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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
( MARK ONE )
/X/ Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 1996.
OR
/ / Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ________to _______.
Commission File No. 0-16469
JEAN PHILIPPE FRAGRANCES, INC.
( Exact name of registrant as specified in its charter )
Delaware 13-3275609
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
551 Fifth Avenue, New York, New York 10176
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 983-2640.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days: Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
At November 12, 1996, there were 9,871,981 shares of common stock, par value
$.001 per share, outstanding.
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Cutex lip color product returns have not affected reported sales in 1996 as the
estimated reserve, of approximately $1.5 million accrued for in 1995, appears
adequate. As of September 30, 1996, the reserve had been fully utilized, but
management does not believe there to be remaining any material obligations
relating to lip color products.
The Aziza hypo-allergenic eye cosmetic line, which made its debut in the latter
part of the first quarter of 1996, represented just over 3% of sales for the
nine months ended September 30, 1996. Aziza continues to enjoy a very strong
sell through at the retail level. However, the sell in, to mass market
merchandisers and drug store chains, continues to be slow because competition
for retail space in the eye care category remains very intense. Sales of the
Cutex product lines were down approximately 23%, which is the result of
decreased promotional activity and the discontinuance of the Cutex Color Splash
lip line.
Sales generated by the Company's French subsidiaries increased 3%; at
comparable foreign currency exchange rates, sales by the Company's French
subsidiaries increased 7%. Although the Company's French operations continue to
endure a very competitive marketplace, new product introductions are underway
to help fuel future growth. The sales growth of the French operations was
achieved despite the sale of the Bal Versaille trademarks in March of 1996.
Gross profit margin for 1996 was 45% of sales as compared to 49% in 1995. The
lower gross margin is the result of the decline in high margin Cutex sales
along with the decline in higher margin fragrance promotions. The decline is
also the result of the absorption of returns of Romantic Illusion products and
the cost to refurbish such products for eventual resale. In addition, the
Company continues to convert discontinued and returned merchandise into cash,
via closeout sales, at prices below normal margins. The Company is in process
of clearing its inventory of returns which resulted from the discontinuance of
the Cutex Color Splash lip line.
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