Wall Street smells trouble in the fragrance business.
Shares of perfume makers tumbled Thursday, after Elizabeth Arden Inc. RDEN +0.30% —the producer of fragrances including Justin Bieber's "Girlfriend," Taylor Swift's "Wonderstruck Enchanted" and Nicki Minaj's "Pink Friday"—said orders from one of its biggest customers, a major U.S. mass-market retailer, had been cut sharply in recent months.
Executives at the company didn't name the retailer, but Wal-Mart Stores Inc. WMT -0.45% is its biggest customer, according to Elizabeth Arden securities filings, accounting for 13% of its $1.24 billion sales in the year to June 2012 and about a fifth of its sales in North America.
The cutback in so-called replenishment orders, Elizabeth Arden said, effectively reduced the retailer's inventory on hand "with orders significantly below their pace of their retail sales."
Due to that sharp drop in orders, as well as pockets of weakness for its business in Europe, Elizabeth Arden posted a $5 million loss for the quarter ended June 30, compared with a profit of $3.6 million a year ago. Its overall sales in the year to June 2013 edged up 2% to $1.34 billion.
Shares of Elizabeth Arden, which also sells cosmetics and perfumes under its namesake brand, were down nearly 25% at their low Thursday before rebounding to $33.56, off 17% on the day. Shares of another fragrance maker, Inter Parfums Inc., IPAR -5.10% fell nearly 14% before climbing back to $31, down more than 5% on the day.
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