Management was very, very guarded about profitability for the third quarter. All they would predict is that sales will be up over last year in the quarter, the company will be profitable for the fiscal year and that the last two quarters will be cash flow positive.
Katz alluded to advertising expenses associated with new brands in the third quarter. It's hard to imagine combined A&P expenses will make it possible for PARL to be very profitable at all in the third quarter. Sales will have to sky-rocket over the next six months for PARL to make $.20 per share this fiscal year, it seems to me.
The 2011 fiscal year might be more of the same with QL, ME and JN off-setting the loss in G? sales but with the two new Iconic celebrities costing millions in A&P expenses. Unless JS, QL and ME do exceedingly well internationally and/or in the mass markets in FY 2011 it may not be until FY 2012 that PARL earns $.20 per share or more.
On the other hand, it is hard to imagine PARL putting their shareholders through events like those experienced over the past two years. If they can roll out celebrities/fashion brands over many years and translate initial department store sales into mass distribution revenues, PARL might one day (three to five years hence) earn ten percent pre-tax on its sales. I have been hoping for more sooner for some time but now doubt seriously that it will happen any time in the realtively near future.
PARL's stock price could double or more in the next twelve months. It could also languish at current levels for several more quarters. Signing celebrity #4 could help but Katz made clear that that is in Iconic's hands--as it apparently always has been--and not those of PARL. For the first time in my memory, Katz said today that PARL is just a third party in the negotiations with celebrity #4. Apparently, the warrant deal was agreed to without that important fourth signee being "in the bag" per Iconic's original proposal to PARL.