +10% $(7.2)
Weighted average cost of capital -10% $8.1
Future sales levels +10% $9.7
Future sales levels -10% $(9.7)
3. The only factor that prevented us from determining that the
Lanvin brand names and trademarks were indefinite life intan-
gible assets was Item c. “Any legal, regulatory, or contractual
provisions that may limit the useful life.” The existence of a re-
purchase option originally in 2025 and amended to 2027, may
limit the useful life of the Lanvin brand names and trademarks to
the Company. However, this limitation would only take effect if
the repurchase option were to be exercised and the repurchase
price was paid. If the repurchase option is not exercised, then
Intangible assets subject to amortization are evaluated for im-
the Lanvin brand names and trademarks are expected to contin-
pairment testing whenever events or changes in circumstances
ue to contribute directly to the future cash flows of our Com-
indicate that the carrying amount of an amortizable intangible as-
pany and their useful life would be considered to be indefinite.
set may not be recoverable. If impairment indicators exist for an
With respect to the application of ASC topic 350-30-35-8,
amortizable intangible asset, the undiscounted future cash flows
the Lanvin brand names and trademarks would only have a finite
associated with the expected service potential of the asset are
life to our Company if the repurchase option were exercised,
compared to the carrying value of the asset. If our projection of
and in applying ASC topic 350-30-35-8, we assumed that the
undiscounted future cash flows is in excess of the carrying value
repurchase option is exercised. When exercised, Lanvin has an
of the intangible asset, no impairment charge is recorded. If our
obligation to pay the exercise price and the Company would be
projection of undiscounted future cash flows is less than the car-
required to convey the Lanvin brand names and trademarks back
rying value of the intangible asset, an impairment charge would
to Lanvin. The exercise price to be received (residual value) is
be recorded to reduce the intangible asset to its fair value. The
well in excess of the carrying value of the Lanvin brand names
cash flow projections are based upon a number of assumptions,
and trademarks, therefore no amortization is required.
RESULTS OF OPERATIONS
Net Sales
(in millions)
Years Ended December 31,
European-based product sales
United States-based product sales
Total net sales
2022
$744.0
342.7
$1,086.7
% Change
12%
58%
24%
2021
$663.2
216.4
$879.6
% Change
57%
86%
63%
2020
$422.9
116.1
$539.0
Net sales rebounded significantly in 2021, as compared to 2020 for both European and United States based operations and con-
tinued to increase in 2022. At comparable foreign currency exchange rates, net sales increased 30% in 2022, as compared
management’s discussion and analysis
of financial condition and results of operations
75
to 2021. Net sales in 2020 reflected the negative impacts of
we have recently announced the license agreement with La-
the COVID-19 pandemic on the beauty industry. Retail store
coste which will offer us another sizable building block of
closings, event cancellations and a shutdown of international
growth in 2024.
air travel brought our sales to a virtual standstill in early 2020.
As in the past, we hope to benefit from our strong financial
In the second half of 2020, business began rebounding thanks
position to potentially acquire one or more brands, either on
to retail stores reopening and a robust e-commerce business
a proprietary basis or as a licensee. However, we have no cer-
conducted by our retail customers.
tainty that any new license or acquisition agreements will be
For European based operations, our largest brands, Mont-
consummated.
blanc, Jimmy Choo and Coach grew 2022 sales by 15%, 23% and
18%, respectively, as compared to 2021. There were also signif-
icant gains made by our mid-sized brands, including Van Cleef
Net Sales to Customers by Region
(in millions)
& Arpels and Karl Lagerfeld. The year-over-year gains, in both
Years ended December 31,
euro and dollars, are all the more impressive considering our
North America
new product pipeline was dominated by flankers and extensions.
Western Europe
However, we did bring to market several entirely new lines, in-
Asia
cluding our first ever Moncler duo, Kate Spade Sparkle, Singulier
Eastern Europe
by Boucheron and Open Road and Wild Rose by Coach.
Middle East
In 2021, GUESS became our fourth brand with sales exceed-
Central & South America
ing $100 million. Strong momentum on GUESS continued in
Other
2022 with brand sales increasing another 24% as compared to
2021. There were also significant gains made by our mid-sized
2022
$431.9
259.2
152.7
87.8
74.2
69.9
11.0
$1,086.7
2021
$354.1
202.0
128.0
69.7
61.0
56.4
8.4
$879.6
2020
$193.5
147.1
79.7
33.1
46.8
32.5
6.3
$539.0
brands, especially Abercrombie & Fitch, Hollister and Oscar
Our largest market, North America achieved sales growth
de la Renta. Additionally, 2022 saw the first full year of sales
of 22% in 2022 compared to 2021, while Western Europe
of Ferragamo products and in the second half of 2022, we also
and Asia grew sales by 28% and 19% in 2022, respectively,
welcomed first time sales of our newest brands, Donna Karan/
compared to 2021. Latin America and the Middle East also
DKNY. Together, these new brands contributed to 38% growth
achieved top line growth of 24% and 44% in 2022, respective-
of our US operations.
ly compared to 2021. Eastern Europe saw only moderate top
We are confident in our future as 2023 has many exciting
line growth of 6% as compared to 2021 largely related to the
developments for the Company. We have transitioned to a
war in Ukraine.
new modern enterprise resource planning system (ERP) for
our US operations which will enable us to operate more ef-
ficiently and offer more scale to absorb our newer brands.
Gross Margins
(in millions)
We have a solid line-up of new product launches in the pipe-
Years ended December 31,
2022
2021
2020
line for many of our brands. This includes the roll out of the
Moncler Collection in the first quarter and a Duo flanker in
European Operations
Net sales
the third quarter, a launch of GUESS Uomo Acqua in the sec -
Cost of sales
ond quarter, as well as Bella Vita Paradiso in the fourth quar -
Gross margin
ter. Extensions of the Montblanc Legend, Jimmy Choo Man
Gross margin as
$744.0
236.9
$507.1
$663.2
221.2
$442.0
$422.9
152.3
$270.6
and Jimmy Choo’s I Want Choo, debut in the first, second and
a percent of net sales
68.2%
66.7%
64.0%
third quarters, respectively. Also, in the third quarter, we
will unveil new men’s lines for Coach and Boucheron. Brand
extensions and flankers are in the works for MCM, Aber-
United States Operations
Net sales
crombie & Fitch, Hollister, Anna Sui, and Oscar de la Renta.
Cost of sales
In sum, 2023 has all the earmarks of another superb year as
Gross margin
the growth catalysts currently far outweigh the headwinds,
Gross margin as
$342.7
155.4
$187.3
$216.4
101.5
$114.9
$116.1
56.0
$60.1
most notably inflation and supply chain disruptions. Lastly,
a percent of net sales
54.7%
53.1%
51.8%
INTERPARFUMS, INC. 2022 ANNUAL REPORT
76
For European based operations, gross profit margin as a per-
centage of net sales was 68.2%, 66.6% and 64.0% in 2022, 2021
Selling, General & Administrative Expenses
(in millions)
and 2020, respectively. Distribution in the United States for
Years ended December 31,
2022
2021
2020
European based operations is handled by a 100% owned subsid-
iary of Interparfums SA based in the United States. Therefore,
European Operations
Selling, general
sales are made at a wholesale price rather than at an ex-fac-
& administrative expenses
$358.3 $327.5 $210.6
tory price, resulting in higher gross margins. Net sales of our
Selling, general
U.S. based distribution subsidiary increased 16% in 2022, as
& administrative expenses
compared to 2021, leading to favorable mix and giving rise to
as a percent of net sales
48.2% 49.4% 49.8%
the increase in gross margin in 2022 over both 2021 and 2020.
We carefully monitor movements in foreign currency exchange
United States Operations
Selling, general
rates as over 50% of our European based operations net sales
& administrative expenses
$134.0
$79.0
$50.1
is denominated in U.S. dollars, while most of our costs are in-
Selling, general
curred in euro. From a margin standpoint, a strong U.S. dollar
& administrative expenses
has a positive effect on our gross margin while a weak U.S. dol-
as a percent of net sales
39.1% 36.5% 43.1%
lar has a negative effect. The average dollar/euro exchange rate
was 1.05 in 2022, 1.18 in 2021, and 1.15 in 2020. Pricing action
For European operations, selling, general and administrative
also enabled us to offset inflationary pressures.
expenses increased 9% and 55% in 2022 and 2021, respectively,
For United States operations, gross profit margin was 54.7%,
as compared to the corresponding prior year period, and repre-
53.1% and 51.8% in 2022, 2021 and 2020, respectively. With a
sented 48.2%, 49.4% and 49.8% of sales in 2022, 2021 and 2020,
decline in sales in 2020, certain expenses such as depreciation of
respectively as we were able to leverage our scale. As discussed
tools and molds together with the distribution of point-of-sale
in more detail below, these fluctuations, which are in line with the
materials exaggerated the decline in gross margin for the year
fluctuations in sales for European operations, are primarily from
as a percentage of sales. The scale benefits coming from our sig-
variations in promotion and advertising expenditures. For United
nificant growth in 2021 and 2022, combined with pricing actions
States operations, selling, general and administrative expenses in-
and favorable channel/brand mix, have enabled us to more than
creased 70% and 58% in 2022 and 2021, respectively, as compared
offset the impacts of inflation and thus expand gross margin by
to the corresponding prior year period and represented 39.1%,
130 bps in 2021 and another 160 bps in 2022.
36.5% and 43.1% of sales in 2022, 2021 and 2020, respectively. As
Costs relating to purchase with purchase and gift with pur-
discussed in more detail below, the increased selling, general and
chase promotions are reflected in cost of sales, and aggregated
administrative expenses as a percentage of net sales are primarily
$43.1 million, $36.9 million and $26.4 million in 2022, 2021 and
the result of increases in promotion and advertising expenditures.
2020, respectively, and represented 4.0%, 4.2% and 4.9% of net
Additionally, the US based operations increased expenses related
sales, respectively.
to salaries and benefits as we build the organization and infra-
Generally, we do not bill customers for shipping and han-
structure to support our new brands and future growth.
dling costs and such costs, which aggregated $15.8 million,
Promotion and advertising included in selling, general and ad-
$10.0 million and $5.0 million in 2022, 2021 and 2020, re-
ministrative expenses aggregated $212.4 million, $171.1 million
spectively, are included in selling, general and administrative
and $91.7 million in 2022, 2021 and 2020, respectively. Promo-
expenses in the consolidated statements of income. As such,
tion and advertising as a percentage of sales represented 19.5%,
our Company’s gross margins may not be comparable to other
19.5% and 17.0% of net sales in 2022, 2021 and 2020, respectively.
companies, which may include these expenses as a component
Promotion and advertising programs were cut significantly in 2020
of cost of goods sold.
in response to market conditions. Promotion and advertising are
management’s discussion and analysis
of financial condition and results of operations
77
integral parts of our industry, and we continue to invest heavily
terest at EURIBOR-1 month rates plus a margin of 0.825%. This
in promotional spending to support new product launches and to
variable rate debt was swapped for variable interest rate debt
build brand awareness. We believe that our promotion and adver-
with a maximum rate of 2% per annum. Additionally, in April
tising efforts have had a beneficial effect on online net sales, caus-
2021, we completed the acquisition of the future headquarters
ing then to continue to grow strongly on a global basis. All of our
of Interparfums SA. The acquisition was financed by a 10-year
brands have benefitted from newly launched and enhanced e-com-
€120 million (approximately $128 million) bank loan which bears
merce sites in existing markets in collaboration with our retail cus-
interest at one-month Euribor plus 0.75%. Also in 2021, ap-
tomers on their e-commerce sites. We also continue to develop
proximately €80 million of the variable rate debt was swapped
and implement omnichannel concepts, the way brick-and-mortar
for fixed interest rate debt. Long-term debt including current
stores and a business’ online operations work in tandem, and com-
maturities aggregated $186.8 million, $148.8 million and $24.7
pelling content to deliver an integrated consumer experience. We
million as of December 31, 2022, 2021 and 2020, respectively.
anticipated that on a full year basis, future promotion and adver-
We enter into foreign currency forward exchange con-
tising expenditures will aggregate approximately 21% of net sales,
tracts to manage exposure related to receivables from unaf-
which is in line with pre-COVID historical averages.
filiated third parties denominated in a foreign currency and
Royalty expense included in selling, general and administra-
occasionally to manage risks related to future sales expected
tive expenses aggregated $87.0 million, $68.9 million and $41.1
to be denominated in a foreign currency. Due to the sizable
million in 2022, 2021 and 2020, respectively. Royalty expense
swings in currency rates during 2022, we went from recog-
as a percentage of sales represented 8.0%, 7.8% and 7.6% of net
nizing a gain of $2.3 million in 2021 to a loss of $1.9 million in
sales in 2022, 2021 and 2020, respectively. The increases in 2022
2022. This accounts for most of our fluctuation within Other
and 2021, as a percentage of sales, are directly related to new
income and expenses.
licenses and increased royalty-based product sales. As a result
Interest and investment income represents interest earned
of the COVID-19 pandemic, we reached agreements with most
on cash and cash equivalents and short-term investments. In
of our licensors to waive or significantly reduce minimum guar-
2022, short-term investments include approximately $19.9 mil-
anteed royalties for 2020.
lion of marketable equity securities of other companies in the
Service fees, which are fees paid within our European oper-
luxury goods sector. Interest and investment income includes
ations to third parties relating to the activities of our distribu-
approximately $3.1 million of unrealized gains on marketable
tion subsidiaries, aggregated $7.9 million, $9.4 million and $6.8
equity securities. Given our strong balance sheet and cash po-
million in 2022, 2021 and 2020, respectively. The 2022 and 2021
sition, the increase in interest rates had a favorable impact on
amounts are in line with and directly related to fluctuations in
interest and investment income.
sales within our U.S. distribution subsidiary.
Income from Operations
As a result of the above analysis regarding net sales, gross
Income Taxes
Our effective income tax rate was 22.2%, 27.1% and 27.9% in
2022, 2021 and 2020, respectively.
profit margins and selling, general and administrative expenses,
Income tax expense represents U.S. federal, foreign, state
our operating margins aggregated 17.9%, 16.8% and 13.1% for the
and local income taxes. The effective rate differs from the fed-
years ended December 31, 2022, 2021 and 2020, respectively.
eral statutory rate primarily due to the effect of state and local
Other Income and Expenses
In December 2022, to finance the acquisition of the Lacoste
income taxes, the tax impact of share-based compensation and
the taxation of foreign income including tax settlements. Our ef-
fective tax rate will change from year-to-year based on recurring
trademark, the Company entered into a $53.3 million (€50 mil-
and non-recurring factors including the geographical mix of earn-
lion) four-year loan agreement. The loan agreement bears in-
ings, enacted tax legislation, state and local income taxes, the tax
INTERPARFUMS, INC. 2022 ANNUAL REPORT
78
impact of share-based compensation, the interaction of various global tax strategies and the impact from certain acquisitions.
Our effective income tax rate for European operations was 25.2%, 30.6% and 29.7% in 2022, 2021 and 2020, respectively, as the French
Government voted to reduce the French corporate income tax rate from approximately 33% to 25% over a three-year period.
Our effective income tax rate for U.S. operations was 13.8%, 15.6% and 16.7% in 2022, 2021 and 2020, respectively.
Our effective tax rate differs from the 21% statutory rate due to state, local and foreign taxes, offset by benefits received from the
exercise of stock options as well as deductions we are allowed for a portion of our foreign derived intangible income. Additionally, in the
third quarter of 2022, our U.S. operations recognized a one-time tax benefit of $2.5 million associated with the 2021 Salvatore Ferrag-
amo acquisition. At the time of the acquisition, we had not recognized deferred tax benefits as there were uncertainties concerning its
potential recoverability; however, as of September 30, 2022, the recoverability was deemed likely.
The Company has determined that it has no tax liability related global intangible low-taxed income (“GILTI”) as of December 31, 2022,
2021 and 2020. The Company also estimated the effect of its foreign derived intangible income (“FDII”) and recorded a tax benefit of
$1.5 million, $0.6 million and $0.3 million as of December 31, 2022, 2021 and 2020, respectively. Share-based compensation resulted in a
discrete tax benefit of $0.8 million, $1.3 million and $0.4 million in 2022, 2021 and 2020, respectively.
Net Income
(In thousands, except share and per share data)
Years ended December, 31
Net income attributable to European operations
Net income attributable to United States operations
Net income
Less: Net income attributable to the noncontrolling interest
Net income attributable to Inter Parfums, Inc.
2022
$107,292
43,745
151,037
30,099
$120,938
2021
$80,670
29,357
110,027
22,616
$87,411
2020
$41,990
7,978
49,968
11,749
$38,219
Net income attributable to European operations was $107.3 million, $80.7 million and $42.0 million in 2022, 2021 and 2020, respec-
tively, while net income attributable to United States operations was $43.7 million, $29.4 million and $8.0 million in 2022, 2021 and
2020, respectively. The fluctuations in net income for both European operations and United States operations are directly related to
the previous discussions concerning changes in sales, gross profit margins, selling, general and administrative expenses, most of which
were caused by the effects of the COVID-19 pandemic beginning in 2020 and the recovery in 2021 and 2022.
The noncontrolling interest arises primarily from our 72% owned subsidiary in Paris, Interparfums SA, which is also a publicly traded
company as 28% of Interparfums SA shares trade on the Euronext. Net income attributable to the noncontrolling interest is directly related
to the profitability of our European operations and aggregated 27.9%, 28.0% and 28.1% of European operations net income in 2022, 2021
and 2020, respectively. Net margins attributable to Inter Parfums, Inc. aggregated 11.1%, 9.9% and 7.1% in 2022, 2021 and 2020, respectively.
liQuidity and capital resources
Our conservative financial tradition has enabled us to amass significant cash balances. As of December 31, 2022, we had $256 million
in cash, cash equivalents and short-term investments, most of which are held in euro by our European operations and are readily con-
vertible into U.S. dollars. We have not had any liquidity issues to date, and do not expect any liquidity issues relating to such cash and
cash equivalents and short-term investments. As of December 31, 2022, short-term investments include approximately $19.9 million of
marketable equity securities.
The Company is party to a number of license and other agreements for the use of trademarks and rights in connection with the
manufacture and sale of its products expiring at various dates through 2039. In connection with certain of these license agreements,
the Company is subject to minimum annual advertising commitments, minimum annual royalties and other commitments. See Item
8. Financial Statements and Supplementary Data – Note 12 – Commitments in this annual report on Form 10-K. Future advertising
commitments are estimated based on planned future sales for the license terms that were in effect at December 31, 2022, without
consideration for potential renewal periods and do not reflect the fact that our distributors share our advertising obligations.
The Company hopes to continue to benefit from its strong financial position to potentially acquire one or more brands, either on a
proprietary basis or as a licensee. In December 2022, we entered into a long-term global licensing agreement for the creation, develop-
ment and distribution of fragrances and fragrance-related products under the Lacoste brand. This new license takes effect January 2024.
management’s discussion and analysis
of financial condition and results of operations
79
In September 2021, we entered into a long-term global li-
of certificates of deposit with maturities greater than three
censing agreement for the creation, development and distri-
months marketable equity securities and other contracts. At
bution of fragrances and fragrance-related products under the
December 31, 2022, approximately $39 million of certificates
Donna Karan and DKNY brands. Our rights under this license
of deposit contain penalties where we would forfeit a portion of
are subject to certain minimum advertising expenditures and
the interest earned in the event of early withdrawal.
royalty payments as are customary in our industry. With this
Our business is not capital intensive as we do not own any
agreement, we are gaining several well-established and valu-
manufacturing facilities. On a full year basis, we generally spend
able fragrance franchises, most notably Donna Karan Cashmere
less than $5.0 million on capital expenditures including tools
Mist and DKNY Be Delicious, as well as a significant loyal con -
and molds needed to support our new product development
sumer base around the world. The exclusive license became
calendar. Capital expenditures also include amounts for office
effective on July 1, 2022, and we are planning to launch new
fixtures, computer equipment and industrial equipment needed
fragrances under these brands in 2024.
at our distribution centers.
In October 2021, we closed on a transaction agreement with
In December 2022, to finance Interparfums SA’s acquisition
Salvatore Ferragamo S.p.A., whereby an exclusive and world-
of the Lacoste trademark, the Company entered into a $53.3
wide license was granted for the production and distribution of
million (€50 million) four-year loan agreement. The loan agree-
Ferragamo brand perfumes. The license became effective in Oc-
ment bears interest at EURIBOR-1 month rates plus a margin of
tober 2021 and will last for 10 years with a 5-year optional term,
0.825%. This variable rate debt was swapped for variable inter-
subject to certain conditions. With respect to the management
est rate debt with a maximum rate of 2% per annum.
and coordination of activities related to the license agreement,
In April 2021, Interparfums SA completed the acquisition of its
the Company is operating through a wholly-owned Italian sub-
future headquarters at 10 rue de Solférino in the 7th arrondisse-
sidiary based in Florence, that was acquired from Salvatore Fer-
ment of Paris from the property developer. This is an office com-
ragamo on October 1, 2021. The acquisition together with the
plex combining three buildings connected by two inner courtyards,
license agreement was accounted for as an asset acquisition. The
and consists of approximately 40,000 total sq. ft.
total cost of the assets acquired net of liabilities assumed ag-
The $142 million purchase price is in line with market val-
gregated approximately $35.8 million. In connection with this
ue and includes the complete renovation of the site. As of De-
acquisition, we agreed to pay $17.0 million in equal annual in-
cember 31, 2021, $136.1 million of the purchase price, including
stallments of $1.7 million including interest imputed at 2.0%.
approximately $3.1 million of acquisition costs, is included in
Opportunities for external growth are regularly examined,
building, equipment and leasehold improvements on the accom-
with the priority of maintaining the quality and homogeneous na-
panying balance sheet as of December 31, 2021. Approximately
ture of our portfolio. However, we cannot assure you that any
$8.8 million of cash held in escrow is included in other assets
new license or acquisition agreements will be consummated.
on the accompanying balance sheet as of December 31, 2021. In
Cash provided by operating activities aggregated $115.2 mil-
2022 this cash was released from escrow and there is no longer
lion, $119.6 million, and $65.0 million in 2022, 2021 and 2020,
any balance of cash outside of cash and cash equivalents on the
respectively. In 2022, working capital items used $65.6 million
accompanying balance sheet as of December 31, 2022. In addi-
in cash from operating activities, as compared to $13.7 million
tion, the Company borrowed $17.0 million pursuant to a short-
in 2021 and $7.3 million in 2020. Although, from a cash flow
term loan equal to the VAT credit, and in July 2021, the $17.0
perspective, accounts receivable is up approximately 37% from
million VAT credit was reimbursed by the French Tax Authori-
year-end 2021, the balance is reasonable based upon fourth
ties and the loan was repaid.
quarter 2022 record sales levels and reflects strong collection
The acquisition was financed by a 10-year €120 million (ap-
activity as day’s sales outstanding increased slightly to 64 days in
proximately $136 million) bank loan which bears interest at one-
2022, as compared to 61 days in 2022 and decreased significant-
month Euribor plus 0.75%. Approximately €80 million of the
ly as compared to 86 days in 2020. From a cash flow perspective,
variable rate debt was swapped for variable interest rate debt
inventory levels are up 49% from year-end 2021. Inventory days
with a maximum rate of 2% per annum.
on hand increased to 231 days in 2022, as compared to 208 days
In June 2020, the Company and Divabox, owner of the
in 2021, and 277 days in 2020 as we chose to protect service
Origines-parfums e-commerce platform for beauty products,
level in light of the COVID driven supply chain disruptions.
signed a strategic agreement and equity investment pursuant
Cash flows used in investing activities reflect the purchase
to which we acquired 25% of Divabox capital for $14 million
and sales of short-term investments. These investments consist
through a capital increase. In connection with the acquisition,
INTERPARFUMS, INC. 2022 ANNUAL REPORT
80
report on internal control
over financial reporting
the Company entered into a $13.4 million term loan, which was
repaid in full in February 2021.
Foreign Exchange Risk Management
A general discussion relating to our policies on foreign exchange
Our short-term financing requirements are expected to be
risk management can be found in “Management’s Discussion and
met by available cash on hand at December 31, 2022, cash gen-
Analysis of Financial Condition and Results of Operations” in
erated by operations and short-term credit lines provided by
Part II, Item 7 of our annual report on Form 10-K for the year
domestic and foreign banks. The principal credit facilities for
ended December 2021.
2022 consist of a $20.0 million unsecured revolving line of credit
As of December 31, 2022, we had foreign currency con-
provided by a domestic commercial bank and approximately $20
tracts in the form of forward exchange contracts with notion-
million in credit lines provided by a consortium of international
al amounts of approximately U.S. $36.5 million which all have
financial institutions. There were no balances due from short-
maturities of less than one year. We believe that our risk of
term borrowings as of December 31, 2022 and 2021.
loss as the result of nonperformance by any of such financial
In April 2020, as a result of the uncertainties raised by the
institutions is remote.
COVID-19 pandemic, the Board of Directors authorized a tem-
porary suspension of the quarterly cash dividend. In February
2021, our Board of Directors authorized a reinstatement of
Interest Rate Risk Management
We mitigate interest rate risk by monitoring interest rates,
an annual dividend of $1.00, payable quarterly and in Febru-
and then determining whether fixed interest rates should be
ary 2022, our Board authorized a 100% increase in the annu-
swapped for floating rate debt, or if floating rate debt should be
al dividend to $2.00 per share. In February 2023 the Board of
swapped for fixed rate debt.
Directors further increased the annual dividend to $2.50 per
share. The next quarterly cash dividend of $0.625 per share was
paid on March 31, 2023, to shareholders of record on March
15, 2023. Dividends paid, including dividends paid once per year
MANAGEMENT’S ANNUAL REPORT
ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Inter Parfums, Inc. is responsible for estab-
to noncontrolling stockholders of Interparfums SA, aggregated
lishing and maintaining adequate internal control over financial
$79.8 million, $41.5 million and $21.1 million for the years ended
reporting as defined in Rule 13(a)-15(f) under the Securities
December 31, 2022, 2021 and 2020, respectively. The cash divi-
Exchange Act of 1934. With the participation of the Chief
dends to be paid in 2023 are not expected to have any significant
Executive Officer and the Chief Financial Officer, our manage-
impact on our financial position.
ment conducted an evaluation of the effectiveness of our inter-
We believe that funds provided by or used in operations can
nal control over financial reporting based on the framework and
be supplemented by our present cash position and available
criteria established in Internal Control – Integrated Framework
credit facilities, so that they will provide us with sufficient re-
(2013), issued by the Committee of Sponsoring Organizations of
sources to meet all present and reasonably foreseeable future
the Treadway Commission. Based on this evaluation, our man-
operating needs.
agement has concluded that our internal control over financial
Inflation rates in the U.S. and foreign countries in which we
reporting was effective as of December 31, 2022.
operate did not have a significant impact on operating results for
Our independent auditor, Mazars USA LLP, a registered pub-
the year ended December 31, 2022 as they were either offset
lic accounting firm, has issued its report on its audit of our in-
by price increases we passed onto our respective customers or
ternal control over financial reporting. This report appears on
operating efficiencies.
the following page.
DISCLOSURES ABOUT MARKET
We address certain financial exposures through a controlled
program of risk management that primarily consists of the use
of derivative financial instruments. We primarily enter into for-
eign currency forward exchange contracts in order to reduce
the effects of fluctuating foreign currency exchange rates. We
Jean Madar
Chief Executive Officer,
Michel Atwood
Chief Financial Officer
do not engage in the trading of foreign currency forward ex-
Chairman of the
change contracts or interest rate swaps.
Board of Directors
report of independent registered
public accounting firm
81
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To Shareholders and
the Board of Directors of Inter Parfums, Inc.
Opinions on the Financial Statements
and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets
We conducted our audits in accordance with the stan-
dards of the PCAOB. Those standards require that we plan
and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material
misstatement, whether due to error or fraud, and whether
effective internal control over financial reporting was main-
tained in all material respects.
of Inter Parfums, Inc. (the “Company”) as of December 31, 2022
Our audits of the consolidated financial statements includ-
and 2021, and the related consolidated statements of income,
ed performing procedures to assess the risks of material mis-
comprehensive income, shareholders’ equity, and cash flows
statement of the consolidated financial statements, whether
for each of the years in the three-year period ended December
due to error or fraud, and performing procedures that re-
31, 2021, and the related notes and the schedule listed in the
spond to those risks. Such procedures included examining, on
Index in Item 15(a)(2) (collectively referred to as the “financial
a test basis, evidence regarding the amounts and disclosures
statements”). We also have audited the Company’s internal con-
in the consolidated financial statements. Our audits also in-
trol over financial reporting as of December 31, 2022, based on
cluded evaluating the accounting principles used and significant
criteria established in Internal Control - Integrated Framework:
estimates made by management, as well as evaluating the over-
(2013) issued by the Committee of Sponsoring Organizations of
all presentation of the consolidated financial statements. Our
the Treadway Commission (COSO).
audit of internal control over financial reporting included ob-
In our opinion, the consolidated financial statements re-
taining an understanding of internal control over financial re-
ferred to above present fairly, in all material respects, the fi-
porting, assessing the risk that a material weakness exists, and
nancial position of the Company as of December 31, 2022 and
testing and evaluating the design and operating effectiveness
2021, and the results of its operations and its cash flows for
of internal control based on the assessed risk. Our audits also
each of the years in the three-year period ended December
included performing such other procedures as we considered
31, 2022, in conformity with accounting principles generally ac-
necessary in the circumstances. We believe that our audits
cepted in the United States of America. Also in our opinion, the
provide a reasonable basis for our opinions.
Company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2022, based
on criteria established in Internal Control - Integrated Frame-
work: (2013) issued by COSO.
Definition and Limitations of Internal Control
over Financial Reporting
A company’s internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliabil-
Basis for Opinion
The Company’s management is responsible for these consol-
ity of financial reporting and the preparation of consolidated
financial statements for external purposes in accordance with
idated financial statements, for maintaining effective internal
generally accepted accounting principles. A company’s internal
control over financial reporting, and for its assessment of the
control over financial reporting includes those policies and pro-
effectiveness of internal control over financial reporting in-
cedures that (1) pertain to the maintenance of records that, in
cluded in the accompanying Management’s Annual Report on
reasonable detail, accurately and fairly reflect the transactions
Internal Control over Financial Reporting. Our responsibility is
and dispositions of the assets of the company; (2) provide rea-
to express an opinion on the Company’s consolidated financial
sonable assurance that transactions are recorded as necessary
statements and an opinion on the Company’s internal control
to permit preparation of consolidated financial statements in ac-
over financial reporting based on our audits. We are a public
cordance with generally accepted accounting principles, and that
accounting firm registered with the Public Company Accounting
receipts and expenditures of the company are being made only
Oversight Board (United States) (“PCAOB”) and are required
in accordance with authorizations of management and directors
to be independent with respect to the Company in accordance
of the company; and (3) provide reasonable assurance regarding
with the U.S. federal securities laws and the applicable rules
prevention or timely detection of unauthorized acquisition, use,
and regulations of the Securities and Exchange Commission and
or disposition of the company’s assets that could have a material
the PCAOB.
effect on the consolidated financial statements.
INTERPARFUMS, INC. 2022 ANNUAL REPORT
82
report of independent registered
public accounting firm
Because of its inherent limitations, internal control over
The determination of the future cash flows of the intangible
financial reporting may not prevent or detect misstatements.
assets requires management to make significant estimates and
Also, projections of any evaluation of effectiveness to future
assumptions related to forecasts of future revenues, operat-
periods are subject to the risk that controls may become in-
ing margins, and discount rates. As disclosed by management,
adequate because of changes in conditions, or that the degree
changes in these assumptions could have a significant impact on
of compliance with the policies or procedures may deteriorate.
the future cash flows and therefore, on the amount of any im-
Critical Audit Matter
The critical audit matter communicated below is a matter aris-
pairment charge. The determination of an impairment indicator
on the finite - life intangible assets requires management judg-
ments and involves assumptions.
ing from the current period audit of the consolidated financial
We identified the impairment assessment of intangible assets
statements that was communicated or required to be commu-
as a critical audit matter as auditing management’s judgments
nicated to the audit committee and that: (1) relates to accounts
regarding the evaluation of impairment indicators, forecasts of
or disclosures that are material to the consolidated financial
future revenue, operating margin, and the discount rate to be
statements and (2) involved especially challenging, subjective,
applied involve a high degree of subjectivity.
or complex judgments. The communication of the critical audit
The primary procedures we performed to address this critical
matter does not alter in any way our opinion on the consoli-
audit matter included:
dated financial statements, taken as a whole, and we are not,
• Reviewing the analysis of the identification of impairment
by communicating the critical audit matter below, providing a
evidence for each indefinite and finite-life asset based on three
separate opinion on the critical audit matter or on the accounts
indicators (sales analysis, new products launches, payment of
or disclosures to which it relates.
minimum guarantees), and then corroborating that analysis with
As described in Notes 1 and 8 to the consolidated financial
external information and evidence obtained in other areas of
statements, the Company’s consolidated indefinite and finite
the audit.
- life intangible assets balance was $291 million at December
• Testing the effectiveness of controls relating to manage-
31, 2022. Indefinite lived intangible assets principally consist of
ment’s impairment tests, including controls over the impairment
trademarks and finite-lived intangible assets represent fees to
indicators and determination of the future cash flows.
acquire or enter into a license.
• In testing management’s process for determining the future
Those intangible assets are tested for impairment as follows:
cash flows we evaluated the reasonableness of management’s
• Indefinite - life intangible assets are tested for impairment
forecasts of future revenue and operating margin by performing
at least annually at the reporting unit level or more frequently
a retrospective review in comparing these forecasts to histori-
when events occur, or circumstances change. The evaluation re-
cal operating results, evaluating whether the assumptions used
quires a comparison of the estimated fair value of the asset to
were reasonable considering current information as well as
the carrying value of the asset. The fair value is estimated based
future expectations, and using additional evidence obtained in
upon discounted future cash flow projections. If the carrying
other areas of the audit.
value of an indefinite-lived intangible asset exceeds its fair value,
• Utilizing a valuation specialist to assist in auditing the dis-
an impairment charge is recorded.
count rate. It includes evaluating whether the assumptions used
• Finite - life intangible assets are tested for impairment
were reasonable by comparing to third party market data.
testing whenever events or changes in circumstances indicate
that the carrying amount of the asset may not be recoverable.
If impairment indicators exist, the undiscounted future cash
flows associated with the expected service potential of the
asset are compared to the carrying value of the asset. If the
Mazars USA LLP
projection of undiscounted cash flows is less than the carrying
We have served as the Company’s auditor since 2004.
value of a finite-lived intangible asset, an impairment charge
New York, New York
would be recorded.
February 28, 2023
financial statements
83
INTER PARFUMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
Years Ended December 31,
ASSETS
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, net
Inventories
Receivables, other
Other current assets
Income taxes receivable
Total current assets
Equipment and leasehold improvements, net
Rights of use assets, net
Trademarks, licenses and other intangible assets, net
Deferred tax assets
Other assets
Total assets
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt
Current portion of lease liabilities
Accounts payable - trade
Accrued expenses
Income taxes payable
Total current liabilities
Long–term debt, less current portion
Lease liabilities, less current portion
Equity:
Inter Parfums, Inc. shareholders’ equity:
2022
2021
$104,713
150,833
197,584
289,984
28,803
15,650
157
787,724
166,722
27,964
290,853
11,159
24,120
$1,308,542
$28,547
5,296
88,388
213,621
8,715
344,567
151,494
24,335
$159,613
160,014
159,281
198,914
10,308
21,375
210
709,715
149,352
33,728
214,047
7,936
30,586
$1,145,364
$15,911
6,014
81,980
136,677
4,328
244,910
132,902
29,220
Preferred stock, $0.001 par value. Authorized 1,000,000 shares; none issued
−
-
Common stock, $0.001 par value. Authorized 100,000,000 shares;
outstanding, 31,967,300 and 31,830,420 shares
at December 31, 2022 and 2021, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost, 9,864,805 common shares
at December 31, 2022 and 2021
Total Inter Parfums, Inc. shareholders’ equity
Noncontrolling interest
Total equity
Total liabilities and equity
(See accompanying notes to consolidated financial statements
32
90,186
620,095
(56,056)
(37,475)
616,782
171,364
788,146
$1,308,542
32
87,132
560,663
(38,432)
(37,475)
571,920
166,412
738,332
$1,145,364
INTERPARFUMS, INC. 2022 ANNUAL REPORT
84
INTER PARFUMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
Years Ended December 31,
Net sales
Cost of sales
Gross margin
Selling, general, and administrative expenses
Impairment loss
Income from operations
Other expenses (income):
Interest expense
2022
$1,086,653
392,231
694,422
492,370
7,749
194,303
3,599
(Gain) Loss on foreign currency 1,921
Interest and dividend income (5,486)
Other Income 50
2021
$879,516
322,614
556,902
406,459
2,393
148,050
2020
$539,009
208,278
330,731
260,648
-
70,083
2,825
(2,338)
(3,403)
1,970
2,178
(2,865)
(53) (549)
734
69,349
19,381
49,968
11,749
$38,219
Income taxes
Income before income taxes
84 (2,969)
151,019
40,992
110,027
22,616
$87,411
Net income
Less: Net income attributable to the noncontrolling interest
194,219
43,182
151,037
30,099
$120,938
Net income attributable to Inter Parfums, Inc.
Net income attributable to Inter Parfums, Inc. common shareholders:
Basic
Diluted
Weighted average number of shares outstanding:
Basic
Diluted
Dividends declared per share
$3.80
3.78
$2.76
2.75
$1.21
1.21
31,859,417
31,988,753
$2.00
31,676,796
31,835,408
$1.00
31,536,659
31,654,544
$0.33
INTER PARFUMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, except share and per share data)
Years ended December 31, 2022, 2021, and 2020
Net income
Other comprehensive income:
Net derivative instrument, net of tax
Transfer of OCI into earnings
Translation adjustments, net of tax
Comprehensive income
Comprehensive income attributable to noncontrolling interests:
Net income
Net derivative instrument income (loss), net of tax
Translation adjustments, net of tax
Comprehensive income attributable to Inter Parfums, Inc.
(See accompanying notes to consolidated financial statements.)
2022
$151,037
2021
$110,027
2020
$49,968
2,356
992
(29,683)
(26,335)
124,702
30,099
647
(9,358)
21,388
$103,314
(1,367)
-
(42,967)
(44,334)
65,693
(19)
(52)
47,912
47,841
97,809
22,616
(375)
(11,524)
10,717
11,749
(19)
14,004
25,734
$54,976 $72,075
financial statements
85
INTER PARFUMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In thousands, except share and per share data)
Years Ended December 31,
Common stock, beginning of year
Shares issued upon exercise of stock options
Common stock, end of year
Additional paid-in capital, beginning of year
Shares issued upon exercise of stock options
Share-based compensation
Purchase of subsidiary shares from noncontrolling interests
Shares issued for license acquisition
Transfer of subsidiary shares purchased
Additional paid-in capital, end of year
Retained earnings, beginning of year
Net income
Dividends
Stock-based compensation
Retained earnings, end of year
2022
$32
−
$32
87,132
6,004
1,355
−
−
(4,305)
$90,186
560,663
120,938
(63,743)
2,237
$620,095
2021
$32
-
$32
75,708
5,393
1,566
-
5,000
(535)
$87,132
503,567
87,411
(31,690)
1,375
$560,663
Accumulated other comprehensive loss, beginning of year
Foreign currency translation adjustment, net of tax
Transfer from other comprehensive income into earnings
Net derivative instrument gain, net of tax
Accumulated other comprehensive loss, end of year
(38,432)
(20,325)
992
1,709
$(56,056)
(5,997)
(31,443)
-
(992)
$(38,432)
2020
$31
1
$32
70,664
2,771
1,711
-
-
562
$75,708
474,637
38,219
(10,406)
1,117
$503,567
(39,853)
33,908
(52)
-
$(5,997)
Treasury stock, beginning and end of year
(37,475)
(37,475)
(37,475)
Noncontrolling interest, beginning of year
Net income
Foreign currency translation adjustment, net of tax
Net derivative instrument loss, net of tax
Dividends
Share-based compensation
Transfer of subsidiary shares purchased
Noncontrolling interest, end of year
Total equity
(See accompanying notes to consolidated financial statements.)
166,412
30,099
(9,358)
647
(16,056)
(282)
(98)
$171,364
$788,146
166,615
22,616
(11,524)
(375)
(9,836)
(293)
(791)
$166,412
$738,332
140,994
11,749
14,004
(19)
(324)
350
(139)
$166,615
$702,450
INTERPARFUMS, INC. 2022 ANNUAL REPORT
86
financial statements
INTER PARFUMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years ended December, 31
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization including impairment loss
Provision for doubtful accounts
Noncash stock compensation
Share of income of equity investment
Lease expense
Deferred tax expense (benefit)
Change in fair value of derivatives
Changes in:
Accounts receivable
Inventories
Other assets
Operating lease liabilities
Accounts payable and accrued expenses
Income taxes, net
Net cash provided by operating activities
Cash flows from investing activities:
Purchases of short-term investments
Proceeds from sale of short-term investments
Purchase of equipment and leasehold improvements
Payment for intangible assets acquired
Purchase of equity investment
Net cash provided used in investing activities
Cash flows from financing activities:
Repayment of long-term debt
Proceeds issuance of long-term debt
Proceeds from exercise of options
Dividends paid
Dividends paid to noncontrolling interests
Purchase of subsidiary shares from noncontrolling interests
Net cash used in financing activities
Effect of exchange rate changes on cash
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents – beginning of year
Cash and cash equivalents – end of year
Supplemental disclosures of cash flow information:
Cash paid for:
Interest
Income taxes
(See accompanying notes to consolidated financial statements.)
2022
2021
2020
$151,037
$110,027
$49,968
22,539
2,353
3,143
49
4,980
(3,604)
227
(59,640)
(98,297)
(13,651)
(4,795)
106,857
3,952
115,150
(1,038)
896
(33,756)
(98,865)
-
(132,763)
(19,861)
52,492
6,003
(63,743)
(16,056)
(4,403)
(45,568)
(493)
(63,674)
168,387
$104,713
12,698
853
2,853
(53)
7,302
(465)
65
(45,395)
(49,815)
(16,725)
(7,503)
103,046
2,698
119,586
(55,691)
10,644
(141,274)
(1,545)
-
(187,866)
(43,056)
157,382
5,393
(31,690)
(9,836)
-
78,193
(11,207)
(1,294)
169,681
$168,387
9,067
4,824
3,029
(549)
5,483
581
(137)
13,157
19,333
1,176
(5,421)
(32,239)
(3,279)
64,993
(7,582)
11,513
(11,011)
(1,251)
(13,998)
(22,329)
(13,725)
13,438
2,771
(20,805)
(324)
-
(18,645)
12,245
36,264
133,417
$169,681
$2,987
38,492
$2,468
40,497
$1,105
21,772
notes to consolidated financial statements
(in thousands, except share and per share data)
87
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) The Company and its Significant
Accounting Policies
Business Of The Company
Inter Parfums, Inc. and its subsidiaries (the “Company”) are in
the fragrance business and manufacture and distribute a wide
array of fragrances and fragrance related products.
Substantially all of our prestige fragrance brands are li-
lars at year-end exchange rates. Income and expense items are
translated at average rates of exchange prevailing during the
year. Gains and losses from translation adjustments are accumu-
lated in a separate component of shareholders’ equity.
Cash and Cash Equivalents
and Short-Term Investments
All highly liquid investments purchased with a maturity of three
censed from unaffiliated third parties, and our business is de-
months or less are considered to be cash equivalents. The
pendent upon the continuation and renewal of such licenses.
Company also has short-term investments which consist of cer-
With respect to the Company’s largest brands, we license the
tificates of deposit and other contracts with maturities greater
Montblanc, Jimmy Choo, Coach and GUESS brand names. As a
than three months and available for sale marketable equity se-
percentage of net sales, product sales for the Company’s largest
curities. The Company monitors concentrations of credit risk
brands were as follows:
Jimmy Choo
Year Ended December 31, 2022
Montblanc
18%
18%
15%
12%
GUESS
Coach
2021 2020
21%
16%
17%
11%
19%
18%
16%
12%
associated with financial institutions with which the Company
conducts significant business. The Company believes its cred-
it risk is minimal, as the Company primarily conducts business
with large, well-established financial institutions. Substantially
all cash and cash equivalents are primarily held at financial in-
stitutions outside the United States and are readily convertible
into U.S. dollars.
No other brand represented 10% or more of consolidated
net sales.
Accounts Receivable
Accounts receivable represent payments due to the Company
for previously recognized net sales, reduced by allowances for
Basis Of Preparation
The consolidated financial statements include the accounts
doubtful accounts or balances which are estimated to be un-
collectible, which aggregated $4.7 million and $2.2 million as of
of the Company and its subsidiaries, including 72% owned
December 31, 2022, and 2021, respectively. Accounts receiv-
Interparfums SA, a subsidiary whose stock is publicly traded
able balances are written-off against the allowance for doubt-
in France. All material intercompany balances and transactions
ful accounts when they become uncollectible. Recoveries of
have been eliminated.
accounts receivable previously recorded against the allowance
are recorded in the consolidated statement of income when re-
Management Estimates
Management makes assumptions and estimates to prepare fi-
ceived. We generally grant credit based upon our analysis of the
customer’s financial position, as well as previously established
nancial statements in conformity with accounting principles
buying patterns.
generally accepted in the United States of America. Those as-
sumptions and estimates directly affect the amounts reported
and disclosures included in the consolidated financial state-
Inventories
Inventories, including promotional merchandise, only in-
ments. Actual results could differ from those assumptions and
clude inventory considered saleable or usable in future pe-
estimates. Significant estimates for which changes in the near
riods, and are stated at the lower of cost and net realizable
term are considered reasonably possible and that may have a
value, with cost being determined on the first-in, first-out
material impact on the financial statements are disclosed in
method. Cost components include raw materials, direct la-
these notes to the consolidated financial statements.
bor and overhead (e.g., indirect labor, utilities, depreciation,
Foreign Currency Translation
For foreign subsidiaries with operations denominated in a for-
purchasing, receiving, inspection and warehousing) as well
as inbound freight. Promotional merchandise is charged to
cost of sales at the time the merchandise is shipped to the
eign currency, assets and liabilities are translated to U.S. dol-
Company’s customers.
INTERPARFUMS, INC. 2022 ANNUAL REPORT
88
Derivatives
All derivative instruments are recorded as either assets or lia-
of the asset. The fair values used in our evaluations are es-
timated based upon discounted future cash flow projections
bilities and measured at fair value. The Company uses derivative
using a weighted average cost of capital of 9.8% and 7.47% in
instruments to principally manage a variety of market risks. For
2022 and 2021, respectively. The cash flow projections are
derivatives designated as hedges of the exposure to changes
based upon a number of assumptions, including future sales
in fair value of the recognized asset or liability or a firm com-
levels, future cost of goods and operating expense levels, as
mitment (referred to as fair value hedges), the gain or loss is
well as economic conditions, changes to our business model
recognized in earnings in the period of change together with
or changes in consumer acceptance of our products which
the offsetting loss or gain on the hedged item attributable to
are more subjective in nature. If the carrying value of an in-
the risk being hedged. The effect of that accounting is to include
definite-lived intangible asset exceeds its fair value, an im-
in earnings the extent to which the hedge is not effective in
pairment charge is recorded.
achieving offsetting changes in fair value. For cash flow hedges,
Intangible assets subject to amortization are evaluated for im-
the effective portion of the derivative’s gain or loss is initially re-
pairment testing whenever events or changes in circumstances
ported in equity (as a component of accumulated other compre-
indicate that the carrying amount of an amortizable intangible
hensive income) and is subsequently reclassified into earnings in
asset may not be recoverable. If impairment indicators exist for
the same period or periods during which the hedged forecasted
an amortizable intangible asset, the undiscounted future cash
transaction affects earnings. The ineffective portion of the gain
flows associated with the expected service potential of the
or loss of a cash flow hedge is reported in earnings immediately.
asset are compared to the carrying value of the asset. If our
The Company also holds certain instruments for economic pur-
projection of undiscounted future cash flows is in excess of the
poses that are not designated for hedge accounting treatment.
carrying value of the intangible asset, no impairment charge is
For these derivative instruments, changes in their fair value are
recorded. If our projection of undiscounted future cash flows
recorded in earnings immediately.
is less than the carrying value of the intangible asset, an impair-
Property, Equipment
and Leasehold Improvements
Property, equipment and leasehold improvements are stat-
ed at cost less accumulated depreciation and amortization.
ment charge would be recorded to reduce the intangible asset
to its fair value.
Revenue Recognition
The Company sells its products to department stores, perfum-
Depreciation and amortization are provided using the straight-
eries, specialty stores and domestic and international wholesal-
line method over the estimated useful lives for equipt, which
ers and distributors. Our revenue contracts represent single
range between three and ten years and the shorter of the lease
performance obligations to sell our products to customers.
term or estimated useful asset lives for leasehold improvements.
Sales of such products by our domestic subsidiaries are denomi-
Depreciation has not yet begun on property recently purchased,
nated primarily in U.S. dollars, and sales of such products by our
as it has not yet been put into service. Depreciation provided on
foreign subsidiaries are primarily denominated in either euro or
equipment used to produce inventory, such as tools and molds,
U.S. dollars. The Company recognizes revenues when contract
is included in cost of sales.
Long-Lived Assets
Indefinite-lived intangible assets principally consist of trade-
terms are met, the price is fixed and determinable, collectability
is reasonably assured, and control of the assets has passed to
the customer based on the agreed upon shipping terms. Net
sales are comprised of gross revenues less returns, trade dis-
marks which are not amortized. The Company evaluates
counts and allowances. The Company does not bill its custom-
indefinite-lived intangible assets for impairment at least an-
ers’ freight and handling charges. All shipping and handling costs,
nually during the fourth quarter, or more frequently when
which aggregated $15.8 million, $10.0 million and $5.0 million in
events occur or circumstances change, such as an unexpected
2022, 2021 and 2020, respectively, are included in selling, gen-
decline in sales, that would more-likely-than-not indicate that
eral and administrative expenses in the consolidated statements
the carrying value of an indefinite-lived intangible asset may
of income. The Company grants credit to all qualified customers
not be recoverable. When testing indefinite-lived intangible
and does not believe it is exposed significantly to any undue con-
assets for impairment, the evaluation requires a comparison
centration of credit risk. No one customer represented 10% or
of the estimated fair value of the asset to the carrying value
more of net sales in 2022, 2021 or 2020.
notes to consolidated financial statements
(in thousands, except share and per share data)
89
Sales Returns
Generally, the Company does not permit customers to return
their unsold products. However, for U.S. based customers, we al-
aggregated $43.1 million, $36.9 million and $26.4 million in
2022, 2021 and 2020, respectively.
low returns if properly requested, authorized and approved. The
Company regularly reviews and revises, as deemed necessary, its
Package Development Costs
Package development costs associated with new products and
estimate of reserves for future sales returns based primarily upon
redesigns of existing product packaging are expensed as incurred.
historic trends and relevant current data including information
provided by retailers regarding their inventory levels. In addition,
as necessary, specific accruals may be established for significant
Operating Leases
The Company leases its offices and warehouses, vehicles, and
future known or anticipated events. The types of known or antic-
certain office equipment, substantially all of which are classified
ipated events that we consider include, but are not limited to, the
as operating leases. The Company currently has no material fi-
financial condition of our customers, store closings by retailers,
nancing leases. The Company determines if an arrangement is a
changes in the retail environment and our decision to continue
lease at inception. Operating lease assets and obligations are rec-
to support new and existing products. The Company records
ognized at the lease commencement date based on the present
its estimate of potential sales returns as a reduction of sales and
value of lease payments over the lease term.
cost of sales with corresponding entries to accrued expenses, to
record the refund liability, and inventory, for the right to recov-
er goods from the customer. The refund liability associated with
License Agreements
The Company’s license agreements generally provide the
estimated returns was $8.6 million and $5.1 million at December
Company with worldwide rights to manufacture, market and
31, 2022 and 2021, respectively, and the amounts recognized for
sell fragrance and fragrance related products using the licen-
the rights to recover products was $3.2 million and $1.9 million at
sors’ trademarks. The licenses typically have an initial term of
December 31, 2022 and 2021, respectively. The physical condition
approximately 5 to 15 years, and are potentially renewable sub-
and marketability of returned products are the major factors we
ject to the Company’s compliance with the license agreement
consider in estimating realizable value. Actual returns, as well as
provisions. The remaining terms, excluding potential renewal
estimated realizable values of returned products, may differ sig-
periods, range from approximately 1 to 12 years. Under each
nificantly, either favorably or unfavorably, from our estimates, if
license, the Company is required to pay royalties in the range of
factors such as economic conditions, inventory levels or compet-
6% to 10% to the licensor, at least annually, based on net sales
itive conditions differ from our expectations.
to third parties.
In certain cases, the Company may pay an entry fee to ac-
Payments to Customers
The Company records revenues generated from purchase with
quire, or enter into, a license where the licensor or another
licensee was operating a pre-existing fragrance business. In
purchase and gift with purchase promotions as sales and the
those cases, the entry fee is capitalized as an intangible asset and
costs of its purchase with purchase and gift with purchase pro-
amortized over its useful life.
motions as cost of sales. Certain other incentive arrangements
Most license agreements require minimum royalty payments,
require the payment of a fee to customers based on their at-
incremental royalties based on net sales levels and minimum
tainment of pre-established sales levels. These fees have been
spending on advertising and promotional activities. Royalty ex-
recorded as a reduction of net sales.
penses are accrued in the period in which net sales are recog-
Advertising and Promotion
Advertising and promotional costs are expensed as incurred and
nized while advertising and promotional expenses are accrued at
the time these costs are incurred.
In addition, the Company is exposed to certain concentration
recorded as a component of cost of goods sold (in the case of
risk. Most of our prestige fragrance brands are licensed from
free goods given to customers) or selling, general and adminis-
unaffiliated third parties, and our business is dependent upon the
trative expenses. Advertising and promotional costs included in
continuation and renewal of such licenses.
selling, general and administrative expenses were $212.4 million,
$171.1 million and $91.7 million for 2022, 2021 and 2020, re-
spectively. Costs relating to purchase with purchase and gift
Income Taxes
The Company accounts for income taxes using an asset and liabil-
with purchase promotions that are reflected in cost of sales
ity approach that requires the recognition of deferred tax assets
INTERPARFUMS, INC. 2022 ANNUAL REPORT
90
and liabilities for the expected future tax consequences of events
While we expect this trend to continue, the introduction of
that have been recognized in its financial statements or tax returns.
variants of COVID-19 in various parts of the world has caused
The net deferred tax assets assume sufficient future earnings for
the temporary reimplementation of governmental restrictions
their realization, as well as the continued application of currently
to prevent further spread of the virus. In addition, interna-
enacted tax rates. Included in net deferred tax assets is a valuation
tional air travel remains curtailed in many jurisdictions due to
allowance for deferred tax assets, where management believes it
both governmental restrictions and consumer health concerns.
is more-likely-than-not that the deferred tax assets will not be re-
While COVID-19 has significantly restricted international travel,
alized in the relevant jurisdiction. If the Company determines that
the travel retail business is beginning to pick up. Lastly, the im-
a deferred tax asset will not be realizable, an adjustment to the
proved economy has put significant strains on our supply chain
deferred tax asset will result in a reduction of net earnings at that
causing disruptions affecting the procurement of components,
time. Accrued interest and penalties are included within the relat-
the ability to transport goods, and related cost increases. These
ed tax asset or liability in the accompanying financial statements.
disruptions have come at a time when demand for our product
lines has never been stronger or more sustained. We have been
Issuance of Common Stock
by Consolidated Subsidiary
The difference between the Company’s share of the proceeds
addressing this issue since the beginning of 2021, by ordering
well in advance of need and in larger quantities. Since 2021, we
have strived to carry more inventory overall, source the same
received by the subsidiary and the carrying amount of the por-
components from multiple suppliers and when possible, man-
tion of the Company’s investment deemed sold, is reflected as
ufacture products closer to where they are sold. We do not
an equity adjustment in the consolidated balance sheets.
expect the supply chain bottlenecks to begin lifting until the sec-
Treasury Stock
The Board of Directors may authorize share repurchases of the
ment, the impact of the COVID-19 pandemic might continue to
have adverse effects on our results of our operations, financial
Company’s common stock (Share Repurchase Authorizations).
position and cash flows through at least the first half of 2023.
ond half of 2023. Therefore, despite recent business improve-
Share repurchases under Share Repurchase Authorizations may
be made through open market transactions, negotiated pur-
chase or otherwise, at times and in such amounts within the
parameters authorized by the Board. Shares repurchased un-
(3) Recent Agreements
Lacoste
In December 2022, we closed a transaction agreement with
der Share Repurchase Authorizations are held in treasury for
Lacoste, whereby an exclusive and worldwide license was
general corporate purposes, including issuances under various
granted for the production and distribution of Lacoste brand
employee stock option plans. Treasury shares are accounted for
perfumes and cosmetics. Our rights under this license are sub-
under the cost method and reported as a reduction of equity.
ject to certain minimum advertising expenditures and royalty
Share Repurchase Authorizations may be suspended, limited or
payments as are customary in our industry. The license becomes
terminated at any time without notice.
effective in January 2024 and will last for 15 years.
(2) Impact of COVID-19 Pandemic
A novel strain of coronavirus (“COVID-19”) surfaced in late
Dunhill
In April 2022, we announced that the Dunhill fragrance license
2019 and in March 2020, the World Health Organization de-
will expire on September 30, 2023 and will not be renewed. The
clared COVID-19 a pandemic. In response, various national,
Company will continue to produce and sell Dunhill fragrances
state, and local governments issued decrees prohibiting certain
until the license expires and will maintain the right to sell-off re-
businesses from operating and certain classes of workers from
maining Dunhill fragrance inventory for a limited time as is cus-
reporting to work.
tomary in the fragrance industry.
Retail store closings, event cancellations and a shutdown of
international air travel brought our sales to a virtual standstill
and caused a significant unfavorable impact on our results of op-
Salvatore Ferragamo
In October 2021, we closed on a transaction agreement with
erations in 2020.
Salvatore Ferragamo S.p.A., whereby an exclusive and world-
Business significantly improved in the second half of 2020
wide license was granted for the production and distribution
and continued to improve throughout 2021 and 2022, as retail
of Ferragamo brand perfumes. Our rights under this license
stores reopened, and consumers increased online purchasing.
are subject to certain minimum advertising expenditures and
notes to consolidated financial statements
(in thousands, except share and per share data)
91
royalty payments as are customary in our industry. The license
became effective in October 2021 and will last for 10 years with
a 5-year optional term, subject to certain conditions.
Land and Building Acquisition
- Future Headquarters in Paris
In April 2021, Interparfums SA, our 72% owned French subsid-
With respect to the management and coordination of activ-
iary, completed the acquisition of its future headquarters at 10
ities related to the license agreement, the Company operates
rue de Solférino in the 7th arrondissement of Paris from the
through a wholly-owned Italian subsidiary based in Florence,
property developer. This is an office complex combining three
that was acquired from Salvatore Ferragamo on October 1,
buildings connected by two inner courtyards, and consists of
2021. The acquisition together with the license agreement was
approximately 40,000 total sq. ft.
accounted for as an asset acquisition.
The purchase price includes the complete renovation of the
Emanuel Ungaro
In October 2021, we also entered into a 10-year exclusive
site. As of December 31, 2022, $148.1 million of the purchase
price, including approximately $4.4 million of acquisition costs,
is included in property, equipment and leasehold improve-
global licensing agreement a with a 5-year optional term sub-
ments on the accompanying balance sheet as of December
ject to certain conditions, with Emanuel Ungaro Italia S.r.l, for
31, 2022. The purchase price has been allocated approximate-
the creation, development and distribution of fragrances and
ly $61.1 million to land and $87.0 million to the building. The
fragrance-related products, under the Emanuel Ungaro brand.
building, which was delivered on February 28, 2022, includes
Our rights under this license are subject to certain minimum
the building structure, development of the property, façade
advertising expenditures and royalty payments as are customary
waterproofing, general and technical installations and interior
in our industry.
fittings that will be depreciated over a range of 7 to 50 years.
The Company has elected to depreciate the building cost
Donna Karan and DKNY
In September 2021, we entered into a long-term global licens-
based on the useful lives of its components. Approximately
$3.4 million of cash held in escrow is also included in property,
ing agreement for the creation, development and distribution
equipment and leasehold improvements on the accompanying
of fragrances and fragrance-related products under the Donna
balance sheet as of December 31, 2022.
Karan and DKNY brands. Our rights under this license are sub-
The acquisition was financed by a 10-year €120 million (ap-
ject to certain minimum advertising expenditures and royalty
proximately $128.0 million) bank loan which bears interest at
payments as are customary in our industry. With this agree-
one-month Euribor plus 0.75%. Approximately €80 million of
ment, we are gaining several well-established and valuable fra-
the variable rate debt was swapped for variable interest rate
grance franchises, most notably Donna Karan Cashmere Mist and
debt with a maximum rate of 2% per annum.
DKNY Be Delicious, as well as a significant loyal consumer base
around the world. In connection with the grant of license, we is-
(4) Inventories
sued 65,342 shares of Inter Parfums, Inc. common stock valued
at $5.0 million to the licensor. The exclusive license is effective
Year Ended December 31,
2022
2021
July 1, 2022, and we are planning to launch new fragrances under
Raw materials and
these brands in 2024.
Rochas Fashion
Effective January 1, 2021, we entered into a new license agree-
component parts
Finished goods
$146,772
143,212
$289,984
$111,312
87,602
$198,914
ment modifying our Rochas fashion business model. The new
Overhead included in inventory aggregated $3.4 million and
agreement calls for a reduction in royalties to be received. As
$3.7 million as of December 31, 2022 and 2021, respectively.
a result, in the first quarter of 2021, we took a $2.4 million im-
Included in inventories is an inventory reserve, which rep-
pairment charge on our Rochas fashion trademark. In the fourth
resents the difference between the cost of the inventory and
quarter of 2022, we again took a $6.8 million impairment charge
its estimated realizable value, based upon sales forecasts and
on the Rochas fashion trademark after an independent expert
the physical condition of the inventories. In addition, and as
concluded that the valuation of the trademark was $11.3 million.
necessary, specific reserves for future known or anticipated
The new license also contains an option for the licensee to buy-
events may be established. Inventory reserves aggregated
out the Rochas fashion trademarks in June 2025 at its then fair
$11.4 million and $15.8 million as of December 31, 2022 and
market value.
2021, respectively.
INTERPARFUMS, INC. 2022 ANNUAL REPORT
92
(5) Fair Value of Financial Instruments
The following tables present our financial assets and liabilities that are measured at fair value on a recurring basis and are categorized
using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value.
FAIR VALUE MEASUREMENTS AT DECEMBER 31, 2022
Quoted Prices in Significant
Significant
Active Markets for Other Observable Unobservable
Identical Assets Inputs Inputs
(Level 3)
(Level 2)
(Level 1)
Total
Assets:
Short-term investments
Interest rate swaps
Foreign currency forward exchange contracts
accounted for using hedge accounting
Assets:
Foreign currency forward exchange contracts
not accounted for using hedge accounting
FAIR VALUE MEASUREMENTS AT DECEMBER 31, 2021
$150,833
6,758
$19,861
-
$130,174 $798
6,758
-
1,189
$158,780
-
$19,861
1,189
$138,121
$68
$68
-
-
$68
$68
-
$798
-
-
Quoted Prices in
Significant
Significant
Unobservable
Active Markets for Other Observable
Identical Assets Inputs Inputs
(Level 3)
Total
(Level 2)
(Level 1)
Assets:
Short-term investments
Foreign currency forward exchange contracts
accounted for using hedge accounting
Foreign currency forward exchange contracts
not accounted for using hedge accounting
Interest rate swaps
$160,014
$-
$160,014
$-
$1,982
63
(234)
$1,811
-
-
-
-
$1,982
63
(234)
$1,811
-
-
-
-
The carrying amount of cash and cash equivalents including money market funds, short-term investments including marketable equi-
ty securities, accounts receivable, other receivables, accounts payable and accrued expenses approximates fair value due to the short
terms to maturity of these instruments. The carrying amount of loans payable approximates fair value as the variable interest rates on
the Company’s indebtedness approximate current market rates.
Foreign currency forward exchange contracts are valued based on quotations from financial institutions and the value of interest
notes to consolidated financial statements
(in thousands, except share and per share data)
93
rate swaps are the discounted net present value of the swaps
accompanying balance sheet for the period ended December
using third party quotes from financial institutions.
31, 2022 and was included in long-term debt on the accompa-
(6) Derivative Financial Instruments
The Company enters into foreign currency forward exchange
nying balance sheet for the period ended December 31, 2021.
The valuation of foreign currency forward exchange contracts
at December 31, 2022 and December 31, 2021, resulted in an as-
contracts to hedge exposure related to receivables denominat-
set and is included in other current assets on the accompanying
ed in a foreign currency and occasionally to manage risks related
balance sheets.
to future sales expected to be denominated in a foreign cur-
At December 31, 2022, the Company had foreign currency
rency. Before entering into a derivative transaction for hedging
contracts in the form of forward exchange contracts with no-
purposes, it is determined that a high degree of initial effec-
tional amounts of approximately U.S. $36.5 million, which all
tiveness exists between the change in value of the hedged item
have maturities of less than one year.
and the change in the value of the derivative instrument from
movement in exchange rates. High effectiveness means that the
change in the cash flows of the derivative instrument will effec-
(7) Property, Equipment and Leasehold Improvements
Year Ended December 31,
2021
2022
tively offset the change in the cash flows of the hedged item.
Land and Building
The effectiveness of each hedged item is measured throughout
(construction in progress)
the hedged period and is based on the dollar offset method-
Equipment
ology and excludes the portion of the fair value of the foreign
Leasehold Improvements
currency forward exchange contract attributable to the change
in spot-forward difference which is reported in current period
Less accumulated
earnings. Any hedge ineffectiveness is also recognized as a gain
depreciation and amortization
or loss on foreign currency in the income statement. For hedge
contracts that are no longer deemed highly effective, hedge
$148,137
$59,689
2,293
210,119
$136,131
$52,036
2,082
190,249
43,397
40,897
$166,722 $149,352
accounting is discontinued, and gains and losses accumulated in
Depreciation and amortization expense was $7.5 million, $4.4
other comprehensive income are reclassified to earnings. If it is
million and $3.8 million in 2022, 2021, and 2020, respectively.
probable that the forecasted transaction will no longer occur,
then any gains or losses accumulated in other comprehensive
(8) Trademarks, Licenses and Other Intangible Assets
income are reclassified to current-period earnings.
Gains and losses in derivatives designated as hedges are
accumulated in other comprehensive income (loss) and gains
and losses in derivatives not designated as hedges are includ-
Gross Accumulated Net Book
2022 Amount Amortization Value
Trademarks
ed in (gain) loss on foreign currency on the accompanying in-
(indefinite lives) $105,022
$−
$105,022
come statements. Such gains and losses were immaterial in
Trademarks
each of the years in the three-year period ended December
(finite lives)
41,267
64
41,203
31, 2022. Interest expense includes a gain of $6.3 million and
Licenses
$0.2 million in 2022 and 2021, respectively, resulting from an
(finite lives)
205,235
63,535
141,700
interest rate swap.
Other intangible assets
All derivative instruments are reported as either assets or
(finite lives)
liabilities on the balance sheet measured at fair value. The val-
Subtotal
uation of interest rate swap is included in other assets on the
Total
17,849
264,351
$369,373
14,921
78,520
$78,520
2,928
185,831
$290,853
INTERPARFUMS, INC. 2022 ANNUAL REPORT
94
Gross Accumulated Net Book
2021 Amount Amortization Value
Trademarks
If the residual value of a finite life intangible asset exceeds its
carrying value, then the asset is not amortized. The Compa-
ny reviews intangible assets with finite lives for impairment
(indefinite lives) $119,712
$-
$119,712
whenever events or changes in circumstances indicate that
Trademarks
the carrying amount may not be recoverable.
(finite lives)
43,820
68
43,752
Trademarks (finite lives) primarily represent Lanvin brand
Licenses
names and trademarks and in connection with their purchase,
(finite lives)
109,682
62,286
47,396
Lanvin was granted the right to repurchase the brand names
Other intangible assets
(finite lives)
Subtotal
Total
17,775
171,277
$290,989
14,588
76,942
$76,942
3,187
94,335
$214,047
and trademarks on July 1, 2027 for €70 million (approximately
$75 million) (residual value) in accordance with an amendment
signed in 2021. Because the residual value of the intangible asset
exceeds its carrying value, the asset is not being amortized.
Amortization expense was $6.8 million, $5.9 million and $5.3
million in 2022, 2021 and 2020, respectively. Amortization ex-
pense is expected to approximate $7.0 million in 2023, $13.3
(9) Accrued Expenses
Accrued expenses consist of the following:
million in 2024, $12.3 million in 2025, $10.5 million in 2026 and
Year Ended December 31,
2027. The weighted average amortization period for trademarks,
Advertising liabilities
2022 2021
$31,215
$42,338
licenses and other intangible assets with finite lives are 18 years,
Salary (including bonus
14 years and 2 years, respectively, and 14 years on average.
and related taxes)
The Company reviews intangible assets with indefinite lives
Royalties
for impairment whenever events or changes in circumstances in-
Due vendors (not yet invoiced)
dicate that the carrying amount may not be recoverable. There
was an impairment charge for trademarks with indefinite useful
Retirement reserves
Refund (return) liability
lives of $6.8 million and $2.4 million in 2022 and 2021, respec-
Other
21,128
26,532
105,869
8,001
8,604
1,149
$213,621
19,993
19,154
45,707
10,234
5,128
5,246
$136,677
tively, relating to our Rochas fashion business and an impairment
charge for trademarks with indefinite useful lives of $0.9 million
in 2022 relating to our Intimate trademark. The fair values used
in our evaluations are estimated based upon discounted future
(10) Loans Payable – Banks
Loans payable – banks consist of the following:
cash flow projections using a weighted average cost of capital
The Company and its domestic subsidiaries have available a
of 9.80%, 7.47%, and 6.99% as of December 31, 2022, 2021 and
$20 million unsecured revolving line of credit due on demand,
2020, respectively. The cash flow projections are based upon a
which bears interest at the daily Secured Overnight Financing
number of assumptions, including, future sales levels and future
Rate (“SOFR”) plus 2% (the SOFR was 4.3% as of December 31,
cost of goods and operating expense levels, as well as economic
2022). The line of credit which has a maturity date of December
conditions, changes to our business model or changes in con-
15, 2023, is expected to be renewed on an annual basis. Bor-
sumer acceptance of our products which are more subjective in
rowings outstanding pursuant to lines of credit were zero as of
nature. The Company believes that the assumptions it has made
December 31, 2022 and 2021.
in projecting future cash flows for the evaluations described
The Company’s foreign subsidiaries have available credit
above are reasonable and currently no other impairment indica-
lines, including several bank overdraft facilities totaling approx-
tors exist for our indefinite-lived assets. However, if future ac-
imately $20 million. These credit lines bear interest at EURI-
tual results do not meet our expectations, the Company may be
BOR plus between 0.6% and 0.9% (EURIBOR was minus 0.576%
required to record an impairment charge, the amount of which
at December 31, 2022). Borrowings outstanding pursuant to
could be material to our results of operations.
these bank overdraft facilities were zero as of December 31,
The cost of trademarks, licenses and other intangible assets
2022 and 2021.
with finite lives is being amortized by the straight-line method
As there were no borrowings outstanding as of December
over the term of the respective license or the intangible assets
31, 2022 and 2021, there is no weighted average interest rate on
estimated useful life which range from three to twenty years.
short-term borrowings as of December 31, 2022 and 2021.
notes to consolidated financial statements
(in thousands, except share and per share data)
95
(11) Long-term Debt
Long-term debt consists of the following:
Year Ended December 31
2022
$53.3 million payable in 48 equal monthly installments of $1.1 million
beginning in December 2022, bearing interest at one-month Euribor plus 0.825% $52,061
$135.9 million payable in 120 equal monthly installments of $1.1 million
beginning in April 2021, bearing interest at one-month Euribor plus 0.75%
$104,758
$15.0 million payable in 14 equal annual installments of $1.1 million
beginning in January 2020 including interest imputed at 4.1% per annum
9,890
$17 million payable in 10 equal annual installments of $1.7 million
beginning in October 2021 including interest imputed at 2.0% per annum
Less current maturities
Total
13,332
$180,041
28,547
$151,494
2021
-
$124,375
10,569
13,859
$148,803
15,911
$132,892
In December 2022, to finance Interparfums SA’s acquisition of the Lacoste trademark, the Company entered into a $53.3 million
(€50 million) four-year loan agreement. The loan agreement bears interest at EURIBOR-1 month rates plus a margin of 0.825%. This
variable rate debt was swapped for variable interest rate debt with a maximum rate of 2% per annum. The swap is a hedged derivative
instrument and is therefore recorded at fair value and changes in fair value are reflected in other comprehensive income.
In April 2021, to finance the acquisition of Interparfums SA’s future corporate headquarters, the Company entered into a $128.0
million (€120 million) ten-year credit agreement. Approximately $85.3 million (€80.0 million) of the variable rate debt was swapped-
for variable interest rate debt with maximum rate of 2% per annum. The swap is a derivative instrument and is therefore recorded at
fair value and changes in fair value are reflected in the accompanying consolidated statements of income.
Maturities of long-term debt subsequent to December 31, 2022 are approximately $30.4 million in 2023 and $28.7 million per year
thereafter through 2033.
(12) Commitments
Leases
The Company leases its offices, warehouses and vehicles,
rate used to determine the operating lease liability was 2.6%.
Rental expense related to operating leases was $5.6 million,
$8.2 million, and $6.2 million for the years ended December
substantially all of which are classified as operating leases.
31, 2022, 2021 and 2020, respectively. Operating lease pay-
The Company currently has no material financing leases. The
ments included in operating cash flows totaled $4.9 million
Company determines if an arrangement is a lease at inception.
and noncash additions to operating lease assets totaled $0.3
Operating lease assets and obligations are recognized at the
million.
lease commencement date based on the present value of lease
Maturities of lease liabilities subsequent to December 31,
payments over the lease term.
2022 are as follows:
In determining lease asset value, the Company considers
fixed or variable payment terms, prepayments, incentives, and
(in thousands)
options to extend or terminate, depending on the lease. Re-
newal, termination or purchase options affect the lease term
used for determining lease asset value only if the option is
reasonably certain to be exercised. The Company generally
uses its incremental borrowing rate based on information
2023
2024
2025
2026
2027
available at the lease commencement date for the location in
Thereafter
which the lease is held in determining the present value of
$5,723
5,971
4,847
4,049
4,060
6,913
31,563
lease payments.
Less imputed interest (based on 2.6%
As of December 31, 2022, the weighted average remaining
lease term was 5.8 years and the weighted average discount
weighted-average discount rate)
$29,631
(1,932)
INTERPARFUMS, INC. 2022 ANNUAL REPORT
96
License Agreements
The Company is party to a number of license and other agreements
under the plans typically have a six-year term and vest over a
four to five-year period. The fair value of shares vested aggre-
for the use of trademarks and rights in connection with the man-
gated $1.3 million, $1.4 million and $1.7 million in 2022, 2021
ufacture and sale of its products expiring at various dates through
and 2020, respectively. Compensation cost, net of estimated
2033. In connection with certain of these license agreements, the
forfeitures, is recognized on a straight-line basis over the req-
Company is subject to minimum annual advertising commitments,
uisite service period for the entire award. Forfeitures are esti-
minimum annual royalties and other commitments as follows:
mated based on historic trends. It is generally the Company’s
2023
2024
2025
2026
2027
Thereafter
$217,852
224,201
218,047
139,348
132,502
986,434
$1,918,384
Future advertising commitments are estimated based on planned
policy to issue new shares upon exercise of stock options.
The following table sets forth information with respect to
nonvested options for 2022:
Weighted Average
Number Grant Date
of Shares Fair Value
Nonvested options
– beginning of year
209,510
Nonvested options granted 62,000
Nonvested options vested
$13.45
$20.36
future sales for the license terms that were in effect at December
31, 2022, without consideration for potential renewal periods. The
or forfeited (102,780) $12.93
Nonvested options
above figures do not reflect the fact that our distributors share our
– end of year 168,730
$16.31
advertising obligations. Royalty expense included in selling, general,
and administrative expenses, aggregated $87.0 million, $68.9 million
The effect of share-based payment expenses decreased in-
and $41.1 million, in 2022, 2021 and 2020, respectively, and repre-
come statement line items as follows:
sented 8.0%, 7.8% and 7.6% of net sales for the years ended Decem-
ber 31, 2022, 2021 and 2020, respectively.
Year Ended December 31,
2022
2021 2020
(13) Equity
Share-Based Payments
The Company maintains a stock option program for key em-
Income before
income taxes
Net Income attributable
$3,143
$2,850 $3,030
to Inter Parfums, Inc.
2,036
1,880 2,040
ployees, executives and directors. The plans, all of which have
Diluted earnings per share
been approved by shareholder vote, provide for the granting
attributable to
of both nonqualified and incentive options. Options granted
Inter Parfums, Inc.
0.06
0.06 0.06
The following table summarizes stock option activity and related information for the years ended December 31, 2022, 2021 and
2020:
Year Ended December 31, 2022
2021 2020
Weighted Average Weighted Average Weighted Average
Options Exercise Price
Options Exercise Price
Options Exercise Price
Shares under option-
beginning of year
Options granted
Options exercised
Options forfeited
524,900
62,000
(136,880)
(8,440)
Shares under option-
$57.58
97.84
43.86
67.65
713,210
9,000
(156,490)
(40,820)
$52.74
62.18
34.46
62.57
815,800
9,000
(95,570)
(16,020)
$49.89
69.11
28.99
58.38
end of year
441,580
$67.30
524,900
$57.58
713,210
$52.74
notes to consolidated financial statements
(in thousands, except share and per share data)
97
At December 31, 2022, options for 558,975 shares were available for future grant under the plans. The aggregate intrinsic value of
options outstanding is $13.0 million as of December 31, 2022 and unrecognized compensation cost related to stock options outstand-
ing aggregated $2.7 million, which will be recognized over the next five years.
The weighted average fair values of options granted by Inter Parfums, Inc. during 2022, 2021 and 2020 were $20.36, $11.35 and
$12.16 per share, respectively, on the date of grant using the Black-Scholes option pricing model to calculate the fair value.
The assumptions used in the Black-Scholes pricing model are set forth in the following table:
Year Ended December 31,
Weighted average expected stock-price volatility
Weighted average expected option life
Weighted average risk-free interest rate
Weighted average dividend yield
2022
26%
4.0 yrs
4.0%
2.4%
2021
25%
5.0 yrs
0.4%
1.6%
2020
25%
5.0 yrs
1.4%
2.5%
Expected volatility is estimated based on historic volatility of the Company’s common stock. The expected term of the option is
estimated based on historic data. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the grant of the
option and the dividend yield reflects the assumption that the dividend payout as authorized by the Board of Directors would maintain
its current payout ratio as a percentage of earnings.
Proceeds, tax benefits and intrinsic value related to stock options exercised were as follows:
Year Ended December 31,
Proceeds from stock options exercised
Tax benefits
Intrinsic value of stock options exercised
2022
$6,003
$800
$6,760
2021
$5,393
$1,300
$7,800
2020
$2,771
$400
$2,873
The following table summarizes additional stock option information as of December 31, 2022:
Options Outstanding
Weighted Average
Remaining
Exercise Price Options Outstanding Contractual Life Options Exercisable
$40.15 − $46.90 103,460
$62.18 − $69.11
$73.09
$97.84
Totals
139,900
136,220
62,000
441,580
0.96 years
2.04 years
3.00 years
5.85 years
2.62 years
101,860
97,210
73,780
−
272,850
As of December 31, 2022, the weighted average exercise price of options exercisable was $59.46 and the weighted average remain-
ing contractual life of options exercisable is 1.88 years. The aggregate intrinsic value of options exercisable at December 31, 2022 is
$10.1 million.
In December 2018, Interparfums SA approved a plan to grant an aggregate of 26,600 shares of its stock to employees with no
performance condition requirement, and an aggregate of 133,000 shares to officers and managers, subject to certain corporate per-
formance conditions. The corporate performance conditions were met and therefore in June 2022, 211,955 shares, adjusted for stock
splits, were distributed. The aggregate cost of the grant of approximately $4.8 million was recognized as compensation cost on a
straight-line basis over the requisite three-year service period.
In March 2022, Interparfums SA approved an additional plan to grant an aggregate of 88,400 shares to all Interparfums SA em-
ployees and corporate officers having more than six months of employment at grant date, subject to certain corporate performance
INTERPARFUMS, INC. 2022 ANNUAL REPORT
98
conditions. The shares, subject to adjustment for stock splits, will be distributed in June 2025 and will follow the same guidelines as
the December 2018 plan.
The fair value of the grant had been determined based on the quoted stock price of Interparfums SA shares as reported by the
Euronext on the date of grant. The estimated number of shares to be distributed of 85,062 has been determined taking into account
employee turnover. The aggregate cost of the grant of approximately $4.1 million will be recognized as compensation cost on a
straight-line basis over the requisite three and a quarter year service period.
Similar to the December 2018 plan, in order to avoid dilution of the Company’s ownership of Interparfums SA, all shares distrib-
uted or to be distributed pursuant to these plans will be pre-existing shares of Interparfums SA, purchased in the open market by
Interparfums SA. During the year ended December 31, 2022, the Company acquired 63,281 shares at an aggregate cost of $3.0 million.
All share purchases and issuances have been classified as equity transactions on the accompanying balance sheet.
Dividends
In October 2019, our Board of Directors authorized a 20% increase in the annual dividend to $1.32 per share on an annual basis. In
April 2020, as a result of the uncertainties raised by the COVID-19 pandemic, the Board of Directors authorized a temporary suspen-
sion of the annual cash dividend. In February 2021, the Board of Directors authorized a reinstatement of an annual dividend of $1.00,
payable quarterly. In February 2022, the Board of Directors authorized a 100% increase in the annual dividend to $2.00 per share and
in February 2023, the Board of Directors further increased the annual dividend to $2.50 per share. The next quarterly cash dividend
of $0.625 per share is payable on March 31, 2023 to shareholders of record on March 15, 2023.
(14) Net Income Attributable to Inter Parfums, Inc. Common Shareholders
Net income attributable to Inter Parfums, Inc. per common share (“basic EPS”) is computed by dividing net income attributable to
Inter Parfums, Inc. by the weighted average number of shares outstanding. Net income attributable to Inter Parfums, Inc. per share
assuming dilution (“diluted EPS”), is computed using the weighted average number of shares outstanding, plus the incremental shares
outstanding assuming the exercise of dilutive stock options using the treasury stock method.
The reconciliation between the numerators and denominators of the basic and diluted EPS computations is as follows:
Year Ended December 31,
Numerator for diluted earnings per share
Denominator:
Weighted average shares
Effect of dilutive securities: stock options
Denominator for diluted earnings per share
Earnings per share:
Net income attributable to Inter Parfums, Inc.
common shareholders:
Basic
Diluted
2022 2021 2020
$38,219
$87,411
$120,938
31,859,417
129,336
31,988,753
31,676,796
158,612
31,835,408
31,536,659
117,885
31,654,544
$1.21
$2.76
$3.80
$3.78 $2.75 $1.21
Not included in the above computations is the effect of anti-dilutive potential common shares, which consist of outstanding options
to purchase 38,000, 175,000, and 450,000 shares of common stock for 2022, 2021, and 2020, respectively.
notes to consolidated financial statements
(in thousands, except share and per share data)
99
(15) Segments and Geographical Areas
The Company manufactures and distributes one product line, fragrances and fragrance related products. The Company manages
its business in two segments, European based operations and United States based operations. The European assets are located, and
operations are primarily conducted, in France. Both European and United States operations primarily represent the sale of prestige
brand name fragrances.
Information on the Company’s operations by segments is as follows:
Year Ended December 31,
Net sales:
United States
Europe
Eliminations of intercompany sales
Net income attributable to Inter Parfums, Inc.:
United States
Europe
Eliminations
Depreciation and amortization expense
including impairment loss:
United States
Europe
Interest and investment income:
United States
Europe
Eliminations
Interest expense:
United States
Europe
Eliminations
Income tax expense:
United States
Europe
Eliminations
Total assets:
United States
Europe
Eliminations
2022
2021
2020
$342,644
744,075
(66)
$1,086,653
$216,559
663,290
(333)
$879,516
$43,745
77,193
−
$120,938
$6,355
16,184
$22,539
$66
5,769
(349)
$5,486
$1,100
2,848
(349)
$3,599
$6,920
36,262
−
$43,182
$29,359
57,869
183
$87,411
$3,835
8,863
$12,698
$3
3,526
(126)
$3,403
$636
2,315
(126)
$2,825
$5,336
35,607
49
$40,992
$278,090
1,052,004
$247,703
931,735
(34,074)
$1,308,542 $1,145,364
(21,552)
$117,489
422,947
(1,427)
$539,009
$7,942
30,241
36
$38,219
$3,354
5,713
$9,067
$24
2,971
(130)
$2,865
$604
1,496
(130)
$1,970
$1,590
17,782
9
$19,381
$141,316
758,812
(9,983)
$890,145
INTERPARFUMS, INC. 2022 ANNUAL REPORT
100
Segments and Geographical Areas continued
Year Ended December 31,
Additions to long-lived assets:
United States
Europe
Total long-lived assets:
United States
Europe
Deferred tax assets:
United States
Europe
Eliminations
2022
2021
2020
$2,318
31,438
$33,756
$61,539
423,999
$485,538
$2,906
8,253
-
$11,159
$2,711
138,563
$141,274
$63,094
334,033
$397,127
$870
7,066
-
$7,936
$1,004
11,259
$12,263
$40,656
217,766
$258,422
$886
7,106
49
$8,041
United States export sales were approximately $169.1 million, $126.2 million and $71.5 million in 2022, 2021 and 2020, respectively.
Consolidated net sales to customers by region are as follows:
Year Ended December 31,
North America
Europe
Asia
Middle East
Central and South America
Other
Consolidated net sales to customers in major countries are as follows:
Year Ended December 31,
United States
France
Russia
United Kingdom
2022
$431,900
333,400
152,700
87,800
69,900
11,000
$1,086,700
2022
$420,900
$44,800
$33,964
$37,900
2021
$354,100
271,600
128,000
61,000
56,400
8,400
$879,500
2021
$351,300
$44,000
$43,400
$38,500
2020
$193,500
180,200
79,700
46,800
32,500
6,300
$539,000
2020
$187,300
$37,600
$14,100
$24,600
notes to consolidated financial statements
(in thousands, except share and per share data)
101
(16) Income Taxes
The Company and its subsidiaries file income tax returns in the
The tax effects of temporary differences that give rise to sig-
nificant portions of the deferred tax assets and deferred tax
U.S. federal, and various states and foreign jurisdictions.
liabilities are as follows:
The Company assessed its uncertain tax positions and de-
termined that it has no material uncertain tax position at De-
December 31,
2022
2021
cember 31, 2022.
Net Deferred tax assets
The components of income before income taxes consist of
Foreign net operating loss
the following:
Year Ended December 31,
U.S. operations
Foreign operations
2021
2022
$34,742
$50,250
116,277
143,969
$194,219 $151,019
2020
$9,577
59,772
$69,349
carry-forwards
Inventory and accounts receivable
Profit sharing
Stock option compensation
Effect of inventory profit
elimination
Other
$554
3,880
2,871
716
9,342
266
$1,292
4,508
3,787
732
5,112
407
The provision for current and deferred income tax expense
Total gross deferred
(benefit) consists of the following:
Year Ended December 31,
2022
2021
2020
Current:
Federal
State and local
Foreign
Deferred:
Federal
State and local
Foreign
Total income
tax expense
$6,829
658
39,458
$46,945
$4,825
518
36,164
$41,507
$1,685
90
17,024
$18,799
(802)
(49)
(2,912)
(3,763)
4
11
(530)
(515)
(215)
44
753
582
tax assets, net
Valuation allowance
Net deferred tax assets
Deferred tax liabilities (long-term)
Building expenses
Trademarks and licenses
Unrealized gain on marketable
equity securities
Other
Total deferred tax liabilities
Net deferred tax assets
17,629
(554)
17,075
15,838
(3,582)
12,256
(1,356)
(2,160)
(1,082)
(2,551)
(1,745)
(655)
(5,916)
$11,159
(436)
(251)
(4,320)
$7,936
Valuation allowances have been provided for deferred tax
assets relating to foreign net operating loss carry-forwards as
$43,182
$40,992
$19,381
future profitable operations from certain foreign subsidiaries
INTERPARFUMS, INC. 2022 ANNUAL REPORT
102
might not be sufficient to realize the full amount of the de-
Differences between the United States federal statutory in-
ferred tax assets.
come tax rate and the effective income tax rate were as follows:
No other valuation allowances have been provided as manage-
ment believes that it is more likely than not that the asset will be
Year Ended December 31,
realized in the reduction of future taxable income.
Statutory rates
2022
21.0%
2021
21.0%
2020
21.0%
The Company estimated of the effect of global intangible low-
State and local taxes,
taxed income (“GILTI”) and has determined that it has no tax
net of Federal benefit
0.2
0.3
0.2
liability related to GILTI as of December 31, 2022, 2021 and 2020.
Windfall benefit from
The Company also estimated the effect of foreign derived intan-
gible income (“FDII”) and recorded a tax benefit of approximate-
exercise of stock options (0.4)
Benefit of Foreign Derived
(0.9)
(0.6)
ly $1.5 million, $0.9 million and $0.3 million as of December 31,
Intangible Income
(0.8)
(0.6)
(0.4)
2022, 2021 and 2020, respectively.
Effect of foreign taxes greater
The Company is no longer subject to U.S. federal, state,
than U.S. statutory rates
and local income tax examinations by tax authorities for years
Other
before 2019.
Effective rates
3.1
(0.9)
22.2%
7.4
(0.1)
27.1%
7.5
0.2
27.9%
(17) Accumulated Other Comprehensive Income Loss
The components of accumulated other comprehensive loss consist of the following:
Year Ended December 31,
Net derivative instruments, beginning of year
Net derivative instrument gain (loss), net of tax
Net derivative instruments end of year
Cumulative translation adjustments, beginning of year
Translation adjustments
Cumulative translation adjustments, end of year
Accumulated other comprehensive loss
2022 2021
$-
$(992)
(992)
2,701
(992)
1,709
(5,997)
(37,440)
(31,443)
(20,325)
(37,440)
(57,765)
$(38,432)
$(56,056)
2020
$52
(52)
-
(39,905)
33,908
(5,997)
$(5,997)
(18) Net Income Attributable to Inter Parfums, Inc. and Transfers from the Noncontrolling Interest
Year Ended December 31,
Net income attributable to Inter Parfums, Inc.
Decrease in Inter Parfums, Inc.’s additional paid-in capital
for subsidiary share transactions
Change from net income attributable to Inter Parfums, Inc.
2022
$120,938
2021
$87,411
2020
$38,219
-
-
-
and transfers from noncontrolling interest
$120,9381
$87,411
$38,219
(19) Reconciliation of Cash and Cash Equivalents to the Statement of Cash Flows
The following table summarizes cash and cash equivalents as of December 31, 2021:
Year Ended December 31,
Cash and cash equivalents per balance sheet
Cash held in escrow included in other assets (see note 3)
Cash and cash equivalents per statement of cash flows
2021
$159,613
8,774
$168,387
corporate and market information
103
the market for our common stock
Our Company’s common stock, $.001 par value per share, is traded
of the annual cash dividend. In February 2021, the Board of Directors
authorized a reinstatement of an annual dividend of $1.00, payable
on The Nasdaq Global Select Market under the symbol “IPAR”. The
quarterly. In February 2022, the Board of Directors authorized a
following table sets forth in dollars, the range of high and low closing
100% increase in the annual dividend to $2.00 per share. Just recently,
prices for the past two fiscal years for our common stock.
in February 2023 the Board of Directors further increased the an-
High Closing Low Closing
Fiscal 2022 Price Price
Fourth Quarter
74.26
70.02
64.74
80.22
99.35
86.78
89.45
106.82
Second Quarter
Third Quarter
First Quarter
High Closing Low Closing
Fiscal 2021 Price Price
75.89
Fourth Quarter
67.55
69.96
59.17
106.90
79.42
77.95
76.75
Second Quarter
Third Quarter
First Quarter
nual dividend to $2.50 per share. The next quarterly cash dividend
of $0.625 per share is payable on March 31, 2023 to shareholders of
record on March 15, 2023.
Form 10-K
A copy of the company’s 2022 Annual Report on Form 10-K,
as filed with the Securities and Exchange Commission, is
available without charge to shareholders upon request (ex-
cept for exhibits) To: Inter Parfums, Inc. 551 Fifth Avenue
New York, NY 10176 Attention: Corporate Secretary.
Corporate Performance Graph
The following graph compares the performance for the periods in-
dicated in the graph of our common stock with the performance of
the Nasdaq Market Index and the average performance of a group
As of February 8, 2023, the number of record holders, which
of the Company’s peer corporations consisting of: CCA Industries,
include brokers and broker nominees, etc., of our common
Inc., Colgate-Palmolive Co., Estée Lauder Companies, Inc., Inter
stock was 28. We believe there are approximately 32,436 bene-
Parfums, Inc., Kimberly Clark Corp., Natural Health Trends
ficial owners of our common stock.
Corp., Procter & Gamble Co., Stephan Co., Summer Infant, Inc.
Dividends
In April 2020, as a result of the uncertainties raised by the COVID-19
and United Guardian, Inc. The graph assumes that the value of the
investment in our common stock and each index was $100 at the
beginning of the period indicated in the graph, and that all dividends
pandemic, the Board of Directors authorized a temporary suspension
were reinvested.
COMPARISON 0F 5 YEAR CUMULATIVE TOTAL RETURN*
Among Inter Parfums, Inc., The NASDAQ Composite Index, and a Peer Group
Inter Parfums, Inc.
NASDAQ Composite
Peer Group
12/21
259.11
235.15
192.02
12/22
239.94
158.65
171.79
*$100 invested on 12/31/17 in stock or index, including reinvestment of dividends. Fiscal year ending December 31.
Below is the list of the data points for each year that corresponds to the lines on the above graph.
12/17
100.00
100.00
100.00
Inter Parfums, Inc.
NASDAQ Composite
Peer Group
12/19
172.84
132.81
136.46
12/18
153.33
97.16
99.33
12/20
144.75
192.47
159.01
INTERPARFUMS, INC. 2022 ANNUAL REPORT
104
directors and executive officers
DIRECTORS AND EXECUTIVE OFFICERS
Directors
Jean Madar
Chief Executive Officer,
and Chairman of the Board of Directors
Inter Parfums, Inc.
Philippe Benacin
President, and Vice Chairman of the
Board of Directors, Inter Parfums, Inc.
Chief Executive Officer,
Interparfums SA
Michel Atwood
Chief Financial Officer
Inter Parfums, Inc.
Philippe Santi
Executive Vice President
Chief Financial Officer
Interparfums SA
Francois Heilbronn
Managing Partner M.M. Friedrich,
Heilbronn & Fiszer
Robert Bensoussan-Torres
Co-founder of Sirius Equity,
a retail and branded luxury goods
investment company
Michel Dyens
Chairman, and Chief Executive Officer,
Michel Dyens & Co.
Véronique Gabai-Pinsky
President of Startup Specialty
Fragrance Company and Former President,
Vera Wang Group
Gilbert Harrison
Chairman, Harrison Group, Inc.
Founder and Chairman Emeritus
Financo LLC
Executive Officers
Jean Madar
Chief Executive Officer,
and Chairman of the Board of Directors
Inter Parfums, Inc.
Philippe Benacin
President, and Vice Chairman of the
Board of Directors, Inter Parfums, Inc.
Chief Executive Officer,
Interparfums SA
Michel Atwood
Chief Financial Officer
Inter Parfums, Inc.
Patrick Choël
Business Consultant and Former
Philippe Santi
Executive Vice President
President and Chief Executive Officer
Chief Financial Officer
Parfums Christian Dior
and the LVMH Perfume and
Cosmetics Division
Interparfums SA
Frédéric Garcia-Pelayo
Executive Vice President
Chief International Officer
Interparfums SA
Corporate Information
Inter Parfums, Inc.
551 Fifth Avenue
New York, NY 10176
Tel. (212) 983-2640
www.interparfumsinc.com
European Operations
Interparfums SA
10 rue de Solferino
75007 Paris, France
Tel. (1) 53-77-00-00
Interparfums Italia, Srl
Piazza della Repubblica, 6
50123 Firenze, Italy
Auditors
Mazars USA, LLP
135 West 50th Street
New York, NY 10020
Transfer Agent
American Stock Transfer
and Trust Company
6201 15th Avenue
Brooklyn, NY 11219