INTER PARFUMS INC [IPAR] Filings

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

FORM 10-K

(Mark one)

☒ Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2023

or 

 pro 

☐ 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

Inter Parfums, Inc.

(Exact name of registrant as specified in its charter)

IPAR

Registrant’s telephone number, including area code: 212.983.2640

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

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 ☒ No ☐ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $2,437,984,859 of voting equity and $-0- of non-voting equity. 

Indicate the number of shares outstanding of the registrant’s $.001 par value common stock as of the close of business on the latest practicable date February 26, 2024: 32,021,700.

Documents Incorporated by Reference: None.

TABLE OF CONTENTS

FORWARD LOOKING STATEMENTS

This report includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, and if incorporated by reference into a registration statement under the Securities Act of 1933, as amended, within the meaning of Section 27A of such act. When used in this report, the words “anticipate,” “believe,” “estimate,” “will,” “should,” “could,” “may,” “intend,” “expect,” “plan,” “predict,” “potential,” or “continue” or similar expressions identify certain forward-looking statements. Although we believe that our plans, intentions and expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved.

Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained in this report. Important factors that could cause actual results to differ materially from our forward-looking statements are set forth in this report, including under the heading “Risk Factors”. Such factors include: The effects of our inability to successfully integrate or manage any future acquisitions; continuation and renewal of existing licenses and similar agreements; potential inability to obtain new licensing, arrangements or agreements for additional brands; potential reduction in sales of our fragrance products due to reduced consumer confidence as the result of a prolonged economic downturn, recession or terrorist attack in the United States, Europe or any of the other countries in which we do significant business; inflation; uncertainties and deterioration in global credit markets could negatively impact suppliers, customers and consumers; re-emergence of COVID-19 and related governmental mandates, or outbreak of other disease, epidemic or pandemic, or similar public health threat; inability to protect our intellectual property rights; impact of social impact and sustainability matters; potential liability for infringement of third party brand names; product liability claims; effectiveness of our sales and marketing efforts and product acceptance by consumers; our dependence upon third party manufacturers and distributors; dependence upon existing management; competition in the fragrance industry; risks related to our foreign operations, currency fluctuation and international tariff and trade barriers; compliance with governmental regulation; changing political conditions could adversely impact our business and financial results; potential hacking and outages of our global information systems; seasonal variability of our business; our ability to operate our business without infringing, and misappropriating or otherwise violating the intellectual property rights of other parties.

These factors are not intended to represent a complete list of the general or specific factors that may affect us. It should be recognized that other factors, including general economic factors and business strategies, may be significant, and the factors set forth herein may affect us to a greater extent than indicated. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth in this report. Except as may be required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

PART I

Item 1. Business

Introduction

Founded in 1982, we operate in the fragrance business, and manufacture, market and distribute a wide array of prestige fragrances, and fragrance related products. Our worldwide headquarters and the office of our wholly owned United States subsidiary, Interparfums, USA LLC, are located at 551 Fifth Avenue, New York, New York 10176, and our telephone number is 212.983.2640. We also have wholly owned subsidiaries as follows:

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 Paris, France. Our telephone number in Paris is 331.5377.0000. Interparfums SA also has wholly owned subsidiaries as follows:

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.

Two Publicly Held Companies

Our common stock is listed on The Nasdaq Global Select 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 reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. We maintain our internet website at www.interparfumsinc.com, which is linked to the SEC internet site. You can obtain through our website, 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.

The following information is qualified in its entirety by and should be read together with the more detailed information and audited financial statements, including the related notes, contained or incorporated by reference in this report.

General Business Development

We operate in the fragrance business, and manufacture, market and distribute a wide array of prestige fragrances and fragrance related products. We manage our business in two based operations, our European based operations and our United States based operations. Certain prestige fragrance products are produced and marketed by our European based operations through 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.

Our business is not capital intensive, and it is important to 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 directly at our third-party fillers or received at one of our distribution centers and then, based upon production needs, the components are sent to one of several third party fillers, which manufacture the finished product for us and then deliver them to one of our distribution centers.

Our fragrance products focus on prestige brands, each with a devoted following. By concentrating in markets where the 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 limited edition fragrances are introduced as well.

The creation and marketing of each product family is intimately linked with the brand’s name, its past and present positioning, customer base and, more generally, the prevailing market atmosphere. Accordingly, we generally study the market for each proposed family of fragrance products for almost a full year before we introduce any new product into the market. This study is intended to define the general position of the fragrance family and more particularly its scent, bottle, packaging and appeal to the buyer. In our opinion, the unity of these four elements of the marketing mix makes for a successful product.

As with any business, many aspects of our operations are subject 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 fast-growing markets and channels to grow market share. We discuss in greater detail risk factors relating to our business in Item 1A of this Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and the reports that we file from time to time with the SEC.

European Based Operations

We produce and distribute our fragrance products primarily under license agreements with brand owners, and fragrance product sales through our European based operations represented approximately 65% of net sales for the year ended December 31, 2023. We have built a portfolio of prestige brands, which include Boucheron, Coach, Jimmy Choo, Karl Lagerfeld, Kate Spade, Lacoste, Lanvin, Moncler, Montblanc, Rochas, and Van Cleef & Arpels, whose products are distributed in over 120 countries around the world. The Lacoste fragrance license became effective on January 1, 2024.

United States Based Operations

Prestige brand fragrance products are also produced and marketed through our United States based operations and represented approximately 35% of net sales for the year ended December 31, 2023. These fragrance products are sold under trademarks owned by us or pursuant to license or other agreements with the owners of brands, which include Abercrombie & Fitch, Anna Sui, Donna Karan, DKNY, Ferragamo, Graff, GUESS, Hollister, MCM, Oscar de la Renta, Roberto Cavalli, and Ungaro.

Recent Developments

Abercrombie & Fitch

In 2023, we announced our agreement to distribute Abercrombie & Fitch’s number one men's fragrance, Fierce, in selected markets. The first phase of the agreement, which became effective on September 1, 2023, covers Fierce distribution in certain major markets, including Europe, Mexico and Australia. The second phase, which activated in February 2024, covers distribution in additional markets in Western Europe and Latin America, and may include other flankers of the Fierce family of products.

Roberto Cavalli

We entered into an exclusive worldwide fragrance license for the Roberto Cavalli brand, for 6.5 years, effective July 6, 2023. Our Roberto Cavalli fragrance license is held and operated by our Italian subsidiary, Interparfums Italia, Srl, in keeping with the Company’s strategy to develop an Italian brand hub, and is managed out of Paris, France. The first seven months of the license have been focused on producing finished goods, and we actively started distributing these products with key customers in February 2024. Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry.

 Lacoste

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 distribution 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 became effective in January 2024 and will last for 15 years.

Dunhill

The Dunhill fragrance license expired on September 30, 2023 and was not renewed. The Company has now entered the twelve-month sell-off period during which it will maintain the right to sell-off remaining Dunhill fragrance inventory, which is customary in the fragrance industry. All usable components have been converted to finished goods, and any remaining components will be destroyed.

Salvatore Ferragamo

In October 2021, we closed on a transaction agreement with Salvatore Ferragamo S.p.A., whereby an exclusive and worldwide license was granted for the production and distribution of Ferragamo brand perfumes. Our rights under this license are subject to certain minimum advertising expenditures and 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.

With respect to the management and coordination of activities related to the license agreement, the Company operates through a wholly owned Italian subsidiary based in Florence, that was acquired from Salvatore Ferragamo on October 1, 2021. The acquisition together with the license agreement was accounted for as an asset acquisition.

Emanuel Ungaro

In October 2021, we also entered into a 10-year exclusive global licensing agreement with a 5-year optional term subject to certain conditions, with Emanuel Ungaro Italia S.r.l, for the creation, development and distribution of fragrances and fragrance-related products under the Emanuel Ungaro brand. Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry.

Donna Karan and DKNY

In September 2021, we entered into a long-term global licensing agreement for the creation, development and distribution of fragrances and fragrance-related products under the Donna Karan and DKNY brands. Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry. With this agreement, we have gained several well-established and valuable fragrance franchises, most notably Donna Karan Cashmere Mist and DKNY Be Delicious, as well as a significant loyal consumer base around the world. In connection with the grant of license, we issued 65,342 shares of Inter Parfums, Inc. common stock valued at $5.0 million 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

As a result of operational challenges faced by the Rochas Fashion business we took a $2.4 million impairment charge on our Rochas fashion trademark in the first quarter of 2021. In the fourth quarter of 2022, we again took a $6.8 million impairment charge on the Rochas fashion trademark after an independent expert concluded that the valuation of the trademark was $11.3 million. In 2023, the Rochas teams underwent a strategic shift to take over their own brand operations, exiting contracts with manufacturers and distributors to make this new structure operational beginning in 2024. An independent expert concluded that the valuation based on this new business model was consistent with prior valuations and no additional impairments were needed.

Fragrance Products

General

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 whereby we produce and distribute our prestige fragrance products under license agreements with brand owners. Under license agreements, we obtain the right to use the brand name, create 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 license agreements are also generally subject to certain minimum sales requirements and advertising expenditures as are customary in our industry.

As a percentage of net sales, product sales for the Company’s largest brands represented 73% of sales in 2023 up from 71% in 2022 with a split by brand as follows:

In 2023, Macys, our top retail customer, accounted for approximately 12% of net sales. No one customer represented 10% or more of net sales in 2022 and 2021.

Our licenses expire on the following dates:

In connection with the acquisition of the Lanvin brand names and trademarks for our class of trade, we granted the seller the right to repurchase the brand names and trademarks on July 1, 2027 for €70 million (approximately $77 million) in accordance with an amendment signed in 2021. In connection with such amendment, we also granted a license to the seller to develop and sell cosmetics other than fragrances.

Fragrance Portfolio 

Abercrombie & Fitch— 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 retail 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.

In 2023, we announced our agreement to distribute Abercrombie & Fitch’s number one men's fragrance, Fierce, in selected markets. The first phase of the agreement, which became effective on September 1, 2023, covers Fierce distribution in certain major markets, including Europe, Mexico and Australia. The second phase, which activated in February 2024, covers distribution in additional markets in Western Europe and Latin America, and may include other flankers of the Fierce family of products.

Anna Sui—In 2011, we entered into an exclusive worldwide fragrance license to create, produce and distribute fragrances and fragrance related products under the Anna Sui brand. The Anna Sui brand is mostly popular in 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, Sky, and Sundae, a new three fragrance collection.

Boucheron— 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 embodied very high-end creation, luxury and French know-how. The mysterious and seductive collection of Boucheron fragrances unquestionably continues this prestigious line of creations.

Boucheron’s legacy scents, Femme and Homme, and the legendary Jaipur perfume form the foundation of brand sales. Our team has enriched the portfolio with Quatre for men and women, a new men’s fragrance, Singulier, along with several special editions, a growing collection of unique scents aptly named, La Collection, and Serpent Bohème. Boucheron operates through several boutiques worldwide as well as an e-commerce site.

Coach— In 2015, we entered into an exclusive 11-year worldwide license to create, produce and distribute new men’s and women’s fragrances 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 craftsmanship. Now the luxury brand that best embodies New York’s casual elegance, Coach also offers collections of ready-to-wear, lifestyle accessories and fragrances. Its contemporary approach to luxury combines authenticity and innovation, exported worldwide 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, Coach Wild Rose, and Coach Open Road, a new fragrance for men. In 2023, we continued to enrich the Coach fragrance lines with the roll-out of a number of flankers. Coach is part of the Tapestry house of brands.

Donna Karan/DKNY— In September 2021, we entered into a long-term global licensing agreement for the creation, development and distribution of fragrances and fragrance-related products under the Donna Karan and DKNY brands, which took effect on July 1, 2022.

The Donna Karan and DKNY brands, which draw from the energy and attitude of New York City, are powerhouses in fashion and fragrance. These global lifestyle brands have been excellent additions to our portfolio. With this agreement, we have gained several well-established and valuable fragrance franchises.

The most notable fragrances for the fashion house duo include Donna Karan Cashmere Mist and DKNY Be Delicious. Upon joining our portfolio in July 2022, these brands now rank among our largest. In 2023, we enriched DKNY with the newest extension, Be Delicious Orchard St. and plan to launch new blockbuster fragrances under these brands in 2024. Donna Karan and DKNY are part of the G-III house of brands.

Dunhill— The Dunhill fragrance license expired on September 30, 2023, and was not renewed. After the expiration of this license, the Company has a twelve-month period to sell-off its remaining Dunhill fragrance inventory, which is customary in the fragrance industry. All usable components have been converted to finished goods, and any remaining components will be destroyed. 

Emanuel Ungaro— 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 detail. Season after season, Emanuel Ungaro dared to be different, combining unexpected yet sensual clashes of bright colors and prints with beautiful draping.

Ungaro fragrances uphold the same values of audacity and elegance, and the brand is best known internationally, and such presence will remain our sales focus as we continue to produce and distribute the brand’s legacy scents, notably Diva. In 2023, we unveiled an extension, Diva Rouge, and plan to launch a new fragrance in 2024.

Graff— In 2018, we entered into an exclusive, 8-year worldwide license agreement with London-based Graff for the creation, development and distribution of fragrances under the Graff brand. The 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, debuted exclusively at Harrods, has now extended to only the most exclusive, limited, ultra-high end retail outlets. New members of the collection have been regularly added since the Lesedi La Rona launch.

GUESS— 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 collection of contemporary apparel, denim, handbags, watches, footwear 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 United States based operations, with legacy fragrances dominating the sales mix.

Since joining our portfolio, we have introduced several new blockbuster scents, including Bella Vita, Effect, and Uomo, the newest men’s fragrance for GUESS, which came to market in 2022 with a flanker debuting in 2023. In 2024, we plan to launch a new blockbuster scent for women, in addition to the roll-out of an innovative extension.

Hollister— In 2014, we entered into a worldwide license to create, produce and distribute new fragrances and fragrance related products under the Hollister brand name. We distribute these fragrances in specialty stores, department stores and duty-free shops.

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, Hollister’s clothes are designed to be lived in and made your own, for wherever life takes you.

 In 2016, we launched our first men’s and women’s fragrance duo, Wave, which led to several extensions, as did subsequent fragrance families Festival and Canyon Escape. In 2023, we launched a new blockbuster scent, Feelin’ Good, with plans to enrich the line with a new flanker in 2024.

Jimmy Choo— 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 offering, alongside handbags, small leather goods, scarves, eyewear, belts, fragrances 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 worldwide. Jimmy Choo is part of the Capri Holdings Limited luxury fashion group. On August 10, 2023, Tapestry, Inc. entered into a definitive agreement under which Tapestry will acquire Capri Holdings, with the final closing date expected to come in 2024. There is no current information that would indicate this purchase would have any material impact on the Company’s operations.

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, Rose Passion, was unveiled in 2023. Established fragrance collections, including Jimmy Choo, Jimmy Choo Man, and Jimmy Choo I Want Choo continue to see international success.

Karl Lagerfeld— 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 fragrances 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 Lagerfeld Portfolio represents a modern approach to distribution, an innovative digital strategy and a global 360 degree vision that reflect 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 collection, Les Parfums Matières, and more recently, Karl Cities, a new collection featuring entries for New York, Paris, Hamburg, Tokyo and Vienna was unveiled. A new fragrance due is unveiling in 2024.

Kate Spade— In 2019, we entered into an exclusive, 11-year worldwide license agreement with Kate Spade to create, produce and distribute 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.

Since its launch in 1993 with a collection of six essential handbags, Kate Spade has always stood for optimistic femininity. Today, the brand is a global life and style house with handbags, ready-to-wear, jewelry, footwear, gifts, home décor and more. Polished ease, thoughtful details and a modern, sophisticated 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.

Our first original scent, Kate Spade New York, debuted in January 2021. We have continued to enrich the collection with flankers, including Kate Spade Sparkle, and more recently, Kate Spade Cherie.

Lacoste – In December 2022, we closed a transaction agreement with Lacoste, whereby an exclusive and worldwide license was granted for the production and distribution of Lacoste brand perfumes and cosmetics.

At the juncture of sport and fashion, Lacoste frees us up, creates movement in our lives, and liberates our self-expression. In every collection, in every line, Lacoste’s timeless elegance is captured through a combination of the creative and the classic. Since its beginnings, the crocodile’s aura has grown more powerful with every generation who has worn it, becoming a rallying sign beyond style. Passed from country to country, from one generation to the next, from one friend to another, Lacoste pieces become imbued with an emotional connection that raises them to the status of icons.

The Lacoste license took into effect in January 2024, and we have been using the time since the license was signed to develop go-forward strategies, curate the collection, and produce entirely new fresh goods.

Lanvin— 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 fragrances in the 1920s.

Lanvin fragrances occupy an important position in the selective 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, A Girl in Capri, and Les Fleurs de Lanvin.

MCM— In 2019, we entered into an exclusive, 10-year worldwide license agreement with German luxury fashion house MCM for the creation, 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 license 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, including the use of cutting-edge techniques. Today, through its association with music, art, travel and technology, MCM embodies 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, empowered 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 success. In 2023, we debuted our first ever men’s scent, MCM Onyx, and have plans to enrich the fragrance line with extensions in 2024.

Moncler— In June 2020, we entered into an exclusive, 5-year worldwide license 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 headquartered 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 had a revolutionary LED design, and the flask-shaped bottles of Moncler Pour Femme and Moncler Pour Homme forged 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 bottle. In March 2023, we launched Les Sommets Moncler and Home collections, exploring a rich, woody olfactory palette.

Montblanc—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 to December 31, 2025 and in 2023, we extended the agreement for a second time through December 31, 2030.

Montblanc has achieved a world-renowned position in the luxury-based operations and has become a purveyor of exclusive products, which reflect today’s exacting demands for timeless design, tradition and master craftsmanship. Through its leadership positions in writing instruments, watches and leather goods, promising 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, Legend Spirit, and Legend Red. 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 numerous flankers including Ultra Blue and Platinum. A four-scent premium collection will debut in 2024.

Oscar de la Renta— In 2013, we entered into an exclusive worldwide license to create, produce and distribute fragrances and fragrance related 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 agreement through December 31, 2036.

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, children’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.

After taking over distribution 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, Bella Essence, Bella Bouquet, and Bella Night. In 2021, we debuted an entirely new fragrance pillar, Alibi, which welcomed sister scents, Alibi Eau de Toilette, and more recently, Alibi Eau Sensuelle. In 2024, we will unveil the Alibi ‘Pop’ three-scent collection.

Roberto Cavalli— In July 2023, we closed a transaction agreement with Roberto Cavalli, whereby an exclusive and worldwide license was granted for the production and distribution of Roberto Cavalli brand perfumes and fragrance related products. The license became effective in July 2023 and will last for 6.5 years.

Roberto Cavalli scents are sophisticated, luxurious, and flamboyant, while Just Cavalli fragrances are designed to appeal to contemporary, urban customers that are young or young at heart. In addition to the two core lines, the house launched the Roberto Cavalli Gold Collection, an ultra-premium fragrance collection, in 2014. Cavalli fragrances are distributed globally, with a concentration in Europe, the Middle East and the United States. Additionally, we partnered with one of the top luxury retailers and distributors in the Middle East, a concentrated market for the brand, to further expand the brand.

We began shipping new freshly produced goods in February 2024, and plan to launch our first signature flanker in the summer of 2024, which is planned to be followed by a Just Cavalli duo and a new collection of hair and body mists.

Rochas— 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.

With Rochas, nature is synonymous with French-style gardens, eternal springs, freshness, and innocence. Never dry, these gardens are constantly irrigated by the water of dreams and lit by the sun of the imagination. Rochas’ birds and flowers are regularly revisited in the ready-to-wear creations and perfumes. They are part of the natural lifeblood of Rochas, a constant presence thronging with a multitude of colors and a very Parisian spirit.

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 legacy scents Eau de Rochas and Mademoiselle Rochas, plus others, and in 2018 we launched our first new men’s line, Rochas Moustache. Byzance debuted in early 2020 and Rochas Girl in 2021. The first flanker for both came to market in 2022 as well as one for L’Homme Rochas. In 2023, we rolled-out pillar extensions Eau de Rochas Citron Soleil and Rochas Girl Life.

Ferragamo— In October 2021, we closed on a transaction agreement with Salvatore Ferragamo S.p.A., whereby an exclusive and worldwide 10-year license was granted for the production and distribution 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 represents 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 collection 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 multifaceted 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 fragrances for men, Signoria, a collection of fragrances for women, the Tuscan Creations series, the Amo series and the Uomo series. In 2023, we rolled out new flankers for the Signoria collection, Liberia, a Storie di Seta duo, Cieli & Foreste, and a four-scent collection for Ferragamo. New flankers are in the works for 2024.

Van Cleef & Arpels— 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.

 Since its founding in 1906, Van Cleef & Arpels has often turned to nature as an inexhaustible source of inspiration. Enthralled by the constant metamorphoses of flora and fauna, the Maison creates pieces that echo the blooming of flowers and the lushness of gardens. Over the decades, the excellence and creativity of the High Jewelry Maison established its reputation across the world.

Van Cleef & Arpels fragrances in current distribution include: First and Collection Extraordinaire. Sales of the Collection Extraordinaire line have experienced continued growth since its debut. We continue to introduce new additions to the Van Cleef & Arpels Collection Extraordinaire assortment annually, including Oud Blanc, Rêve de Matiere, and Patchouli Blanc, with further additions planned. Founded in 1896, Van Cleef & Arpels is a French luxury jewelry company owned by Richemont Holdings Limited.

Business Strategy

Focus on prestige beauty brands. Prestige beauty brands are expected to contribute significantly to our growth. We focus on developing and launching quality fragrances utilizing internationally renowned brand names. By identifying and concentrating in the most receptive market based operations and territories where our brands are known, and executing highly targeted launches that capture the essence of the brand, we have had a history of successful launches. Certain fashion designers and other licensors choose us as a partner because our Company’s size enables us to work more closely with them in the product development process as well as our successful track record.

Grow portfolio brands through new product development and marketing. We grow through the creation of fragrance family extensions within the existing brands in our portfolio. We regularly create a new family of fragrances for each brand in our portfolio. We frequently introduce seasonal and limited edition fragrances as well. With new introductions, we leverage our ability and 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 or flankers) within our brand franchises. Furthermore, we promote the performance of our prestige fragrance operations through knowledge of the market, detailed analysis of the image and potential of each brand name, and a highly professional approach to international distribution channels.

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 agreements. We intend to further build on our success in prestige fragrances and pursue new licenses and acquire new brands to strengthen our position in the prestige beauty market. To that end, in 2021, we closed on a transaction agreement with Salvatore Ferragamo S.p.A., whereby an exclusive and worldwide license was granted for the production and distribution of Ferragamo brand perfumes. Also in 2021, we entered into a long-term global licensing agreement for the creation, development and distribution of fragrances and fragrance-related products under the Donna Karan and DKNY brands. This exclusive license became effective in July 2022. During 2022, we closed a transaction agreement with Lacoste, whereby an exclusive and worldwide license was granted to Interparfums SA for the production and distribution of Lacoste brand perfumes and cosmetics effective January 1, 2024. During 2023, we closed on a transaction agreement with Roberto Cavalli, whereby an exclusive and worldwide license was granted for the production and distribution of Roberto Cavalli brand perfumes and fragrance related products. This license became effective in July 2023. As of December 31, 2023, we had cash, cash equivalents and short-term investments of approximately $182.8 million, which we believe should assist us in entering new brand licenses or outright acquisitions. We identify prestige brands that can be developed and marketed into a full and varied product families and, with our technical knowledge and practical experience gained over time, take licensed brand names through all phases of concept, development, manufacturing, marketing and distribution.

Expand existing portfolio into new categories. We selectively broaden our product offering beyond the fragrance category and offer other fragrance related products 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 build our global distribution footprint. In order to adapt to changes in the environment and our business, in addition to our arrangements with third party distributors globally, we are operating distribution subsidiaries or divisions in the major markets of the United States, France, Italy and Spain for distribution of prestige fragrances. We may look into future joint arrangements or acquire distribution companies within other key markets to distribute certain of our prestige brands. While building a global distribution footprint is part of our long-term strategy, we may need to make certain decisions based on the short-term needs of the business. We believe that in certain markets, vertical integration of our distribution network may be one of the keys to future growth of our Company, and ownership of such distribution should enable us to better serve our customers’ needs in local markets and adapt more quickly as situations may determine.

Production and Supply

The stages of the development and production process for all fragrances are as follows:

Suppliers who assist us with product development include, but are not limited to:

Suppliers’ accounts for our European based operations are primarily settled in euro and for our United States based operations, suppliers’ accounts are primarily settled in U.S. dollars. For our European based operations components for our prestige fragrances are purchased from many suppliers around the world and are primarily manufactured in France.

For United States based operations, components for our prestige fragrances are sourced from many suppliers around the world and are primarily manufactured in the United States and Italy. Additionally, we occasionally utilize third party manufacturers in China, Poland and Turkey. 

Environmental, Social & Governance

Both our United States based operations and our European based operations are good corporate citizens and take our responsibilities seriously. We comply with all applicable laws, rules and regulations in general, and in particular with regard to chemicals and hazardous materials. Throughout our supply chain, from procurement of components to distribution of finished products, we act responsibly and monitor and comply with all legal requirements. While we do not own our manufacturing facilities, we set a high bar with our industrial partners by placing an emphasis on quality, the use of good manufacturing practices and innovation, and encouraging them to build strong ESG programs of their own. Like many of our industry competitors, we are applying a multifunctional and comprehensive approach in addressing the issues of corporate, environmental and social responsibility and transparency, building off the UN Sustainable Development Goals. Our European based operations have led the way on this initiative, but our US operations are actively catching up.

ESG Strategy

Inter Parfums, Inc., our parent company, is using a multi-step process for Environment, Social, Governance (“ESG”) related activities and reporting. Following the work done in ESG by our French based subsidiary, Interparfums SA, in September 2022 we launched our United States ESG program for our subsidiaries, Interparfums, USA LLC in the United States and Interparfums, Italia Srl in Italy. Environmental data regarding our regional sales offices in Geneva, Dubai and Hong Kong are not yet included in the ESG strategy. The final step in our ESG reporting will be the combination of both ESG programs into a single cohesive report.

United States based operations ESG

This section of our annual report discusses our United States based operations ESG program, and when we refer to ESG activities of Interparfums in the rest of the report, we are referring solely to our United States based operations ESG program. The ESG report by our French based subsidiary Interparfums SA, follows in the next section. When we refer to Inter Parfums, Inc., or the Company, we are referring to our Nasdaq publicly traded parent company. ESG related information is as of December 31, 2022, unless otherwise noted.

Introduction

We have defined Interparfums’ United States based operations ESG strategy and have been developing new projects and activities to reflect the United Nations’ sustainable development goals (https://sdgs.un.org/fr/goals), which are present throughout the document. Our ESG strategy is based upon the challenges we face, our risk analysis and the expectations of our stakeholders.

We are committed to:

● Creating a more diverse and inclusive culture and impacting our community: Our human capital is our greatest asset. We want to build a culture genuinely focused on listening to employees, supporting their development, and leveraging their value.

● Reducing and optimizing our environmental footprint: Climate change requires urgent action. We want to improve our environmental footprint and measure our carbon footprint to disclose it for all its scopes.

● Sustainable fragrances throughout their whole life cycle. Sustainability is at the heart of our product creation to respond to evolving social and environmental challenges. The procurement of materials should consider all those aspects.

● Transparency and compliance: Interparfums complies with all applicable laws, rules and regulations in general, and in particular with regard to chemicals and hazardous materials.

Act as a Climate Stakeholder and Anticipate Future Regulations

The first step is to know where we are starting from by measuring our carbon footprint across the board. It will enable us to initiate a low-carbon trajectory compatible with the Paris Agreements. As we do not own manufacturing facilities, our scope 1 is negligible and our scope 2 is restricted to the electricity consumption of our offices and warehouse. Finally, our scope 3 represents most of our emissions.

Measure the Carbon Footprint of Our Activities

The carbon footprint has been calculated for scopes 1, 2, and 3 for 2022. Scope 1 covers direct greenhouse gas emissions associated with consumption for heating and fuel for company vehicles. Scope 2 covers indirect energy-related greenhouse gas emissions, i.e. electricity consumption of our offices and warehouses. Scope 3 refers to indirect emissions in an organization’s supply chain, i.e. those indirectly related to its activity, both upstream and downstream. Inter Parfums, Inc. has calculated its total carbon footprint in accordance with international standards, and namely the International 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).

Interparfums carbon intensity is in the low end of its industry sector. Calculating this first carbon footprint across the board has given us a starting point and highlighted our need to ask our suppliers more about their climate strategy and encourage them to make their own calculations to refine ours. We will then be able to forecast our carbon trajectory more precisely.

Commitment to Create a More Diverse, Fair and Inclusive Culture, and Impact Our Community

Interparfums is a company serving many customers in different countries. To serve our customers well, we must attract and retain the best talent who bring with them different backgrounds, experiences and viewpoints. Fostering an inclusive culture is key to enabling our talents to work together effectively.

In United States based operations, as of December 31, 2022, women accounted for 67% of the workforce and black, indigenous, and people of color accounted for 58% of the workforce. Our workforce as of December 31, 2022 included 241 full time employees.

We strive to maintain an inclusive environment free from discrimination of any kind, including sexual or other discriminatory harassment, and all our US employees are trained once a year on Preventing Harassment at Work through on-line training.

At Interparfums, we strongly believe in fostering a diverse and inclusive workplace where everyone feels safe, valued, respected, and empowered to reveal their authentic selves. This approach to diversity includes diversity of gender, ethnicity, ability, background, gender identity, and sexual orientation and is recognized at the leadership level and throughout our whole organization.

Offer a Healthy and Environmental Conscious Workplace

Since September 2022 our New York office has been partnering with Fraîche, which provides smart fridges that are stocked every day with high-quality and on-trend items curated from their local partner restaurants and brands. Our New York based employees can have access to meals, drinks, and snacks and the Company gives each employee a daily credit to be used. We are very glad to be part of the Fraîche journey.

To ensure that all our employees play an active role in our environmental approach, we have carried out several initiatives aimed to reflect on how Interparfums impacts climate change, global warming, pollution, and other environmental challenges, and how we can promote sustainability.

To commemorate Earth Day, we encouraged all employees to participate in activities that promote sustainability, distributed info on the UN Sustainable Goals, tips on how to be more sustainable in the office and shared a QR code linked to a survey where employees were invited to share suggestions on how we can make Interparfums a more sustainable workplace.

In Interparfums’ offices we also launched our recycling initiative. For example, in New York, we have now color-coded bins as follows:

● green bins for paper/cardboard placed next to the copy-machines and in the kitchens.

● blue bins for metal, plastic, glass, and cartons placed in the kitchens.

● black bins for regular trash/non-recycling items.

Moreover, we shared good practices on “how to be more sustainable in the office” tips on printing, electricity management, and cyberlearning. This is a first but necessary step in promoting sustainability in our day-to-day work.

Caring Employer Committed to Everyone’s Success

With a management style that is very family oriented and close to employees, everyone is free to share their ideas while respecting the Company’s. Management attaches the utmost importance to ensuring that everyone understands and supports Interparfums’ strategy.

Regular briefings on business developments and monetary results keep employees up to date with management and market expectations. The flexibility of the organization, which is essentially made up of small teams, means that it can constantly adapt to any changes or developments in the external environment.

The Company cultivates a positive and inclusive culture through various initiatives including the following that were implemented during 2023 in our United States based operational locations:

Social- Positive Contribution Through Impactful Philanthropy

To start the new year off strong, we’re proud to announce that Interparfums partnered with I Support the Girls https://isupportthegirls.org/programs/our-impact/ to distribute 1,100 Interparfums products to various American and international shelters for the holiday season. Our products were distributed to 13 different shelters that donate hygiene and cosmetic products to domestic abuse survivors and low-income schools.

Commitment To Sustainable Fragrances Throughout Their Life Cycle

Compliance Policy - As a global distributor of fragrances under licenses, Interparfums, fragrance oils and ingredients must comply with relevant global legislation, including, but not limited to, the countries and jurisdictions where the products are sold. We do not support animal testing on any bulk, raw materials, or finished product. We encourage our suppliers and any testing laboratories to find alternative test methods to ensure the safety and stability of our products. We also encourage development, use, and regulatory acceptance of alternatives to animal testing to ensure health and safety of consumers. Fragrance oil compounds must not be tested on animals (any mixtures of blended raw materials supplied to Interparfums). Fragrance ingredients must also not be tested on animals by the fragrance manufacturer for cosmetic safety assessment purposes.

The fragrance suppliers share with Interparfums an analysis report with physiochemical data (color, pH, density, organoleptic profile, etc.). We rely on these reports shared by our partners.

Measurements are taken after receipt to check the ingredients before formulation. Compliance with the specifications is verified for each batch, and at each renewal. If compliance is not obtained, then the product is not launched. In other words, 100% of the products launched are compliant. As there is no claim regarding our products, there is no further investigation made on them (unlike cosmetic products for instance).

Vegan-Friendly Fragrances Policy - We support a shift toward a vegan consciousness. As vegan products are becoming a standard request on the part of many of Interparfums’ licensors and clients, all fragrance oils developed for Interparfums are vegan in accordance with the definition provided below:

Vegan products do not contain any animal products, animal by-products, or animal derivatives. Animal products are anything obtained from living or killed animals. Animal by-products are anything obtained from living animals, including, but not limited to, beeswax, honey, shellac (including Ambretollide), and lanolin. Animal derivatives are anything derived from animals, animal products, or animal products, such as casein derived from milk.

Responsible Ingredients - As consumer interest continues to grow toward sustainable products and sustainably sourced ingredients, we understand our responsibility to ensure that we can speak about sustainably sourced ingredients within our products. Of course, all claims are compliant with the new French claims guide preparing the future European Commission regulation on explicit environmental claims (Green Claims Directive), as our products are also sold in Europe. All fragrances developed for Interparfums should provide an environmentally added value ingredient storyline, such as use of responsibly sourced lavender. Of course, the exact storyline or ingredient requested may vary depending on the brand or project.

While we understand some of these may be safe-as-used and well proven as solvents, all fragrance oils developed for Interparfums are formulated without phthalates and without gluten. This restriction also applies to ingredients that contain gluten such as wheat, barley, oats and rye, as well as raw materials that may be derived from gluten containing ingredients (e.g., Tocopherol derived from wheat germ oil).

To complete our approach, we have formalized a list of ingredients prohibited in our fragrances, which is shared by our development teams. In addition, we strictly adhere to the requirements of our licensors.

It is important to specify that most of our alcohol is of plant origin, mainly corn.

MCM Ultra - We have MCM Ultra fragrance, a bold new scent that fuses expert craftsmanship with cutting-edge technologies. Inspired by the brand’s signature backpack in eye-catching Berlin Gold, MCM Ultra features a rich scent profile in a show-stopping packaging that meets the opulence of this exquisite fragrance. MCM Ultra is 100% vegan, made with 74% biodegradable ingredients, and contains 79% responsibly sourced ingredients from Firmenich Naturals Together™ program that make a positive social impact to local communities all over the world.

Created in collaboration with our amazing partners at MCM, the ULTRA campaign foreshadows MCM Worldwide AW22’s campaign, “The Movement”. The campaign takes place in a seemingly infinite room made of entirely gold-tinted mirrors, reminiscent of a Berlin discotheque. The MCM tribe moves through the warm, ultra-luxurious light to reveal the ULTRA bottle emerging from liquid gold, capturing the feeling of upscale, sensual glitz and glamour that encapsulates ULTRA.

Contractors

Interparfums does not tolerate child labor or any form of involuntary labor and demands that its business Contractors (including its contractors, consultants, fillers, vendors and suppliers) conduct themselves with the utmost fairness, honesty and responsibility in all aspects of their business. As a general principle, our business Contractors are required to comply fully with all legal requirements applicable to the conduct of their business. We also demand that they comply with rigorous standards with respect to the manner in which they treat their employees and accept Interparfums’ Supplier Code of Conduct, which reflects our principles and values.

Governance

Inter Parfums, Inc. adheres to corporate governance codes including but not limited to anti-hedging, bribery, fraud, and prohibition against insider trading. The Company’s management is responsible for the development and implementation of its ESG strategies and programs. Ultimate oversite by the Company’s Board of Directors is included in its committee charters and practices. Inter Parfums, Inc. is a publicly traded company (Nasdaq GS: IPAR), and files reports with the Securities and Exchange Commission (“SEC”). Our largest subsidiary, 72% owned Interparfums SA, is also a publicly traded company as 28% of Interparfums SA shares trade on the Euronext and is subject to the reporting requirements of the Euronext. Interparfums SA also maintains a governance policy that relates to its status as a French publicly held company, in addition to complying with this governance policy, where applicable.

Interparfums SA CSR/ESG

Introduction

Interparfums SA has identified its Corporate Social Responsibility (“CSR”) challenges based on the expectations of its stakeholders and the market. The first step was to identify them. A materiality analysis was then carried out to list the CSR challenges and highlight the priorities to be addressed in the coming years to ensure the model’s sustainability. Stakeholders and priorities consist of the following:

Interparfums SA is committed to a global approach to social, environmental and corporate responsibility and transparency. Year after year, it develops a CSR policy implemented by its operational and functional divisions and involving all staff. It identifies its main challenges based on several key areas: its responsibilities to consumers, the environment, operational stakeholders and society, and employees. To support this approach, a CSR Executive Committee was set up at the beginning of 2021 at the initiative of management. Comprising the Operations & Supply Chain, Human Resources, Finance, Legal and Communications departments, it has formalized the Company’s CSR strategy, with goals to:

●        Consolidate its status as a responsible employer with, in particular, the formalization of a "Responsible Employer Charter" and reinforcement of the employee training plan

●        Reduce its ecological footprint and involve suppliers in the process, thanks to the introduction of optimized eco-design specifications, including the reduction of packaging and the introduction of recycled and recyclable materials on each product developed

●        Measure its carbon footprint according to the GHG protocol methodology (Scopes 1, 2 and 3) to initiate a low- carbon trajectory compatible with the Paris Agreements

●        Strengthen its sustainable development approach by formalizing a business ethics charter that can be enforced against operational stakeholders

ESG Targets

In line with the Interparfums SA’s Corporate Social Responsibility strategy, the following table presents Interparfums SA’s main objectives and compares them to market benchmarks such as the Sustainable Development Goals (“SDGs”). In January 2024, as part of its continuing improvement in ESG performance, Interparfums SA announced that it had increased its rating with Sustainalytics, a leading ESG rating firm, and now ranks 26^th out of 104 companies.

Ensure the Health and Safety of Consumers

Interparfums SA is responsible for marketing the cosmetic products it sells and for assessing their safety. It also relies on information provided by perfumers, who assess the safety of the raw materials used to make fragrances. Interparfums SA carries out skin and eye safety tests on the products it markets. In accordance with EC regulation 1223/2009, none of these tests are carried out on animals. Dermal safety tests are carried out on healthy adult volunteers and ocular safety tests on cultured cells. Interparfums SA has taken account of the REACH regulation (EC Directive No. 1907/2006 of 18 December 2006) on the registration, evaluation and authorization of chemicals with all its suppliers, and has taken the initiative of contacting its various subcontractors and suppliers to ensure that they effectively comply with the necessary registrations, notifications and requests for authorization from those upstream in their supply chain. Interparfums SA has proactively communicated with all its suppliers to commit to supplying items that do not contain any substance listed in Appendix XIV (substances of very high concern). To date, no supplier has declared the presence of substances subject to authorization in items supplied to Interparfums SA.

High Priority for High Levels of Natural Ingredients

Interparfums SA uses only plant-based alcohol in all its fragrance lines, essentially beet alcohol, 99.5% of which is natural. The remainder is made up, depending on the line, of a variable proportion of natural ingredients. All the perfumers we work with have concentrates with a proportion of ingredients certified to ISO 9235 or ISO 16128. The proportion of natural fragrances is therefore over 80%. For its other products (aftershave balm, hand cream, shower gel and body lotion), Interparfums SA uses between 79% and 88% natural ingredients.

Rochas Girl Franchise

The launch of Rochas’ first low environmental impact line in 2021 was the first eco-design initiative to be led by Interparfums SA teams. This proposal allowed us to test with Rochas Girl the possibilities available to us in this area, taking our thinking as far as possible. The aim was to offer consumers a fragrance that met their expectations in terms of environmental engagement. This project combined the codes of luxury perfumery with a new awareness by modernizing the Rochas portfolio, in an inclusive and eco-responsible approach. Rochas Girl is made from 90% natural ingredients, with neroli extract with relaxing properties, and is vegan. Its glass bottle contains 40% post-consumer recycled glass (“PCR”), which is the maximum level currently proposed by glassmakers, and its cap is made from recycled plastic. Its cardboard case is FSC-certified, printed with water-based ink and without unnecessary decoration. It is made in France. Its formula contains no colorants, stabilizers, controversial additives or UV filters. It contains a reduced number of allergens. In the same vein, a refill is now available for even less impact on the environment.

The multi-channel advertising was consistent with the product, with an advertisement filmed in the Paris region, with pictures of unretouched models conveying an authentic image. FSC certified cardboards point-of-sale advertising was also used. With Rochas Girl, Rochas also wanted to join the "1% for the planet" initiative, redistributing 1% of turnover generated to various charities.

The new version of Rochas Girl, Rochas Girl Life, launched in spring 2023, offers a direct refill and its bottle is made from 40% PCR glass.

Environmental Responsibilities

Interparfums SA does not directly manage industrial sites but is involved in developing an environmental policy in collaboration with its subcontracting partners and suppliers throughout its value chain, particularly in the following areas:

● choice of ingredients;

● choice of techniques and materials;

● recycling and waste disposal measures; and

● reducing CO₂ emissions.

Interparfums SA has no manufacturing activity and entrusts the manufacturing process to partners, each offering the best expertise and commitment in their respective fields: fragrance, glassmaking and packaging. Interparfums SA asks them about their CSR strategies, in addition to the EcoVadis assessment, and works with them to incorporate the environmental issues identified at each stage, in particular the choice of materials used in components, waste treatment and reducing the carbon footprint.

An optimized eco-design charter was formalized in 2022 and shared both internally and externally to ensure that the possible options in this area are clear to all stakeholders. The aim of this charter is to highlight the best practices of Interparfums SA for optimizing the eco-design of the products it develops. The objectives for each product category are clearly stated: glass, decoration, covers, wedges and cases.

Promotional products are not forgotten either with boxes, tubes and point-of-sale advertising. This is a global approach that will enable Interparfums SA to prepare for the regulatory obligations of the French AGEC law (anti-waste law for a circular economy).

Manage the Environmental Impact of Our Operations

Interparfums SA uses an HQE (High Environmental Quality) certified warehouse located in Normandy France, for its logistics and storage needs. This certification covers improved insulation, lighting using presence detectors, Ecolabel finishing materials, centralized technical management for energy control, rainwater recovery and efficient waste sorting.

Interparfums SA constantly monitors energy and water consumption indicators to identify opportunities for improving energy efficiency in lighting, heating and ventilation throughout the logistics site, such as modulating ventilation flow rates and programming weekend heating/ventilation slowdowns.

To this end, the warehouse lighting is switched off automatically when employees are on a break outside and the temperature in the warehouse is kept at 11°C. This energy management also includes measures to manage the recharging schedules of the electric forklift trucks during off-peak hours at night, with a low consumption of 280 kW maximum instead of 600 kW during the day. Monthly electricity consumption reports are drawn up and in the event of significant peaks in consumption, the Company analyses the causes of this over-consumption in order to remedy the situation where necessary. Finally, to help preserve the environment, Interparfums SA has installed dedicated parking spaces for bicycles and electric terminals for cars on the logistics site.

Waste

Interparfums SA closely monitors its waste production at warehouse level. In 2023, 27 tons of waste were recycled through various channels (plastic, pallets, paper and cardboard). In addition, 3 tons of non-hazardous waste were incinerated with heat recovery. There was no dangerous waste elimination in 2023.

Logistics

Actions undertaken in collaboration with the warehouse and goods dispatch manager as part of the improvement and optimization of inter-plant transport and the logistics platform have contributed to a reduction in the number of trucking turnarounds.

As regards transport to distributors, Interparfums SA uses road transport for shipments in France and Europe and sea transport for America, Asia and the Middle East. Interparfums SA makes very limited use of air transport, reserving it for unavoidable emergencies. Some promotional products manufactured in Asia are sent directly to American distributors without being imported and stored in France.

Measure the Carbon Footprint Of Our Activities

The carbon footprint has been calculated for scopes 1 and 2 since 2020. Scope 1 covers direct greenhouse gas emissions (gas and fuel consumption by Interparfums SA vehicles), while Scope 2 covers indirect emissions associated with energy (electricity consumption). The sites studied were the warehouse and offices of the Paris head office. On rue de Solférino, the premises are connected to the City of Paris heating network and to a district cooling network that uses the cool temperature of the River Seine to cool the water in the distribution network. The emission factors for these two networks are very favorable in terms of carbon footprint. Gas consumption is now reduced to that of the warehouse. In addition, the solar panels on the roof have produced 4.9 MWh of renewable energy.

The variations between 2023 and 2022 are linked to the periods of lockdown relating to the pandemic in 2020. In 2022, Interparfums SA moved its head office to BREEAM and HQE-certified premises, which are expected to reduce energy consumption by around 30%. In addition, the use of renewable energies and the Paris heating network help improve these results.

Since 2021, a full scope 1, 2 and 3 carbon footprint has been calculated using the GHG protocol method and either emission factors available in databases, monetary ratios, or data shared by suppliers. Therefore, 2021 is the reference year chosen by Interparfums SA for its carbon trajectory.

We are convinced that it is by involving our suppliers in our approach that we will be able to make progress on a low-carbon trajectory. For the moment, only 53% of suppliers within the EcoVadis scope are tracking their carbon footprint. However, 86% of purchases of goods and services for production are made from suppliers located in Europe, who will be subject to the CSRD regulations (with a deadline depending on their size) and will therefore initiate the process of measuring their carbon footprint. If they wish, we will support them in terms of methodology so that they can make progress on these crucial issues.

The variations observed between the two years can be explained by changes in suppliers, some of whom are more advanced in terms of carbon strategy and disclose their new scope 3, which we integrated in our measurements. More assets were tied up over the period and more business trips were made.

Interparfums carbon intensity is at the low end of its sector. The significant change between 2021 and 2022 is also linked to the increase in sales.

Once the carbon footprint measurement had been completed, it was found only some of production purchases were made from suppliers with targets for reducing their carbon footprint by 2030 (often in line with the European fit for 55). We will be continuing our dialogue with them to increase the number of partners involved and thus avoid carbon emissions.

Interparfums SA wants to ensure that its climate trajectory is in line with the most recognized standards. A first step is to align its reporting with the principles of the TCFD (Task Force on Climate- Related Financial Disclosures).

Commitment to Carbon Sequestration Programs

At the end of 2022, Interparfums teamed up with TerraTerre, a young French Company with a mission to connect farmers committed to the ecological transition and companies wishing to contribute to the global goal of climate neutrality by 2050.

Improve the Environmental Impact of Products

Action to prevent environmental risks and pollution begins with the choice of techniques and materials, which must be optimized.

To reduce the impact of its activities, some of the bottles produced by Interparfums SA are colored by applying a water-soluble solution, making it possible to obtain a partly biodegradable color with no harmful impact on the natural environment. For the rest of its product ranges, Interparfums SA is pursuing its objective of gradually phasing out the use of "solvent-based" lacquers, with a view to using "water-based" lacquers for all its product ranges.

In addition, Interparfums SA is committed to reducing the volume of packaging and selecting appropriate materials at every stage of product development, to ensure that they can be recycled or disposed of under optimum conditions. Recyclable glass bottles are manufactured using a system that recovers, crushes and remelts the waste. Interparfums SA has revised boxes and secondary packaging (perfume cases and boxes) to optimize pallet filling, reduce cardboard purchases and cut transport volumes by reducing empty space. Tester boxes are entirely recyclable. Interparfums SA is now imposing a minimum number of pallets per truckload.

Promotional Products Integrated Into the CSR Initiative

Packaging for our boxes and cases has long been made from FSC-certified cardboard and paper. The transport crates have also been FSC-certified since 2022.

The design of the boxes also takes environmental concerns into account, with a choice of two formats, each with 3 recipient heights to match the volume of perfume. In addition, because of new specifications from certain distributors, the boxes will be subject to further developments. The new configuration will enable us to reduce our use of PS (polystyrene) plastic by more than 200 tons and our use of 100% recycled APET plastic by 40 tons.

Thanks to an innovative proposal from a supplier, in 2022 the new capsules helped reduce the amount of virgin PP plastic used by 3.6 tons. The replacement of virgin plastic in the boxes has begun, with the essential steps of testing compatibility with the formulas. In 2022, 60% of tube have been made from PE PCR, saving 16 tons of virgin PE plastic. PVC has definitively been banned for perfumery items.

Further, more than 50% of tubes are recyclable, and more than 2 million of them contain no or no more carbon black (making them difficult, if not impossible, to recycle). Another action aimed at reducing the consumption of unnecessary packaging is to discourage its use and replace it, particularly polybags. We progressively suppress the carbon black in the plastic tubes to make them recyclable in an easier way.

Gifts with Purchase (GWPs) are a major driver of consumer decisions. The CSR initiative extends to their selection. Our five suppliers are already assessed by EcoVadis, and their average score is 77.6 (4 are Platinum and 1 Gold according to the 2022 ranking), which is well above the average score for their sector (which is either 39 or 47, depending on the company). We are therefore exercising our duty of care in this area and, in addition, will be sharing our ethics charter with them in 2023. The search for eco-labelled products is also a priority.

In 2024, except for fragile items, promotional products will be wrapped in Kraft paper rather than plastic.

Help Consumers Recycle Their Packaging

Cardboard packaging for perfumes sold by Interparfums SA can be recycled if the correct procedure is followed. The optimized eco- design charter recommends using traditional glass (i.e., soda-lime glass), which is recyclable, and avoiding technical glass (i.e., boro-silicate glass), which is not.

Since January 2022, European regulations have made it compulsory to display the Triman logo with instructions on how to recycle waste. This has been done for all products sold by Interparfums SA.

We are taking part in the Selective Perfumery working group run by the Institut du Commerce, which aims to mobilize brands and distributors around the issue of collecting and recycling plastic in-store advertising in France. This collective approach also brings together in-store advertising manufacturers already committed to eco-design and potential dismantling.

All these actions reflect Interparfums SA’s determination to integrate circular economy initiatives into its business model.

Responsibilities to Operational Stakeholders and Society

As it carries out and develops its activities, Interparfums SA has identified the following challenges:

●             Maintain a high level of relationship with its licensors through synergy, mutual involvement and the sharing of common values;

●             Develop long-term partnerships with its suppliers and subcontractors through close collaboration in information exchange, in particular about their CSR approach, their carbon footprint and their trajectory; and

●             Develop long-term, trust-based relationships with its distributor customers.

Build Trusting Relationships with Licensors and Distributors

Since signing its first license agreement in 1988, Interparfums has developed a significant portfolio of luxury brands under license. Contact with luxury houses is systematically initiated by managers who develop and maintain a close relationship with the licensors. Through the close collaboration between the marketing departments and the brands, which has increased over the years, products are developed according to the desires and collections of each brand, to offer a unique fragrance that represents shared values.

Interparfums SA has developed long-standing relationships with its distributors in each of the countries or regions in which it operates. More than 60 employees use their expertise in France and over 100 countries to distribute its fragrances. As each continent and region of the world has its own tastes, identity and olfactory culture, as well as its own sensitivities and attachment to a brand, there is no single destination, and it is crucial to develop close commercial relationships with our distributors, to provide optimum service to the consumer.

Every two or three years, Interparfums SA organizes a seminar lasting several days, bringing together all its distributors from around the world. This seminar, scheduled for 2024, will be an opportunity to present all the brands and products on offer, to meet all the distributors and involve them closely in our development, and for the distributors to meet the employees with whom they work closely on a daily basis.

Forge Lasting Industrial Partnerships

Most of the subcontractors' factories and the warehouse for storing finished products are in Haute Normandie (France). The activity generated by Interparfums SA thus contributes to the development of the local economy.

All of the perfumers we work with answer the CDP Climate Change questionnaire. Their grades are above B, which is a reassuring performance for our relationship with them. This means that they are dealing with climate change and biodiversity at the right level. Ratings of this level reflect a mature analysis of climate risks and opportunities.

The Forests questionnaire is also important for Interparfums SA, which pays close attention to the management of natural areas and considers it essential not to introduce raw materials responsible for deforestation in any country.

Of our suppliers assessed by EcoVadis, 45% are ISO 14001 certified, and 28% are ISO 45001/ OHSAS 18001 certified.

Run a Quality Management System with Confidence

Interparfums SA has introduced specifications for purchasing, logistics, and best manufacturing practice standards for its subcontractors. In addition, Interparfums SA has drawn up a business ethics charter that will be binding for its partners, to ensure that they comply with the rules of ethics, morality and law that we are committed to respecting. Its roll-out can thus be measured and improvement plans can be requested from partners.

Since 2013, all our suppliers have been implementing the ISO 22716 international standard on Best Manufacturing Practices, which sets out guidelines for the production, checks, packaging, storage and dispatch of cosmetic products. It is the practical development of the quality assurance concept, through the description of the plant's activities. Against this regulatory backdrop, regular audit campaigns of all packaging plants carried out by the Quality department in accordance with the ISO 22716 standard have been introduced. The purpose of these audits is to ensure that packagers maintain a good level of traceability. All plant activities have been reviewed, including the processes for receiving raw materials and packaging items, manufacturing, packaging and quality control. These reports have demonstrated that our subcontractors comply with ISO 22716 Best Manufacturing Practices and in particular the traceability required for all fragrance production.

Assess the CSR Performance of Suppliers

As part of its CSR strategy, Interparfums SA has teamed up with EcoVadis to assess the CSR performance of its supply chain and suppliers. EcoVadis operates a global platform for assessing and sharing CSR performance, and their assessment method is based on international CSR standards.

In 2023, 110 suppliers were assessed or in the process of being assessed, representing 92% of Interparfums SA’s purchasing activity. As part of a continuous improvement approach, Interparfums SA’ s objective is to monitor and encourage the CSR performance of its suppliers in 4 major areas: Environment, Social and Human Rights, Business Ethics and Responsible Purchasing.

Social- Positive Contribution Through Impactful Philanthropy

Plastic pollution is a major issue. The oceans are its first victims and taking concrete action to protect them is a cause that Interparfums SA defends. With this in mind, we have decided to support The Sea Cleaners, a charity founded by yachtsman Yvan Bourgnon. The charity's mission is to help clean up the oceans by deploying boats to collect and recycle plastic waste. Awareness-raising campaigns are also run for the general public to bring about lasting changes in behavior.

Since 2018, through the Givaudan Foundation, Interparfums SA has helped seven schools manage their libraries. In 2022, the school library installation program continued in Sulawesi with the opening of 2 new libraries in Mamuju (West Sulawesi). A total of more than 5,000 books were delivered to 1,163 children and 95 schoolteachers. Interparfums SA renewed this partnership for 2023.

Caring Employer Committed to Everyone's Success

With a management style that is very family oriented and close to employees, everyone is free to share their ideas while respecting Interparfums SA’s values. Management attaches the utmost importance to ensuring that everyone understands and supports Interparfums SA’s strategy.

Regular briefings on business developments keep employees up to date with management and market expectations. The flexibility of the organization, which is essentially made up of small teams, means that it can constantly adapt to any changes or developments in the external environment.

Sharing the "Interparfums SA spirit" also means that all employees adhere to and are aware of the Company's ethical values, as well as ensuring that employees feel fulfilled at work and respect good working conditions. This ethical commitment has been formalized in a charter called the "Code of Conduct," to which each employee adheres, and which particularly focuses on health, safety, discipline, risk prevention, harassment, respect for individual freedoms, sensitive transactions, fraud and business confidentiality. Diversity of profiles, cultures, ages and genders is a source of strength for our teams, the Company's greatest asset.

Since 2019, Interparfums SA has organized an annual disability awareness campaign. In 2022, employees had the opportunity to take part in a conference organized in partnership with the Café Joyeux Company, which employs people with disabilities, mainly with Down's syndrome or autism. Thanks to these discussions and testimonials, employees were able to talk about any obstacles they might face and share their visions and experiences.

Thanks to these awareness-raising campaigns and local support from the Human Resources teams, three employees have been recognized as disabled workers via the RQTH (Recognition as a Worker with a Disability).

The quality of the work carried out by the teams is enhanced throughout the careers of our employees through training courses in order to maintain a high level of competence in all business categories. To this end, Interparfums SA offers all its employees development plans enabling them to broaden their technical, managerial and personal skills.

Our employees, who work mainly in the offices at our Paris headquarters, enjoy excellent working conditions. In 2022, the premises were transferred to a single site on rue de Solférino, in a building renovated to the latest standards in terms of user comfort. Smart systems mean everyone can manage their own lighting and ventilation. The site is easily accessible by public transport, and its car park has bicycle spaces and two vehicle charging points.

In addition, as part of the drive to prevent psychosocial risks, a counseling and psychological support service is available to employees via a dedicated toll-free number, in partnership with the Institut d'Accompagnement Permanent Psychologique et de Ressources (“IAPR”).

The CSR Executive Committee has therefore decided to set up a dedicated internal interactive platform: Work for Good. Work for Good is a socially responsible platform which, with just a few clicks of the mouse, aims to raise awareness among employees and encourage them to think about their consumption habits, both at work and at home and also think about how our professions need to change.

The platform also provides year-round information on Interparfums’ strategy. A number of modules will also be dedicated to understanding climate change. And for those who want it, turnkey training courses on environmental and social issues along with simple solutions that are easy to integrate into everyday life.

Governance

Interparfums SA adheres to the Middlenext corporate governance code and in this context is developing its governance in line with the ESG issues identified in its materiality matrix above. Since its listing on the Paris stock exchange, Interparfums SA has made every effort to be as transparent as possible by regularly explaining its strategy, outlook and concerns, and by answering all its shareholders' questions to the best of its ability.

In 2022, we set up an Individual Shareholders’ Consultative Committee to strengthen our communication and respond more effectively to the legitimate expectations of our shareholders. In 2023, the members of the Board of Directors attended information-sharing sessions designed to help them anticipate future regulations, particularly in terms of climate change, business ethics and the fight against corruption and forced labor. At the 2023 Annual General Meeting, new Directors were appointed to achieve double parity, with the Board of Directors now made up of 50% independent directors and 50% women.

Interparfums SA does not engage in any lobbying activities. Interparfums SA is a member of Middlenext to ensure that management is informed and trained in new regulations.

Ethics

The business ethics charter formalized in 2022 was sent in the second half-year to supply chain suppliers via the Provigis platform. This will enable us to guarantee suppliers' regulatory compliance and monitor the electronic signature system that will be put in place for the ethics charter. Other suppliers and partners will also be involved. In addition to distributing the ethics charter, we have decided to provide anti-corruption training for all our employees. Employees who are most exposed to risk will benefit from a special, tailor-made training day led by an expert.

Marketing and Distribution

Our products are distributed in over 120 countries around the world through a selective distribution network. For our international distribution, we either contract with independent distribution companies specializing in luxury goods or distribute prestige products through our distribution subsidiaries. In each country, we designate anywhere from one to three distributors on an exclusive basis for one or more of our name brands. We also distribute our products through a variety of duty free operators, such as airports and airlines, and select vacation destinations. 

As our business is a global one, we intend to continue to build our global distribution footprint. For the distribution of brands within our European based operations, we operate through our distribution subsidiaries or divisions in the major markets of the United States, France, Italy and Spain, in addition to our arrangements with third party distributors globally. Our third party distributors vary in size depending on the number of competing brands they represent. This extensive and diverse network together with our own distribution subsidiaries provides us with a significant presence in over 120 countries around the world.

Over 50% of our European based prestige fragrance net sales are denominated in U.S. dollars. We address certain financial exposures through a controlled program of risk management that includes the use of derivative financial instruments. We primarily enter into foreign currency forward exchange contracts to reduce the effects of fluctuating foreign currency exchange rates. 

The business of our European based operations has become increasingly seasonal due to the timing of shipments by our distribution subsidiaries and divisions to their customers, which are weighted to the second half of the year.

For our United States operations, we distribute products to retailers and distributors in the United States as well as internationally, including duty free and other travel-related retailers. We also utilize our in-house sales team to reach our third party distributors and customers outside the United States. In addition, the business of our United States operations has become increasingly seasonal as shipments are weighted toward the second half of the year.

Competition

The market for prestige fragrance products is highly competitive and sensitive to changing preferences and demands. The prestige fragrance industry is highly concentrated around certain major players with resources far greater than ours. We compete with an original strategy, regular and methodical development of quality fragrances for a growing portfolio of internationally renowned brand names. 

Inventory

We purchase raw materials and component parts from suppliers based on internal estimates of anticipated need for finished goods, which enables us to meet production requirements for finished goods. We generally ship products to customers within 72 hours of the receipt of their orders. Our business is not capital intensive, and it is important to 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 received at one of our distribution centers and then, based upon production needs, the components are sent to one of several third party fillers or directly to one of those third party fillers, which manufacture the finished products for us and then deliver them to one of our distribution centers.

Product Liability

Our United States operations maintain product liability coverage in an amount of $10.0 million, and our European based operations maintain product liability coverage in an amount of €14.7 million (approximately $16.2 million). Based upon our experience, we believe this coverage is adequate and covers substantially all of the exposure we may have with respect to our products. We have never been the subject of any material product liability claims.  

Government Regulation

Under the Federal Food, Drug and Cosmetic Act, fragrance products are regulated as cosmetics, and fragrances include, but are not limited to, perfumes, colognes, fragrance mists, body sprays and aftershave. They must meet the same requirements for safety as other cosmetic ingredients. Compliance required of fragrance ingredients include being safe for consumers when they are used according to labeled directions or as consumers customarily use them.

Under the Fair Packaging and Labelling Act, companies and individuals who manufacture or market cosmetics have the legal responsibility to ensure the products are safe and labelled according to the Act.

Our fragrance products that are manufactured and marketed in Europe are also regulated as cosmetics and subject to EU Regulation 1223/2009, and after Brexit, the United Kingdom regulation of The UK Schedule 34 to the Product Safety and Metrology Regulation 2019. As of the date of this report, Interparfums products are in compliance with these regulations.

Trademarks

The market for our products depends to a significant extent upon the value associated with our trademarks and brand names. We have licenses or other rights to use, or own, the material trademark and brand name rights used in connection with the packaging, marketing and distribution of our major products both in the United States and in other countries where such products are principally sold. Therefore, trademark and brand name protection are important to our business. Although most of the brand names we license, use or own are registered in the United States and in certain foreign countries in which we operate, we may not be successful in asserting trademark or brand name protection. In addition, the laws of certain foreign countries may not protect our intellectual property rights to the same extent as the laws of the United States. The costs required to protect our trademarks and brand names may be substantial.

Under various licenses and other agreements, we have the right to use certain registered trademarks throughout the world for fragrance products. These registered trademarks include:

In addition, we are the registered owner of several trademarks for fragrance and beauty products, including:

Equity Investments

In June 2020, the Company and Divabox, owner of the Origines-parfums e-commerce platform for beauty products, signed a strategic agreement and equity investment pursuant to which we acquired 25% of Divabox capital for $14 million through a capital increase.

Human Capital

        General

As of December 31, 2023, we had 607 full-time employees worldwide. Of these, 334 are full-time employees of our European based operations and its subsidiaries, with 90 employees engaged in sales activities and 244 in administrative, production and marketing activities. Our United States based operations has 273 full-time employees, and of these, 85 are engaged in sales activities and 188 in administrative, production and marketing activities. Other than for the employees of Interparfums Italia Srl, we do not have collective bargaining agreements relating to any of our employees, and we believe the collective bargaining agreement for our employees of Interparfums Italia Srl will not have a material adverse effect on our operations.

At Interparfums, we strongly believe in fostering a diverse and inclusive workplace free from discrimination of any kind, including sexual or other discriminatory harassment, an environment where everyone feels safe, valued, respected, and empowered to reveal their authentic selves. This approach to diversity includes diversity of gender, ethnicity, ability, background, gender identity, and sexual orientation and is recognized at the leadership level and throughout our whole organization.

Goals for our employees Company-wide are:

United States Based Operations

Our employees are one of our most valuable assets, and fostering long-term relationships is beneficial to the continuity of our business. After experience and expertise in the respective fields of employment, we look for dedication and loyalty among our employees, as we believe having a long-standing workforce benefits our company. All of our executive officers have been with us for a long time (other than our CFO and our head of HR who joined our Company in 2022), and we also have several senior members of staff with years of experience at Interparfums. These experienced executives and employees believe that our company and their co-workers are an extended family and share the same values of entrepreneurship, commitment, creativity and passion. Their efforts and dedication are what allow our company to prosper.

Every year, Interparfums organizes two seminars over several days for all its global employees. This seminar provides an opportunity to present all the company’s brands, products and marketing strategies.

In Italy, an onboarding process is deployed including a welcome day with training on the company’s history and values, meeting with all teams and dinner with the new employee’s team. We also have an onboarding program in the US, which includes a two-day newcomers’ seminar, twice a year where new hires learn more about our Company, our vision, our brands, our teams, our ways of working and have team building activities.

The safety of our employees is of paramount importance to us. In the early stages of the COVID-19 Pandemic we experienced brief closures at all of our locations and adapted to working remotely. Upon reopening, we implemented prevention protocols to minimize the spread of COVID-19 in our workplaces. These protocols, which remained in place until June 2023, are in compliance with the Centers for Disease Control guidelines and state requirements. In Italy, the application of COVID-19 anti-contagion measures and protocol are followed and as required by the law, we provide occupational health and safety training.

Compensation and Benefits

We aim to provide an increasingly attractive employment package at our United States operations, this includes a comprehensive benefits package (including Medical, Dental, Vision, basic and voluntary Life Insurance, AD&D Short-term and Long-Term Disability and 401K program (plus company match after 1 year of service, 50% of employee contribution, capped at 3%) parental leave and commuter benefits).

We also allow Friday remote working arrangements for our employees, have shorter hours on Fridays during the summer months, and have made available food choices for purchase in our lunchroom in New York from the “Fraîche” fridge.

For the Italian operations, some of the benefits are required by law, such as health insurance for employees and family coverage, supplementary voluntary severance scheme, parental leave, study leave and paid time off.

A welfare plan is provided for employees in Italy, consisting of €500 per year, that each employee can use through a dedicated platform that comprises a broad range of benefits and services (Transport and mobility, education, health, culture and leisure time, supplementary pension and fringe benefit). Ten paid hours per year are allocated for medical appointments. Luncheon vouchers worth €8 per day worked are given to cover lunch expenses. Depending on the position in question, specific categories of employees are entitled to a company mobile phone and unlimited internet access.

In Italy, we also implemented remote working two days per week and flexible working hours (different start and end times for employee’s workday).

Performance Evaluation System

Performance management was introduced in 2022. It is designed mainly to drive individual performance and organizational effectiveness by aligning individual and company objectives and to set clear, fair and transparent expectations for success. Enabling and empowering all employees to develop their skills and be in line with professional advancement possibilities is an integral part of this process. Finally, the aim is to promote ongoing opportunities for employees and managers to exchange feedback on performance, milestones, development, and build stronger work relationships.

The process begins in January with goal setting and development planning. Two check-ins are scheduled over the course of the year. In November-December, an end-of-year review is carried out for performance assessment. The latter represents a key step in the career management of all our employees as it covers four main objectives:

Employee Engagement

During Q3 of 2022, we conducted a Companywide Engagement Survey as we want to hear everyone’s voice and understand their expectations. We want to build a culture where all our employees feel included, engaged, and motivated – a workplace where they can bring their best to make things happen and achieve our collective goals. Based on the survey’s feedback, we implemented various People & Talent programs with a focus on onboarding, talent management, performance, learning, internal communications, and company culture. Some examples include more enhanced benefits, our Performance Management Program, LinkedIn Learning, our toolkit for new hires, Employee Anniversary Rewards and community events.

To nurture employee engagement, we hold quarterly presentations with all employees presenting Company results, function updates, celebrate successes and open the floor to Q&As.

In Italy, community and team building events are organized to actively promote and strengthen the sense of belonging (Interparfums Italia’s birthday, Christmas and Easter dinners). The offices have been refurbished with a dining room for socializing and relaxing over complimentary coffee, tea and cookies. At Easter and Christmas, associations benefited from philanthropic funding by purchasing chocolate eggs (for AIL - Italian Association against Leukemia, Lymphoma and Myeloma) and Christmas cards and gift baskets (for ANT - Home Medical Care for Cancer Patients).

European Based Operations

Interparfums SA’s employees constitute its most important contributor for creating value. For that reason, their professional fulfillment and motivation are indispensable drivers for our development.

With a family-style management culture that is close to its employees, everyone is free to share their ideas in a manner that respects the Company’s values. Management attaches great importance to ensuring that each employee fully understands and supports Interparfums SA’s strategy.

Through regular information meetings on business developments and trends, employees are kept up-to-date on expectations of management and the market. The organization’s flexibility, largely made up of small teams, facilitates its continuous adaptation to all changes or evolving external conditions.

This sharing of the “Interparfums” spirit also entails a commitment to and understanding of its ethical values by each employee, the fulfillment of employees at work and compliance with good working conditions. This ethical commitment is formalized by a “Code of Good Conduct” to which each employee subscribes, and that is focused in particular on health, safety, discipline, risk management, preventing harassment, respecting individual freedoms, sensitive transactions, fraud and business confidentiality.

In 2017, Interparfums SA adopted a Charter relating to the right to disconnect from digital devices that was accepted by each employee.

Every two to three years, Interparfums SA organizes a seminar over several days for all its distributors from throughout the world. This seminar provides an opportunity to present all the Company’s brands and products, meet with all distributors and involve them in Interparfums SA’s development while giving the distributors an opportunity to meet with staff with whom they work closely on a daily basis.

The Human Resources Department pays particular attention to ensuring equal opportunity and non-discrimination for each recruitment. Only skills, experience, qualifications and the personality of the candidates are taken into account in the selection process for new employees. This diversity in terms of profiles, culture, age and gender constitutes a decisive strength of its teams, the Company’s most important asset.

Women account for 74% of Interparfums SA’s workforce and 60% of management positions are occupied by women in 2023.

Since 2019, Interparfums SA has organized an annual disability awareness raising campaign. In 2021, employees were given an opportunity to participate in a role-playing workshop designed to give them a first-hand perspective of a person with a disability (hearing, visual, psychological, motor). Thanks to these opportunities for exchange, employees were able to talk about their possible impediments and share their views and experiences.

Through these awareness-raising campaigns and local support from the Human Resources teams, two employees were accorded the status of employees with disabilities through a specific procedure available in France for that purpose (Reconnaissance de la Qualité de Travailleur Handicapé or RQTH).

Interparfums SA also participates indirectly in promoting the employment of persons with disabilities and combating exclusion discrimination. The Company has chosen to use a sheltered work enterprise to package its perfume boxes and a global communications agency called “Les Papillons de Jour” to organize the European Week for the Employment of People with Disabilities (“EWPD”).

In addition, Interparfums SA has adopted action plans promoting the employment of seniors and equal opportunity between men and women.

Compensation and wage increases

Interparfums SA has a compensation policy as well as a system of job classifications and performance evaluations applied to all employees. These procedures guarantee the principle of fairness as well as equal treatment of men and women employees. All employees benefit from a combination of fixed and variable incentive compensation benefits linked to Interparfums SA’s performance.

Profit-sharing

As required by French law, Interparfums SA maintains a statutory employee profit-sharing agreement, which represents an important component of compensation and motivation for all staff and reviewed every year.

Savings plan and pension plan

All employees of Interparfums SA benefit from a company savings plan which proposes several types of funds corresponding to the specific projects of each. Since 2017, it has adapted its plan by proposing an Interparfums stock ownership fund allowing employees to take advantage of the growth of Interparfums’ shares under favorable tax conditions. The amounts employees pay into this fund are supplemented by an important contribution from the Company.

In addition, a group retirement savings plan (Plan d’Epargne Retraite Collectif or “PERCOL”) is available to employees as a vehicle for preparing for their retirement and to which the Company contributes significantly. Employees also can transfer a portion of their unused annual vacation days into the Interparfums SA retirement savings plan.

Supplemental defined contribution retirement plan contract (Article 83)

Management employees benefit from a supplemental defined-contribution retirement plan. Participation in this plan is mandatory. This individual plan is funded by monthly employee and employer contributions, with the breakdown of these latter contributions freely determined. Interparfums SA has decided to assist its employees in financing this supplemental retirement benefit, by assuming an important percentage of these contributions itself.

Item 1A. Risk Factors.

You should carefully consider these material risk factors before you decide to purchase or sell shares of our common stock. These factors could cause our future results to differ materially from those expressed or implied in forward-looking statements made by us. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment.

We are dependent upon the continuation and renewal of various licenses and other agreements for a significant portion of our sales, and the loss of one or more licenses or agreements could have a material adverse effect on us.

All of our rights relating to prestige fragrance brands, other than Lanvin and Rochas, are derived from licenses or other agreements from unaffiliated third parties, and our business is dependent upon the continuation and renewal of such licenses and other agreements on terms favorable to us. Each license or agreement is for a specific term and may have additional optional terms. Generally, each license is subject to us making required royalty payments (which are subject to certain minimums), minimum advertising and promotional expenditures and meeting minimum sales requirements. Other agreements are generally subject to meeting minimum sales requirements. Just as the loss of a license or other significant agreement may have a material adverse effect on us, a renewal on less favorable terms may also negatively impact us.

If we are unable to acquire or license additional brands or obtain the required financing for these agreements and arrangements, then the growth of our business could be impaired.

Our future expansion through acquisitions or new product license or distribution arrangements, if any, will depend upon the capital resources and working capital available to us. Further, we may be unable to obtain financing or credit that we may require for additional licenses, acquisitions or other transactions. We may be unsuccessful in identifying, negotiating, financing and consummating such acquisitions or arrangements on terms acceptable to us, or at all, which could hinder our ability to increase revenues and build our business. Just as the loss of a license or other significant agreement may have a material adverse effect on us, our failure to acquire rights to new brands may also negatively impact us.

We may engage in future acquisitions that we may not be able to successfully integrate or manage. These acquisitions may dilute our stockholders and cause us to incur debt and assume contingent liabilities.

We continuously review acquisition prospects that would complement our current product offerings, increase our size and geographic scope of operations or otherwise offer growth and operating efficiency opportunities. The financing, if available, for any of these acquisitions could significantly dilute our stockholders and/or result in an increase in our indebtedness. We may acquire or make investments in businesses or products in the future, and such acquisitions may entail numerous integration risks and impose costs on us, including:

Our failure to successfully complete the integration of any acquired business could have a material adverse effect on our business, financial condition and operating results.

Joint arrangements or strategic alliances in geographic markets in which we have limited, or no prior experience may expose us to additional risks.

We review, and from time to time may establish, arrangements and strategic alliances that we believe would complement our current product offerings, increase the size and geographic scope of our operations or otherwise offer growth and operating efficiency opportunities. These business relationships may require us to rely on the local expertise of our partners with respect to market development, sales, local regulatory compliance and other matters. Further, there may be challenges with ensuring that such arrangements or strategic alliances implement the appropriate internal controls to ensure compliance with the various laws and regulations applicable to us as a U.S. public company. Accordingly, in addition to commercial and operational risk, these arrangements and strategic alliances may entail risks such as reputational risk and regulatory compliance risk. In addition, there can be no assurance that we will be able to identify suitable alliances or candidates, that we will be able to consummate any such alliances or arrangements on favorable terms, or that we will realize the anticipated benefits of entering into any such alliances or arrangements.

If we are unable to protect our intellectual property rights, specifically trademarks and brand names, our ability to compete could be negatively impacted.

The market for our products depends to a significant extent upon the value associated with trademarks and brand names that we license, use or own. We have licenses or other rights to use or own the material trademark and brand name rights in connection with the packaging, marketing and distribution of our major products both in the United States and in other countries where such products are principally sold. Therefore, trademark and brand name protection are important to our business. Although most of the brand names we license, use or own are registered in the United States and in certain foreign countries in which we operate, we may not be successful in asserting trademark or brand name protection. In addition, the laws of certain foreign countries may not protect our intellectual property rights to the same extent as the laws of the United States. The costs required to protect our trademarks and brand names may be substantial.

If our intangible assets, such as trademarks and licenses, become impaired, we may be required to record a significant non-cash charge to earnings which would negatively impact our results of operations.

Under United States generally accepted accounting principles, we review our intangible assets, including our trademarks and licenses, for impairment annually in the fourth quarter of each fiscal year, or more frequently if events or changes in circumstances indicate the carrying value of our intangible assets may not be fully recoverable. The carrying value of our intangible assets may not be recoverable due to factors such as reduced estimates of future cash flows, including those associated with the specific brands to which intangibles relate, or slower growth rates in our industry. Estimates of future cash flows are based on a long-term financial outlook of our operations and the specific brands to which the intangible assets relate. However, actual performance in the near-term or long-term could be materially different from these forecasts, which could impact future estimates and the recorded value of the intangibles. Any significant impairment to our intangible assets would result in a significant charge to earnings in our financial statements during the period in which the impairment is determined to exist.

The illegal distribution and sale by third parties of counterfeit versions of the Company’s products or the unauthorized diversion by third parties of the Company’s products could have an adverse effect on the Company’s revenues and a negative impact on the Company’s reputation and business.

Third parties may illegally distribute and sell counterfeit versions of the Company’s products. These counterfeit products may be inferior in terms of quality and other characteristics compared to the Company’s authentic products and/or the counterfeit products could pose safety risks that the Company’s authentic products would not otherwise present to consumers. Consumers could confuse counterfeit products with the Company’s authentic products, which could damage or diminish the image, reputation and/or value of the Company’s brands and cause consumers to refrain from purchasing the Company’s products in the future. In addition, the sale of the Company’s prestige products through non-authorized “grey market” channels could damage or diminish the image, reputation and/or value of the Company’s brands and could adversely affect the Company’s revenues and have a negative impact on the Company’s reputation.

Our success depends on our ability to operate our business without infringing, misappropriating or otherwise violating the trademarks, patents, copyrights and proprietary rights of other parties.

Our commercial success depends at least in part on our ability to operate without infringing, misappropriating or otherwise violating the trademarks, patents, copyrights and other proprietary rights of others. However, we cannot be certain that the conduct of our business does not and will not infringe, misappropriate or otherwise violate such rights. Many companies have employed intellectual property litigation as a way to gain a competitive advantage, and to the extent we gain greater visibility and market exposure, we may also face a greater risk of being the subject of such litigation. For these and other reasons, third parties may allege that our products, services or activities infringe, misappropriate or otherwise violate their trademark, patent, copyright or other proprietary rights. Defending against allegations and litigation could be expensive, take significant time, divert management’s attention from other business concerns, and delay getting our products to market. In addition, if we are found to be infringing, misappropriating or otherwise violating third party trademark, patent, copyright or other proprietary rights, we may need to obtain a license, which may not be available on commercially reasonable terms or at all, or redesign or rebrand our products, which may not be possible. We may also be required to pay substantial damages or be subject to a court order prohibiting us and our customers from selling certain products or engaging in certain activities. Our inability to operate our business without infringing, misappropriating or otherwise violating the trademarks, patents, copyrights and proprietary rights of others could therefore have a material adverse effect on our business, financial condition and results of operations. 

Although we weathered the COVID-19 pandemic and its effects to date, if this pandemic reemerges or another pandemic emerges, any pandemic may have a material adverse effect on our business, results of operations, financial condition and cash flows.

The public health crisis caused by the COVID-19 pandemic, its variants and the measures being taken by governments, businesses, including us, our suppliers, our distributors, retailers and the public, to limit COVID-19’s spread, previously had certain negative impacts on our business. Any reemergence of COVID-19, or a new pandemic, could have certain negative impacts on our business, including but not limited to, the following:

The extent and potential short and long-term impact of a re-emergence of COVID-19 variants any other pandemic on the Company’s operational and financial performance will depend on future developments, including the duration and spread of the outbreak, our customers’ willingness to travel and purchase our products, and the impact on our supply chain and the financial markets, all of which are highly uncertain and cannot be predicted.

 Consumers may reduce discretionary purchases of our products as a result of a general economic downturn.

We believe that a high degree of global economic uncertainty could have a further negative effect on consumer confidence, demand and spending. In addition, we believe that consumer spending on beauty products is influenced by general economic conditions and the availability of discretionary income. Accordingly, we may experience sustained periods of declines in sales during periods of economic downturn as it may affect consumer purchasing patterns. In addition, a further general economic downturn may result in further reduced traffic in our customers’ stores which may, in turn, result in reduced net sales to our retail store customers. Any further material reduction in our sales could have a material adverse effect on our business, financial condition and operating results.

We are subject to risks related to our foreign operations, and a disruption in our operations or supply chain could adversely affect our business and financial results.

We operate on a global basis, with a substantial portion of our net sales and net income generated outside the United States, and we anticipate for the foreseeable future that a substantial portion of our net sales and net income will be generated outside the United States. A substantial portion of our cash, cash equivalents and short-term investments that result from these earnings remain outside the United States. As a company engaged in manufacturing and distribution on a global scale, we are subject to many risks and uncertainties, including:

These risks could have a material adverse effect on our business, prospects, results of operations and financial condition.

Terrorist attacks, acts of war or military actions, other civil unrest or natural disasters may adversely affect territories in which we operate, and therefore affect our business, financial condition and operating results.

Terrorist attacks such as those that have previously occurred in Paris, France where we have our European headquarters, amongst other locations, and attempted terrorist attacks, military responses to terrorist attacks, other military actions, or governmental action in response to or in anticipation of a terrorist attack, or civil unrest as occurring in the Middle East, Ukraine and Africa or natural disasters, may adversely affect prevailing economic conditions. These events could result in work stoppages, reduced consumer spending or reduced demand for our products. These developments subject our worldwide operations to increased risks and, depending on their magnitude, could reduce net sales and therefore could have a material adverse effect on our business, financial condition and operating results.

The loss of or disruption in our distribution facilities could have a material adverse effect on our business, financial condition and operating results.

We currently have several distribution facilities in Europe, China and the United States. The loss of any of those facilities, as well as the inventory stored in those facilities, would require us to find replacement facilities and assets. In addition, acts of God, such as extreme weather conditions, natural disasters and the like or terrorist attacks, could disrupt our distribution operations. If we cannot replace our distribution capacity and inventory in a timely, cost-efficient manner, then such failure could have a material adverse effect on our business, financial condition and operating results.

Changes in foreign tax provisions, the adoption of new tax legislation or exposure to additional tax liabilities could affect our profitability and cash flows.

In addition to being subject to taxation in the United States, we are subject to income and other taxes in other foreign jurisdictions. Our effective tax rate in the future could be adversely affected by changes to our operating structure, changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws and the discovery of new information in the course of our tax return preparation process. From time to time, tax proposals are introduced or considered by the United States Congress or the legislative bodies in foreign jurisdictions that could also affect our tax rate, the carrying value of our deferred tax assets, or our other tax liabilities. Our tax liabilities are also affected by the amounts we charge for inventory, services, licenses, funding, cross-jurisdictional transfer pricing, and other items in intercompany transactions. A negative determination or ultimate disposition in any tax audit, changes in tax laws or tax rates, or the ability to utilize our deferred tax assets could materially affect our tax provision, net income and cash flows in future periods.

The international character of our business renders us subject to fluctuation in foreign currency exchange rates and international trade tariffs, barriers and other restrictions.

A substantial portion of our European based operations’ net sales (over 50%) are sold in U.S. dollars. In an effort to reduce our exposure to foreign currency exchange fluctuations, we engage in a controlled program of risk management that includes the use of derivative financial instruments for all major currencies with which we operate. Despite such actions, fluctuations in foreign currency exchange rates for the U.S. dollar, particularly with respect to the euro, could have a material adverse effect on our operating results. Possible import, export, tariff and other trade barriers, which could be imposed by the United States, the European Union or other countries might also have a material adverse effect on our operating results.

Changing political conditions could adversely impact our business and financial results.

Changes in the political conditions in markets in which we manufacture, sell or distribute our products may be difficult to predict and may adversely affect our business and financial results. In addition, results of elections, referendums or other political processes in certain markets in which our products are manufactured, sold or distributed could create uncertainty regarding how existing governmental policies, laws and regulations may change, including with respect to sanctions, taxes, the movement of goods, services, capital and people between countries and other matters. The potential implications of such uncertainty, which include, among others, exchange rate fluctuations, tariffs, trade barriers and market contraction, could adversely affect the Company’s business and financial results.

The wars between Russia and Ukraine, and Israel and Hamas could adversely impact our business and financial results.

The wars between Russia and Ukraine, and Israel and Hamas have negatively impacted our operations to a limited degree to date. However, future impacts to our Company are difficult to predict due to the high level of uncertainty as to how these wars will evolve. Fuel supplies and supply chains increases, as well as retailers or consumers, could all be negatively impacted by these wars. Such negative impacts could have a material adverse effect on our net sales, earnings and cash flows.

We are dependent upon Messrs. Jean Madar and Philippe Benacin, and the loss of their services could harm our business.

Jean Madar, our Chairman and Chief Executive Officer, and Philippe Benacin, our President, and Chief Executive Officer of Interparfums SA, are responsible for day-to-day operations as well as major decisions. Termination of their relationships with us, whether through death, incapacity or otherwise, could have a material adverse effect on our operations, and we cannot assure you that qualified replacements can be found.

Our reliance on third party manufacturers could have a material adverse effect on us.

We rely on outside sources to manufacture our fragrances and cosmetics. The failure of such third party manufacturers to deliver either compliant, quality components or finished goods on a timely basis could have a material adverse effect on our business. Although we believe there are alternate manufacturers available to supply our requirements, we cannot assure you that current or alternative sources will be able to supply all of our demands on a timely basis. We do not intend to develop our own manufacturing capacity. As these are third parties over whom we have little or no control, the failure of such third parties to provide components or finished goods on a timely basis could have a material adverse effect on our business, financial condition and operating results.

Our reliance on third party distributors could have a material adverse effect on us.

We sell a substantial percentage of our prestige fragrances through independent distributors specializing in luxury goods. Given the growing importance of distribution, we have modified our distribution model by owning a controlling interest in certain of our distributors within key markets. However, we have little or no control over third party distributors and the failure of such third parties to provide services on a timely basis could have a material adverse effect on our business, financial condition and operating results. In addition, if we replace existing third party distributors with new third party distributors or with our own distribution arrangements, then transition issues could have a material adverse effect on our business, financial condition and operating results.

Our business is subject to governmental regulation, which could impact our operations.

Under the Federal Food, Drug and Cosmetic Act, fragrance products are regulated as cosmetics, and fragrances include perfumes, colognes and aftershave. They must meet the same requirements for safety as other cosmetic ingredients. Compliance required of fragrance ingredients include being safe for consumers when they are used according to labelled directions or as consumers customarily use them.

Under the Fair Packaging and Labelling Act, companies and individuals who manufacture or market cosmetics have the legal responsibility to ensure the products are safe and labelled according to the Act.

Our fragrance products that are manufactured and marketed in Europe are also regulated as cosmetics and subject to EU Regulation 1223/2009, and after Brexit, the United Kingdom regulation of The UK Schedule 34 to the Product Safety and Metrology Regulation 2019. As of the date of this report, Interparfums products are in compliance with these regulations.

However, we cannot assure you that, should we use proscribed ingredients in our fragrance products that we develop or market, or develop or market fragrance products with different ingredients, or should existing regulations or requirements be revised, we would not in the future experience difficulty in complying with such requirements, which could have a material adverse effect on our results of operations.

Our business could be negatively impacted by social impact and sustainability matters.

There continues to be an increased focus from certain investors, customers, consumers, employees, and other stakeholders concerning social impact and environmental matters. We are spending considerable time addressing social impact and sustainability matters, which are becoming more prominent issues for certain of our institutional shareholders. From time to time, we may announce certain initiatives, including goals and commitments, regarding environmental matters, packaging, responsible sourcing and corporate social responsibility. We could fail, or be perceived to fail, in our achievement of such initiatives, or in accurately reporting our progress on such initiatives. Such failures could be due to changes in distribution channels, new licenses or other acquisitions. Moreover, the standards by which corporate social responsibility is measured are developing and evolving, and certain areas are subject to assumptions that could change over time. In addition, we could be criticized for the scope of our initiatives or goals or perceived as not acting responsibly in connection with these matters. Any such matters could have a material adverse effect on our business.

Our business is subject to seasonal variability.

Our business is somewhat seasonal due to the timing of shipments to our customers, which are weighted to the second half of the year. Accordingly, our financial performance, sales, working capital requirements, cash flow and borrowings generally experience variability during the third and fourth quarters.

Our business is subject to inflationary pressures.

Despite significant inflationary pressures that started during 2022 and continued into 2023 affecting many aspects of our business, especially increase component costs and shipping, we were able to offset the effects of inflation during 2022 by increasing the prices of our products. Although we believe inflation will continue to be a major factor in 2024, a further increase in sales prices, if necessary, should help to mitigate its impact to some degree. However, we may not be able to continue increasing our prices indefinitely without causing a reduction in the number of consumers with sufficient disposable income to buy our certain of our fragrance products, which could have a material adverse effect on our business.

The success of our products is dependent on public taste.

Our revenues are substantially dependent on the success of our products, which depends upon, among other matters, pronounced and rapidly changing public tastes, factors which are difficult to predict and over which we have little, if any, control. In addition, we have to develop successful marketing, promotional and sales programs in order to sell our fragrances and fragrance related products. If we are not able to develop successful marketing, promotional and sales programs, then such failure will have a material adverse effect on our business, financial condition and operating results.

We are subject to extreme competition in the fragrance industry.

The market for fragrance products is highly competitive and sensitive to changing market preferences and demands. Many of our competitors in this market are larger than we are and have greater financial resources than are available to us, potentially allowing them greater operational flexibility. Our success in the prestige fragrance industry is dependent upon our ability to continue to generate original strategies and develop quality products that are in accord with ongoing changes in the market.

If there is insufficient demand for our existing fragrance products, or if we do not develop future strategies and products that withstand competition or if we are unsuccessful in competing on price terms, then we could experience a material adverse effect on our business, financial condition and operating results.

Changes in laws, regulations and policies that affect our business could adversely affect our financial results. 

Our business is subject to numerous laws, regulations and policies. Changes in the laws, regulations and policies, including the interpretation or enforcement thereof, that affect, or will affect, our business, including changes in accounting standards, tax laws and regulations, environmental or climate change laws, regulations or accords, trade rules and customs regulations, or increased cosmetics regulation, and the outcome and expense of legal or regulatory proceedings, and any action we may take as a result could adversely affect our financial results. 

Our success depends, in part, on the quality and safety of our products.

Our success depends, in part, on the quality and safety of our products. If our products are found to be defective or unsafe, or if they otherwise fail to meet our consumers’ standards, then our relationships with customers or consumers could suffer, the appeal of one or more of our brands could be diminished, and we could lose sales and/or become subject to liability claims, any of which could result in a material adverse effect on our business, results of operations and financial condition.

Our failure to protect our reputation, or the failure of our partners to protect their reputations, could have a material adverse effect on our brand images.

Our ability to maintain our reputation is critical to our various brand images. Our reputation could be jeopardized if we fail to maintain high standards for merchandise quality and integrity or if we, or the third parties with whom we do business, do not comply with regulations or accepted practices. Any negative publicity about these types of concerns may reduce demand for our merchandise. Failure to comply with ethical, social, product, labor and environmental standards, or related political considerations, such as animal testing, could also jeopardize our reputation and potentially lead to various adverse consumer actions, including boycotts. Failure to comply with local laws and regulations, including applicable U.S. trade sanctions, to maintain an effective system of internal controls or to provide accurate and timely financial statement information could also hurt our reputation. We are also dependent on the reputations of our brand partners and licensors, which can be affected by matters outside of our control. Damage to our reputation or the reputations of our brand partners or licensors or loss of consumer confidence for any of these or other reasons could have a material adverse effect on our results of operations, financial condition and cash flows, as well as require additional resources to rebuild our reputation.

Our information systems and websites may be susceptible to outages, hacking and other cybersecurity risks.

We have information systems that support our business processes, including product development, production, marketing, order processing, sales, distribution, finance and intra-company communications. We also have Internet websites in the United States and Europe. These systems may be susceptible to outages due to fire, floods, power loss, telecommunications failures, hacking, attacks and similar events. Despite the implementation of network security measures, our systems may be vulnerable to computer viruses, hacking, attacks and similar disruptions from unauthorized tampering. The occurrence of these or other events could disrupt or damage our information systems and adversely affect our business and results of operations.

The trading prices of our securities periodically may rise or fall based on the accuracy of predictions of our earnings or other financial performance.

Our business planning process is designed to maximize our long-term strength, growth and profitability, not to achieve an earnings target in any particular fiscal quarter. We believe that this longer-term focus is in the best interests of our Company and our stockholders. At the same time, however, we recognize that it may be helpful to provide investors with guidance as to our forecast of annual net sales and diluted earnings per share. Accordingly, we provide guidance as to our expected annual net sales, and diluted earnings per share, which is updated as appropriate throughout the year. While we generally provide updates to our guidance when we report our results each fiscal quarter if called for, we assume no responsibility to update any of our forward-looking statements at such times or otherwise. In addition, longer-term guidance that we may from time to time provide is based on goals that we believe, at the time guidance is given, are reasonably attainable. 

In all of our public statements when we make, or update, a forward-looking statement about our sales and/or earnings expectations or expectations regarding other initiatives, we accompany such statements directly, or by reference to a public document, with a list of factors that could cause our actual results to differ materially from those we expect. Such a list is included, among other places, in our earnings press releases (by reference to our periodic filings with the Securities and Exchange Commission) and in our periodic filings with the Securities and Exchange Commission (e.g., in our reports on Form 10-K and Forms 10-Q). These and other factors may make it difficult for outside observers, such as research analysts, to predict what our earnings will be in any given fiscal quarter or year.

Outside analysts and investors have the right to make their own predictions of our financial results for any future period. Outside analysts, however, have access to no more material information about our results or plans than any other public investor, and we do not endorse or adopt their predictions as to our future performance. Nor do we assume any responsibility to correct the predictions of outside analysts or others when they differ from our own internal expectations. If and when we announce actual results that differ from those that outside analysts or others have been predicting, the market price of our securities could be affected. Investors who rely on the predictions of outside analysts or others when making investment decisions with respect to our securities do so at their own risk. We take no responsibility for any losses suffered as a result of such changes in the prices of our securities.

Item 1B. Unresolved Staff Comments.

None.

Item 1C. Cybersecurity

Cybersecurity for our Company is conducted by our United States based operations and European based operations. For our United States based operations, our Information Technology department (“ITUS”) in New York, New York is in charge of our cybersecurity for offices in the United States, Italy, and other remote locations. For our European based operations, our Information Technology department (“ITEU”) in Paris, France is in charge of our cybersecurity for offices in France, and other remote locations. Each of ITUS and ITEU report to their respective segment Chief Executive Officers, Messrs. Madar for ITUS and Benacin for ITEU, who are also directors of our Company. Any material issues of cybersecurity would then be reported to our board of directors. As of the date of this report, we have not had any material cybersecurity incidents.

Both departments have established strict security rules for infrastructure, application and limitations on access rights. New employees are instructed on aspects of cybersecurity, and reminders for safe internet access are periodically sent. Access to our networks for former employees and contractors is immediately revoked upon severance of association, and any hardware such as laptops, company phones, access keys are returned. Each department has also installed equipment and tools to protect and update against the risks of intrusions, cyberattacks, and system obsolescence. Various applications and methods to manage our cybersecurity include, but not limited to, use of EDI (electronic digital interface) for receiving orders, fire walls, virtual private network, antivirus software, encryption, and requiring two factor authentication for remote access after business hours. Redundancy is important as data is routinely backed up daily.

In addition, Interparfums SA has adopted an IT Charter that defines the rights and obligations of employees and users of their information system, to ensure that the information technology resources are used in a secure environment complying with the procedures of internal control, and regularly performs penetration testing. Beginning in January 2024, Interparfums SA commenced enrolling all employees of Interparfums SA in cybersecurity training. United States based operations provides specific user IDs, and employees are instructed to set up passwords that are not easy to guess, keep passwords confidential, and immediately change such employee’s password if such employee believes it has been compromised. All desktop and laptop computers must be password protected and must be changed every 90 days. In addition, employees must not knowingly input erroneous, fraudulent, fictitious or otherwise inappropriate data into any application/system and report any suspicious activity to ITUS. Company employees are prohibited from downloading any files or software for personal use, and not create any independent data connections from Company offices that attempt to sidestep the Company’s network security policy or mechanisms.

Neither United States based operations nor European based operations sells directly to retail consumers, which diminishes to some degree, but does not preclude, the likelihood of third party access to our data.

Item 2. Properties

United States Based Operations

We maintain our corporate headquarters and United States based operations in approximately 32,000 square feet with a term that expires on December 31, 2029, and have been at the same location in New York City since 1992. We also have a 140,000 square foot distribution center in New Jersey, and this lease expires on October 31, 2025. In October 2021 we leased office space in Florence, Italy for a 6-year term with an option for an additional 6 years for Interparfums Italia Srl, and office space in Paris, France. We also maintain a distribution center in Liscate, Italy. In 2023 we obtained small, leased space for our new sales subsidiaries in Dubai and Switzerland, in addition to maintaining a leased sales office in Hong Kong.

 European Based Operations

Since March 2022, our European based operations have maintained their corporate headquarters at 10 rue de Solférino in the 7th arrondissement of Paris. This is an office complex combining three buildings connected by two inner courtyards and consists of approximately 40,000 total sq. ft. United States distribution operations for European based operations maintain their headquarters in New York City, with a lease that expires in May 2029. During 2022, we also purchased several small apartments at 96 rue de l’Université, Paris adjacent to the main office complex and have converted them into additional offices. A small office is located in Singapore for Asia-Pacific distribution by European based operations.

In addition, European based operations maintain an approximately 37,000 square meters (approximately 398,265 square feet) distribution center located in Criquebeuf sur Seine, France, with a term that expires May 2027 and an option to extend the term for an additional two years. Interparfums SA also has several agreements for warehousing and distribution services which are renewed on an annual basis, as well as one with a service provider that expires in 2024. Fees for such services are partially calculated based upon a percentage of sales, which is customary in the industry. 

We believe our office and warehouse facilities are satisfactory for our present needs and those for the foreseeable future. 

Item 3. Legal Proceedings

We are not a party to any material lawsuits.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Market for Our Common Stock

Our Company’s common stock, $.001 par value per share, is traded on The Nasdaq Global Select Market under the symbol “IPAR”. The following table sets forth, in dollars, the range of high and low closing prices for the past two fiscal years for our common stock.

As of February 9, 2024, the number of record holders, which include brokers and broker nominees, etc., of our common stock was 25. We believe there are approximately 47,503 beneficial owners of our common stock.

Corporate Performance Graph

The following graph compares the performance for the periods indicated in the graph of our common stock with the performance of the Nasdaq Market Index, the average performance the Company’s peer group for the year ended December 31, 2022 (the “2022 Peer Group”), and the average performance of the Company’s peer group for the year ended December 31, 2023 (the “2023 Peer Group”). The 2022 Peer Group consists of CCA Industries, Inc., Colgate-Palmolive Co., Estée Lauder Companies, Inc., Kimberly Clark Corp., Natural Health Trends Corp., Procter & Gamble Co., Revlon, Inc., Stephan Co., Summer Infant, Inc. and United Guardian, Inc. The 2023 Peer Group also includes Estée Lauder Companies, Inc. and Procter & Gamble Co. and replaces all other companies with e.l.f. Beauty, Inc., Coty Inc., L’Oréal SA, LVMH Moët Hennessy Louis Vuitton, Natura &Co Holding SS, Olaplex Holdings, Inc., and Shiseido Co Ltd. The Company changed its peer group in order to reflect the current competitive landscape in our industry more accurately. 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 were reinvested.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Inter Parfums, Inc., the NASDAQ Composite Index,
2022 Peer Group and 2023 Peer Group