IPAR 10-K & 10-Q changes, risk factors and insider trading

All of our rights relating to prestige fragrance brands, other than Off-White, LanvinLanvin, Goutal 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.

The US government has indicated its intent to adopt a new approach to trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements. It has initiated or is considering the imposition of tariffs on certain foreign goods, including fragrances and fragrance related products. Changes in US trade policy could result in one or more of US trading partners adopting responsive trade policies making it more difficult or costly for us to export our products to those countries. As an example, on February 1, 2025, the U.S. government announced a 25% tariff on product imports from certain countries, including Mexico and Canada, and 10% tariffs on product imports from certain countries, including China. However, a recent Supreme Court decision determined that the previously announced tariffs were not validly authorized, and a new global 15% tariff was instituted. Our business operations, financial condition, and results of operations could be significantly affected by these measures and the potential expansion of existing tariffs or implementation of new tariffs, trade restrictions, or retaliatory measures by China, Mexico, or Canada that could disrupt our established supply chain, increase costs of goods sold into the United States and this in turn could require us to increase prices to our customers which may reduce demand, or, if we are unable to increase prices, result in lowering our margin on products sold.

The warswar between Russia and Ukraine, and Israelthe andwar Hamaswith Iran or other Iranian sponsored actors could adversely impact our business and financial results.

The warswar between Russia and Ukraine,Ukraine and Israel and Hamas havehas negatively impacted our operations to a limited degree to date. However, futurethe impactswar towith Iran or Iranian sponsored actors could impact our CompanyCompany, which are difficult to predict due to the high level of uncertainty as to how these warsthey will or could evolve. Fuel supplies and supply chain cost 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.

As disclosed in Part II, Item 9A, “Controls and Procedures,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, we have identified material weaknesses in our internal controlscontrol over financial reporting related to to risk assessment, monitoring of controls, lack of documentation of evidenceevidencing of control operating effectiveness and information technology general controls. A material weakness is a deficiencydeficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable reasonable possibility that a material misstatement of the registrant’s Company’s financial statements will not be prevented or detected on a timely basis. As a result of the these material weakness,weaknesses, we concluded that our internal control over financial financial reporting and related disclosure controls and procedures were not effective as of December 31, 2024. We cannot be certain that the measures we may take in the future will be sufficient to remediate the control deficiencies that led to our material weaknesses in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses. The effectiveness of our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the possibility of human error and the risk of fraud. If we are unable to remediate our existing or any future material weaknesses in our internal control over financial reporting, our ability to record, process or report financial information accurately and to prepare financial statements in an accurate and timely manner could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and adversely impact our stock price.

Despite significant inflationary pressures that started during 2022 and continued into 2024, affecting many aspects of our business, especially increasing component costs and shipping, we were able to offset the effects of inflation during 2022 by increasing the prices of our products. Although inflation was a major factor in 2023 and continued to have impacts in 2024, we increased our sales prices to mitigate its impact to some degree in prior years and implemented cost saving efforts to mitigate these impacts in the current year. With the inflation moderating in 2025, we did increase our prices, predominately in the US, to partially offset the impact of tariffs. 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 certain of our fragrance products, which could have a material adverse effect on our business.

We have information technology systems (“IT 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.

Cybersecurity incidents may also result in the future from social engineering, i.e., the manipulation of people into sharing information, downloading malicious software, visiting malicious websites and sending money to criminal websites masquerading as legitimate websites, compromising their personal or organizational security, or masquerading of authorized users. Malicious activity may exploit design flaws and security weaknesses, or sabotage information systems. Cybersecurity incidents can also be caused by other malicious software programs or other attacks, such as ransomware, and “denial of service attacks.” Use of AI may intensify cybersecurity risks as techniques used in cyberattacks continue to become more sophisticated and thereby more dangerous. Malicious use of AI, or any other unauthorized access to our informational systems could result in disruption or damage to our information systems, and significant expense in remediating the damage, thereby adversely affecting our business and results of operations.

We produce and distribute fragrance products through our European based operations primarily under license agreements with brand owners, and European based fragrance product sales represented approximately 65%,68%, 65% and 68%65% of net sales for 2024,2025, 20232024 and 2022,2023, respectively. We have built a portfolio of prestige brands, which include Boucheron, Coach, Goutal, Jimmy Choo, Karl Lagerfeld, Kate Spade, Lacoste, Lanvin, Longchamp, Moncler, Montblanc, RochasRochas, Solférino and Van Cleef & Arpels, whose products are distributed in over 120 countries around the world. Our exclusive and worldwide license for the production and distribution of Lacoste brand perfumes and cosmetics became effective in January 2024.

Through our United States based operations, we also produce and distribute fragrances and fragrance related products. United States based operations represented 35%,32%, 35% and 32%35% of net sales in 2024,2025, 20232024 and 2022,2023, respectively. These fragrance products are sold primarily pursuant to license or other agreements with the owners of the Abercrombie & Fitch, Anna Sui, Donna Karan/DKNY, EmanualEmanuel Ungaro, Ferragamo, Graff, GUESS, Hollister, MCM, Oscar de la Renta, and Roberto Cavalli brands.

Substantially all of our prestige fragrance brands are licensed from unaffiliated third parties, and our business is dependent upon the continuation and renewal of such licenses. With respect to the Company’s largest brands, we license the Jimmy Choo, Coach, Montblanc, Coach,GUESS, GUESS,Lacoste, Donna Karan/DKNY, LacosteDKNY and Ferragamo brand names. This diversified portfolio of top brands represented 76%,77%, 73%76% and 71%73% of total sales in 2025, 2024, and 2023, and 2022, respectively.

We grow our business in two distinct ways. First, we grow by adding new brands to our portfolio, through new licenses,licenses or other arrangementsarrangements, or outright acquisitions of brands. Second, we grow through the introduction of new products and by supporting new and established products through advertising, merchandising and sampling, as well as by phasing out underperforming products, so we can devote greater resources to those products with greater potential. The economics of developing, producing, launching and supporting products influence our sales and operating performance each year. The introduction of new products may have some cannibalizing effect on sales of existing products, which we take into account in our business planning.

Our reported net sales are impacted by changes in foreign currency exchange rates as greater thanapproximately 50% of net sales of our European based operations are denominated in U.S. dollars, while almost all costs of our European based operations are incurred in euro. We address certain financial exposures through a controlled program of risk management that includes the use of derivative financial instruments and primarily enter into foreign currency forward exchange contracts to reduce the effects of fluctuating foreign currency exchange rates.

Net sales in 20242025 increased 10%2% compared to 2023.2024 Aton comparablea foreignreported currencybasis. exchangeOn rates,an netorganic basis, sales were also increasedup 10% in 2024,2% as compared to 2023,2024 with foreign exchange gains of which2% 9%offsetting isthe relatednegative toimpacts newof brands.the Dunhill exit in 2024. The average dollar/euro exchange rate for 20242025 was 1.08,1.13, compared to 1.08 in line with 2023.2024.

For European based operations, gross profit margin as a percentage of net sales was 67.0%,66.1%, 67.0% and 67.2% in 2025, 2024 and 68.2%2023, respectively. The bulk of the 0.9% erosion in 2024,gross 2023margin was and 2022, respectively. European based operations were negatively impacteddriven by brandtariffs andwhich channelrepresented mix.$9 These negative impacts were partially offset by the positive impact of certain one-time expenses related to inventorymillion in 2023.2025. For United States based operations, gross profit margin was 57.9%,58.2%, 57.9% and 57.0% and 54.7% in 2024,2025, 20232024 and 2022,2023, respectively. The year-over-year increase was driven by favorable brand andmix driven by the Dunhill discontinuation, channel mix.mix, and pricing actions which more than offset the negative $4.2 million impact of tariffs.

The Company’s selling, general and administrative expenses as a percentage of nets sales were 44.7%,45.5%, 44.7% and 44.6% and 45.3% in 2024,2025, 20232024 and 2022,2023, respectively. The percentage of net sales remainedincreased flatby 0.8% from the prior year asdriven increasedby amortization cost from the addition of the Lacoste license, which represented $6 million for the year, were offset due tohigher promotional and advertising activities bywhich ourrepresent European0.5% basedof operationsthe growingincrease, sloweras thanwell salesas growthunfavorable insegment 2024.mix.

For United StatesEuropean based operations, selling, general and administrative expenses increased 14%7% and 35%9% in 20242025 and 2023,2024, respectively, as compared to the corresponding prior year period, and represented 40.5%,46.7%, 39.7%46.3% and 39.1%47.1% of net sales in 2024,2025, 20232024 and 2022,2023, respectively. The increases in selling, general and administrative expenses asstem from a percentagecombination of nethigher sales were largely driven by continued investment in infrastructure and employee headcount to support the growth of the business as well as increased promotionalpromotion and advertising spending.expenditures and the increased costs were broadly in line with fluctuations in sales on other selling, general and administrative cost buckets.

Promotion and advertising included in selling, general and administrative expenses aggregated $294.7 million, $280.5 million,million and $261.3 million and $212.4 million in 2024,2025, 20232024 and 2022,2023, respectively. Promotion and advertising represented 19.3%,19.8%, 19.8%19.3% and 19.5%19.8% of net sales in 2024,2025, 20232024 and 2022,2023, respectively. Promotion and advertising are integral parts of our industry, and we continue to invest heavily to support new product launches and to build brand awareness. We believe that our promotion and advertising efforts have had a beneficial effect on sales. Additionally, as 20242025 saw a lighter innovation program than in prior years, the Company focused on increasing promotional and advertising spending to protect sell-out and support the continued success of our existing brands and to support the initial launches offuel our new brands, Lacoste and Roberto Cavalli. We also continueinvested todisproportionally developin the launch and implementbrand omnichannelbuilding concepts and compelling content to deliver an integrated consumer experience. As noted above, some promotion and advertising expenses were phased into 2025 for European based operations in order to further strengthenof our firstproprietary half of 2025.brand, Solférino. Long-term, we continue to anticipate that on a full year basis, promotion and advertising expenditures should aggregate approximately 21% of net sales. In 2026, we expect we will continue to make progress towards this goal as we ramp up investments to support the launches of Goutal in 2026 and prepare for the launches of the new fragrances under our Longchamps license and Off-White trademark in 2027.

The Company reviews intangible assets with indefinite lives for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. There was an impairment charge for trademarks with indefinite useful lives of $4.0 million and $6.8 million in 2024 and 2022, respectively,2024, relating to our Rochas fashion business and an impairment charge for trademarks with indefinite useful lives of $0.9 million in 2022 relating to our Intimate trademark.business. There waswere no impairment chargecharges for trademarks with indefinite useful lives in 2025 and 2023.

Overall, other income and expense was a lossgain of $1.0 million in 2025 as compared to losses of $6.4 million, and $1.8 million, and $0.1 million in 2024, 2023, and 2022,2023, respectively. The main drivers of the change between 20242025 and 20232024 are discussed in more detail below. These include ana one-time increase in interest expense on borrowingsgain of $0.4$7.6 million,million related to a gaindebt extinguishment, a hurt on foreign currency of $0.5$3.7 million, a gain on interest income related to cash and cash equivalents and short-term investments of $0.5$1.2 million, and lossesa reduction in interest expense on marketable securitiesborrowings of $2.1$0.7 million of which $1.5 million is unrealized. Additionally, there was a one-time gain of $3.1 million recognized in 2023 related to the sale of marketable securities.million.

Interest expense is primarily related to the financing of brand and licensing acquisitions and the financing of the headquarters of Interparfums SA. The increasedecrease in interest expense in 20242025 is related to increaseddecreases borrowingsin duringinterest therates year.in 2025. In December 2022, to finance the acquisition of the Lacoste trademark, the Company entered into a $51.9$58.8 million (€50 million) four-year loan agreement. The loan agreement bears interest at Euribor-1 month rates plus a margin of 0.825%. This variable rate debt was swapped for variable interest rate debt with a maximum rate of 2% per annum. Additionally, in April 2021, we completed the acquisition of the headquarters of Interparfums SA. The acquisition was financed by a 10-year approximately $124.7 $141 million (€120 million) bank loan which bears interest at one-month Euribor plus 0.75%. Approximately $83.1$94 million (€80 million) of the variable rate debt was swapped for fixed interest rate debt with a maximum interest rate of 2% per annum. The swap effectively exchanges the variable interest rate to a fixed rate of approximately 1.1%. In July 2024, the Company entered into a $47 million (€40 million) three-year loan agreement that bears a fixed interest rate of 4.03%. Additionally in JulyJune 2024,2025, the Company entered into a $41.6$23.5 million (€4020 million) three-year loan agreement that bears a fixed interest rate of 4.03%.3.0% and into a $35.3 million (€30 million) three-year loan agreement which bears interest at one-month Euribor plus 0.88%. The loanthree wasmost recent loans were used to improve our short-term cash position. Long-term debt including current maturities aggregated $157.3$176.0 million, $157.5 $157.3 million and $180.0$157.5 million as of December 31, 2024,2025, 20232024 and 2022, 2023, respectively.

We enter into foreign currency forward exchange contracts to manage exposure related to receivables from unaffiliated third parties denominated in a foreign currency and occasionally to manage risks related to future sales expected to be denominated in a foreign currency. Greater thanApproximately 50% of net sales of our European based operations are denominated in U.S. dollars. Gains and losses in derivatives designated as hedges are accumulated in other comprehensive income and gains and losses in derivatives not designated as hedges are included in (gain) loss on foreign currency on the accompanying consolidated income statements. Such gains and losses were immaterial in each 2025, 2024, 2023, and 2022.2023.

The effective tax rate for European based operations was 25.8%,24.2%, 25.8% and 27.3% in 2025, 2024 and 25.2%2023, respectively. The lower effective tax rate in 2024,2025 compared to 2024 resulted from a $3 million favorable outcome in 2025 to our mutual agreement procedure between the French and United States tax authorities in which we were able to reclaim the tax assessment paid in France in 2023. The gain was offset by a $1 million one-time tax assessment in 2025 included in the tax expense as a result of a tax audit conducted for the 2022 and 2023 andtax 2022, respectively.years. Our higher effective tax rate in 2023 differswas fromdriven the 25% statutory rate due toby a one-time tax assessment of € 2.8 million ($3.1 million) included in tax expense as the result of a tax audit conducted for the 2020 and 2021 tax years.years, and which was recovered in 2025 as discussed above.

The effective tax rate for United States based operations was 20.4%,21.5%, 20.4% and 19.3% and 13.8% in 2024,2025, 20232024 and 2022,2023, respectively. Our effective tax rate differs from the 21% statutory rate in the United States as it is a blended rate across multiple jurisdictions, and takes into account benefits received from the exercise of stock options as well asoptions, deductions we are allowed for a portion of our foreign derived intangible income, slightly offsetand by state and local taxes. Additionally, in the third quarter of 2022, our United States based operations recognized a one-time tax benefit of $2.5 million associated with the 2021 Salvatore Ferragamo acquisition. At the time of the acquisition, we had not recognized a deferred tax benefit as there were uncertainties concerning its potential recoverability; however, as of September 30, 2022, recoverability was deemed likely. Other than as discussed above, we did not experience any significant changes in tax rates, and none were expected in the jurisdictions where we operate.

Net income attributable to Interparfums, Inc. steadily increased, and was $168.4 million, $164.4 million,million and $152.7 million and $120.9 million in 2024,2025, 20232024 and 2022,2023, respectively.

Net income attributable to European based operations was $143.9 million, $140.1 million,million and $124.0 million and $107.3 million in 2024,2025, 20232024 and 2022,2023, respectively, while net income attributable to United States based operations was $68.8 million, $68.9 million,million and $63.8 million and $43.7 million in 2024,2025, 20232024 and 2022,2023, respectively. The significant fluctuations in net income for both European and United States based operations are directly related to the previous discussions relating to changes in sales, gross profit margins, and selling, general and administrative expenses.

The Company hopes to continue to benefit from its strong financial position to potentially acquire one or more brands, either on a proprietary basis or as a licensee. In December 2024, our 72% owned French subsidiary, Interparfums SA, obtainedacquired all Off-White brand names and registered trademarks for Class 3 fragrance and cosmetic products, subject to an existing license that expiresexpired on December 31, 2025, when Interparfums SA will beginbegan commercial use of the fragrance brands. Additionally in December 2024, we renewed the Van Cleef & Arpels license agreement for an additional nine-year term, beginning January 1, 2025. In July 2023, we entered into a global licensing agreement for the creation, development and distribution of fragrances and fragrance related products under the Roberto Cavalli brand. Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry. This license took effect in July 2023,2023 and began shipping products in February 2024.

In December 2022, we entered into a long-term global licensing agreement for the creation, development and distribution of fragrances and fragrance related products under the Lacoste brand. Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry. This new license took effecteffect, and products started to ship in January 2024.

Cash provided by operating activities aggregated $187.6$214.9 million, $105.8$187.6 million, and $73.0$105.8 million in 2024,2025, 20232024 and 2022,2023, respectively. In 2024,2025, working capital items used $49.7$20.7 million in cash from operating activities, as compared to $102.0$51 million in 20232024 and $107.7$103.2 million in 2022.2023. Although, from a cash flow perspective, accounts receivable is up 17%8% from year-end 2023,2024, the balance is reasonable based upon 20242025 record sales levels. While days sales outstanding was 6673 days, up from 6266 days and 6062 days in 20232024 and 2022,2023, respectively, driven by changes in our channel mix, we are still seeing strong collection activity and do not anticipate any issues with collections of accounts receivable. From a cash flow perspective, inventory levels are updown 5%15% inand support of our overall sales growth. Inventoryinventory days on hand increaseddecreased slightlyto 244 days in 2025, as compared to 259 days in 2024, as compared toand 252 days in 2023,2023. andThese 227decreases daysare ina 2022,direct as we have built up inventory related to the inclusionresult of the LacosteCompany's and Roberto Cavalli licenses, which require large inventory needs to support the launches of these brands. Additionally, as we are workingefforts to manage down our inventory levels,levels. weWe have seen increased conversion of raw materials into finished goods in recent years resulting in finished goods making up 63% of our inventory levels at both December 31, 2025 and 2024 as compared to 57% and 49% at December 31, 2023 and 2022, respectively.2023. Due to past supply constraints, we had strived to carry more inventory overall, source the same components from multiple suppliers and when possible, manufacture products closer to where they are sold. These constraints have largely abatedabated, and we are gradually reversing some of these previous interventions. We are beginning to seeseeing the impacts of these recent inventory management efforts and will continue to work to optimize inventory levels.

Further,In inMarch December 2024,2025, the Company paid approximately $16$19.7 million for the purchase of the Off-WhiteGoutal Trademark,trademark. withAdditionally, anduring the second and third quarters the Company purchased approximately $18.2 million of additional $2property millionin payableParis overattached twoto years.its French headquarters.

Our business is not capital intensive as we do not own any manufacturing facilities. On a full year basis, we typically spend approximately $5 million on tools and molds,molds fluctuates depending on our new product development calendar.calendar and is typically not material. Capital expenditures also include amounts for office fixtures, computer equipment and industrial equipment needed at our distribution centers.

Cash flows used in financing activities in 20242025 predominately reflect issuances and repayment of debt and payment of dividends to stockholders.

Our short-term financing requirements are expected to be met by available cash on hand at December 31, 2024,2025, and by short-term credit lines provided by domestic and foreign banks. The principal credit facilities for 20242025 consist of a $70$45 million unsecured revolving lines of credit provided by a consortium of domestic commercial banks and approximately $8.3$9.4 million in credit lines provided by a consortium of international financial institutions. Balances due from short-term borrowings totaled $8.3$9.4 million and $4.4$8.3 million as of December 31, 20242025 and 2023,2024, respectively.

In February 2022,2023, our Board of Directors authorized an annual dividend of $2.00 per share, payable quarterly. In February 2023, our Board of Directors authorized an increase in the annual dividend to $2.50 per share and in February 2024, our Board of Directors increased the annual dividend to $3.00 per share. In February 2025, our Board of Directors further increased the annual dividend to $3.20 per share, and in 2026 our Board of Directors maintained the annual dividend at $3.20 per share. The next quarterly cash dividend of $0.80 per share is payable on March 28,31, 20252026 to shareholders of record on March 14,16, 2025.2026.

Inflation rates in the U.S. and foreign countries in which we operate did not have a significant impact on operating results for the year ended December 31, 20242025, .however, we have already started to see the impacts of tariffs on our cost structure and have adjusted our pricing accordingly. As such, we anticipate potential inflationary impacts in the first quarter of 2026 and beyond as our suppliers potentially adjust their pricing as well.

We produce and distribute fragrance products through our European based operations primarily under license agreements with brand owners, and European based fragrance product sales represented approximately 70% and 72% of net sales for the threesix months ended MarchJune 31,30, 2026 and 2025. We have built a portfolio of prestige brands, which include Annick Goutal, Boucheron, Coach, Goutal, Jimmy Choo, Karl Lagerfeld, Kate Spade, Lacoste, Lanvin, Longchamp, Moncler, Montblanc, Off-White, Rochas, Solférino and Van Cleef & Arpels, whose products are distributed in over 120 countries around the world.

Through our United States based operations, we also produce and distribute fragrance and fragrance related products. United States based operations represented 30% and 28% of net sales for the threesix months ended MarchJune 31,30, 2026 and 2025.2025, respectively. These fragrance products are sold primarily pursuant to license or other agreements with the owners of the Abercrombie & Fitch, Anna Sui, Donna Karan/DKNY, Emanuel Ungaro, Ferragamo, Graff, GUESS, Hollister, MCM, Oscar de la Renta and Roberto Cavalli brands.

As a percentage of net sales for the threesix months ended MarchJune 31,30, 2026 and 2025, product sales for the Company’s largest brands represented 81% and 76%,77%, respectively, with a split by brand as follows:

For the threesix months ended MarchJune 31,30, 2026, Macy's, our top retail customer, accounted for approximately 12%10% of net sales. No one customer represented 10% or more of net sales for the threesix months ended MarchJune 31,30, 2025.

We grow our business in two distinct ways. First, we grow by adding new brands to our portfolio, through new licenses or other arrangements, or outright acquisitions of brands. Second, we grow through the introduction of new products and by supporting new and established products through advertising, merchandising and sampling, as well as phasing out underperforming products, so that we can devote greater resources to those products with greater potential. The economics of developing, producing, launching and supporting products influence our sales and operating performance each year. The introduction of new products may have some cannibalizing effect on sales of existing products, which we take into account in our business planning.

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 neededthe components we need from our suppliers. These components are received and stored directly at our third party fillers or received at one of our distribution centers. For those components received at one of our distribution centers, based upon production needs, the components are subsequently 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.

Please see our discussion of Recent Important Events, which is incorporated by reference to Note 2 to the Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for the quarter ended MarchJune 31,30, 2026.

Three and Six Months Ended MarchJune 31,30, 2026 as Compared to the Three and Six Months Ended MarchJune 31,30, 2025

While the 2026 first quarter experiencedWith a slightrich declinelineup inof organicfragrance sales,extensions net sales grew overall, andplanned, we remain cautiously optimistic about the remainder of 2026. Looking ahead to 2027, we continue to be optimistic by the enhanced offerings within our current portfolio of brands, the introduction of new fragrances from recently acquired brands and licenses, and the selective pursuit of incremental brand opportunities. WhileWe have a series of blockbuster launches planned for 2027 and 2028, and with the paceproven of growth in the market is starting to normalize closer to historical levels following massive growth seen over the past few years, the powerstrength of our diversebusiness brandmodel, portfolio,we inremain combinationwell withpositioned ourto agilecontinue growing as we navigate a dynamic operating model, should help us gain market share.environment.

In the threesix months ended MarchJune 31,30, 2026, net sales in our largest market, North America, rose 7%5% as compared to the prior year periodperiod, behinddriven by continued market growth, the launch of several extensions, in particularparticularly for Coach, as well as successful marketing and advertising investments, while sales in Western Europe remaineddeclined flat3% behinddue slowto slower consumer demand. Our sales in Asia/Pacific decreasedincreased by 7%14% driven by distributionbrand changesinitiatives wewith implemented in 2025 in South KoreaCoach and India,Montblanc and softerexpansion consumerof demandGUESS in Australia/ and New Zealand,Zealand. whichOur werenew partiallyaffiliate compensatedin byKorea is off to a strong growthstart, and after sluggish sales over the past few years, the business is growing again in China.the first half of 2026. Central and South America net sales increased 23%15% due to the success of women'swomen’s and men'smen’s Coach franchises and the strength of the Montblanc Legend line. Our net sales in Eastern Europe decreased 12%7% in the threesix months ended MarchJune 31,30, 2026 as compared to the prior year period driven by operational difficulties in certain countries, which disproportionately impacted Lanvin and Lacoste. The war in the Middle East has again led to a significant decline in our sales in the Middle East and Africa netRegion salesthat alsowas declineddown 12%24%, primarilyweighting duesignificantly toon recentour intensificationoverall of the conflicts in those regions.results.

The Company’s gross profit margin as a percentage of net sales was 65.1%65.5% and 65.3% for the three and six months ended MarchJune 31,30, 2026 as compared to 63.7%66.2% and 65.0% for the corresponding period of the prior year. The increase was the result of favorable segment, brand and channel mix as well as lower than expected destruction costs. These were partially offset by tariffstariff impacts which represented ana net expense of $6$8.2 million in the threesix months ended MarchJune 31,30, 2026 as compared to the prior year period. Furthermore, as of June 30, 2026, the company has received $8.7 million in IEEPA tariff refunds, of which $6.9 million have been recognized as a non-recurring reduction in cost of sales. Overall, the Company is expecting approximately $17.6 million in refunds.

For European based operations, gross profit margin as a percentage of net sales was 67.4% for the three and six months ended MarchJune 31,30, 2026, respectively, as compared to 65.5%68.3% and 66.9% for the corresponding period of the prior year.year, respectively. The decrease in the three months ended June 30, 2026 was the result of unfavorable brand and channel mix, as well as higher costs related to tariffs, partially offset by one time tariff refunds. The increase in the six months ended June 30, 2026 was the result of favorable brand and channel mixmix, lower destruction costs, as well as lower$2.7 thanmillion expectedof destructionIEEPA costs.tariff refunds. These were partially offset by tariffstariffs, which represented an additional expense of $4$4.5 million in the threesix months ended MarchJune 31,30, 2026 as compared to the prior year period.

For United States based operations, gross profit margin as a percentage of net sales remainedwas flat61.6% atand 58.9%60.3% for the three and six months ended MarchJune 31,30, 2026 respectively, as compared to 58.7%60.7% and 59.7% for the corresponding period of the prior year. FavorableTariff brandrefunds andrepresenting channel$4.2 mixmillion as well as lower thanlevels expectedof destructiondestructions costs werehelped offset byunfavorable tariffschannel whichand representedproduct anmix expense of $2 million in the three months ended March 31, 2026impacts as comparedwell toas thehigher priorongoing yeartariff period.costs.

The Company’s selling, general and administrative expenses as a percentage of net sales were 43.6%51.2% and 47.4% for the three and six months ended MarchJune 31,30, 2026 as compared to 41.6%48.5% and 45.0% for the three and six months ended MarchJune 31,30, 2025. The increase in selling, general and administrative expenses as a percentage of net sales in both the quarter and six month period resulted from marketing investments in brands, royalty costs growing ahead of sales driven by unfavorable brand mix as well higher logistics costs related to supply chain transitions and channel mix.

For European based operations, selling, general and administrative expenses increased 8.8%7.5% and increased 8.1% for the three and six months ended MarchJune 31,30, 2026, respectively as compared to the corresponding period of the prior year, and represented 41.4%53.9% and 47.4% of net sales for the three and six months ended MarchJune 31,30, 2026, as compared to 38.7%48.2% and 43.4% for the three and six months ended MarchJune 31,30, 2025. The increase in expenses for both periods was largely driven by increaseshigher marketing expenses due to the timing of product launches in employeethe relatedsecond costsquarter of 2026 as wewell areas buildinginvestments upbehind ourthe Korean subsidiary and higher logistics costs related to increased warehouse fees.brands. Royalty costs also grew ahead of sales driven by unfavorable brand mix. Employee related costs expanded as we are building up our Korean subsidiary, and we also saw higher logistics costs related to increased warehouse fees and supply chain transitions. For United States based operations, selling, general and administrative expenses increased 2.5%8.6% and increased 5.6% for the three and six months ended MarchJune 31,30, 20262026, respectively, as compared to the corresponding period of the prior year, in line withbelow sales increases, and represented 47.9%44.2% and 46.0% of net sales for the three and six months ended MarchJune 31,30, 2026, as compared to 47.6%48.0% and 47.8% for the three and six months ended MarchJune 31,30, 2025. Despite higher selling, general and administrative investments overall, the decrease as a percentage of net sales in the three and six month periods were driven by productivity gains behind the accelerated sales growth, which were partially offset by unfavorable brand mix on royalty expenses.

Promotion and advertising included in selling, general and administrative expenses aggregated $51.6$77.2 million and $128.8 million for the three and six months ended MarchJune 31,30, 2026, respectively, as compared to $51.5$68.8 million and $120.4 million for the corresponding period of the prior year and represented 15.0%22.6% and 18.8% of net sales for the three and six months ended MarchJune 31,30, 2026, respectively, as compared to 15.2%20.6% and 17.9% for the corresponding period of the prior year. Promotion and advertising are integral parts of our industry, and we continue to invest heavily to support new product launcheslaunches, new brands and to build brand awareness. We are also investing in line with anticipated sell out by our retailers, which we believe are higher than our reported sales. We believe that our promotion and advertising efforts have a beneficial effect on sales.sales, Asand as such, the Company is focused on increasing promotional and advertising spending to support the continued success of our brands. LongWe term,are reinvesting the tariff refunds in order to protect our top line growth and set ourselves up for a successful 2027, as such, we continue to anticipate that on a full year basis, promotion and advertising expenditures will aggregateapproach our long term target of approximately 21% of net sales.

Royalty expense included in selling, general and administrative expenses aggregated $31.9$30.9 million and $62.8 million for the three and six months ended MarchJune 31,30, 2026, respectively, as compared to $28.1$27.7 million and $55.8 million for the corresponding period of the prior year. Royalty expense represented 9.3%9.1% and 9.2% of net sales for the three and six months ended MarchJune 31,30, 2026 as compared to 8.3% of net sales for the corresponding periods of the prior year. This increase was primarily driven by unfavorable brand mix.

As a result of the above analysis regarding net sales, gross profit margins and selling, general and administrative expenses, our operating margins aggregated 21.5%14.4% and 17.9% for the three and six months ended MarchJune 31,30, 2026, respectively, as compared to 22.2%17.7% and 20.0% for the corresponding period of the prior year.

Overall, other income and expense for the threesix months ended MarchJune 31,30, 2026, was a gain of $1.1$0.4 million as compared to a loss of $1.7$6.7 million in the corresponding prior year period. The main drivers of the change are discussed in more detail below. These include the positive impact of the change in foreign currency where we recognized a loss of only $0.1$0.2 million in the first three monthshalf of 2026 compared to a loss of $0.8$2.4 million in the first three monthshalf of 2025. Additionally, we had a gain on interest income related to cash and cash equivalents and short-term investments of $1.7$4.4 million and a reduction in interest expense on borrowings of $0.1$0.5 million.

Interest expense is primarily related to the financing of brand and licensing acquisitions, as well as our headquarters in Paris. Long-term debt including current maturities aggregated $157.3$142.8 million and $176.0 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively. Interest expense was $1.4$2.6 million in the threesix months ended MarchJune 31,30, 2026 compared to $1.5$3.1 million in the prior year period.

We enter into foreign currency forward exchange contracts to manage exposure related to receivables from unaffiliated third parties denominated in a foreign currency and occasionally to manage risks related to future sales expected to be denominated in a foreign currency. Approximately 50% of net sales of our European based operations are denominated in U.S. dollars. Gains and losses in derivatives designated as hedges are accumulated in other comprehensive income and gains and losses in derivatives not designated as hedges are included in (gain) loss on foreign currency on the accompanying consolidated income statements. Such gains and losses were immaterial in the three and six months ended MarchJune 31,30, 2026 and 2025.

Interest and investment income represents interest earned on cash and cash equivalents and short-term investments and realized and unrealized gains and losses on marketable equity securities. Interest income was $1.6$3.0 million in the threesix months ended MarchJune 31,30, 2026 compared to $1.3$2.6 million in the prior year period. Additionally, we recognized gains on marketable equity securities of $0.7$0.1 million in the threesix months ended MarchJune 31,30, 2026 compared a loss of $0.7$3.4 million in the threesix months ended MarchJune 31,30, 2025.

Our consolidated effective tax rate was 24.6%24.2% and 24.5%24.3% for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The Company's effective income tax rate is primarily affected by the geographic mix of earnings among jurisdictions with different statutory tax rates, the benefit associated with the Foreign-Derived Intangible Income ("FDII") deduction, excess tax benefits related to stock-based compensation, state income taxes, and other permanent differences recognized during the period. These items collectively result in the Company's effective tax rate differing from the U.S. federal statutory rate. The company does not have a jurisdictional tax forecast but uses a forecasted tax rate by segment to validate the quarterly effective tax rate. The effective tax rate for our European based operations remained flat at 25.4% for both the threesix months ended MarchJune 31,30, 2026 as compared to 25.5% for the three months endedand 2025. The effective tax rate for United States based operations was 19.7%20.4% for the threesix months ended MarchJune 31,30, 2026, as compared to 18.1%18.8% for the corresponding period of the prior year. Our effective tax rate for United States based operations differs from the 21% statutory rate in the United States as it is a blended rate across multiple jurisdictions, and takes into account benefits received from the exercise of stock options as well as deductions we are allowed for a portion of our foreign-derived deduction-eligible income, slightly offset by state and local taxes. Other than as discussed above, we did not experience any significant changes in tax rates, and none were expected in jurisdictions where we operate. We also did not have any material discreet tax items this quarter nor significant changes in uncertain tax positions, valuation allowances, tax examinations, or enacted law changes. The Company was notified in June 2026 by the Internal Revenue Service that the Company will undergo an audit for the 2024 tax year.

Net income attributable to Interparfums, Inc. was $43.4$30.5 million and $73.9 million for the three and six months ended MarchJune 31,30, 2026, respectively, as compared to $42.5$32.0 million and $74.5 million for the corresponding period of the prior year.

Net income attributable to European based operations was $49.9$22.8 million and $72.6 million for the three and six months ended MarchJune 31,30, 2026, as compared to $48.1$32.7 million and $80.9 million for the corresponding period of the prior year, while net income attributable to United States based operations wasincreased $8.4to $15.5 million and $23.9 million for the three and six months ended MarchJune 31,30, 2026, as compared to $8.7$9.6 million and $18.2 million for the corresponding period of the prior year. The fluctuations in net income for both European based operations and United States based operations are directly related to the previous discussions pertaining to changes in sales, gross margin, and selling, general and administrative expenses.

The noncontrolling interest arises from our 72% owned subsidiary in Paris, Interparfums SA, which is also a publicly traded company, as 28% of Interparfums SA shares trade on the Euronext. Net income attributable to the noncontrolling interest is directly related to the profitability of our European based operations and aggregated 28% of European based operations net income for both the threesix months ended MarchJune 31,30, 2026 and 2025. Net profit margins attributable to Interparfums, Inc. for the threesix months ended MarchJune 31,30, 2026 and 2025 aggregated 12.6%10.8% and 12.5%,11.1%, respectively.

Our conservative financial tradition has enabled us to amass significant cash balances. As of MarchJune 31,30, 2026, we had $237.1$211.3 million in cash, cash equivalents and short-term investments, the majority of which are held in euros by our European based operations and is readily convertible into U.S. dollars. We have not experienced any liquidity issues to date, and do not expect any liquidity issues relating to such cash and cash equivalents and short-term investments.

As of MarchJune 31,30, 2026, working capital aggregated $692$664 million. Approximately 79%74% of the Company’s total assets are held by European based operations, and approximately $285$280 million of trademarks, licenses and other intangible assets are also held by European based operations.

The Company is party to a number of licenses and other agreements for the use of trademarks and rights in connection with the manufacture and sale of its products expiring at various dates through 2049. In connection with most of these license agreements, the Company is subject to minimum annual advertising commitments, minimum annual royalties and other commitments. See Item 8. Financial Statements and Supplementary Data – Note 11 – Commitments in our 2025 annual report on Form 10-K, which is incorporated by reference herein. Future advertising commitments are estimated based on planned future sales for the license terms that were in effect at December 31, 2025, without consideration for potential renewal periodsperiods, and do not reflect the fact that our distributors share our advertising obligations.

The Company hopes to continue to benefit from its strong financial position to potentially acquire one or more brands, either on a proprietary basis or as a licensee. In January 2026, we entered into long-term global licensing agreements for the creation, development and distribution of fragrances and fragrance related products under the David Beckham and Nautica brands, effective April 1, 2028 and January 1, 2030, respectively. In July 2025, our 72% owned French subsidiary, Interparfums SA, signed an exclusive fragrance license agreement with Longchamp running through December 31, 2036. Our rights under these licenses are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry. The first launch under our Longchamp license is expected in 2027. In June 2025, our 72% owned French subsidiary, Interparfums SA, acquired all intellectual property rights relating to Maison Goutal held by Amorepacific Europe, which iswas operating the Annick Goutal brand under an existing license agreement that expired on December 31, 2025, when Interparfums SA began commercial use of the fragrance brand. Additionally, in June 2025, we renewed the Coach license agreement for an additional five-year term, extending the license through June 30, 2031.

Cash provided by operating activities aggregated $0.1$45.7 million for the threesix months ended MarchJune 31,30, 2026 compared to cash used in operating activity of $7.4$4.5 million for the threesix months ended MarchJune 31,30, 2025. For the threesix months ended MarchJune 31,30, 2026, working capital items used $67.3$61.7 million in cash from operating activities, as compared to $70.0$108.9 million in the 2025 period. From a cash flow perspective, accounts receivables are updown 6%3% from year end 2025. The balance is reasonable based on first quarter 2026 sales levels and seasonality of the business. Days' sales outstanding increaseddecreased slightly to 7873 days, up from 74 days in the corresponding period of the prior year, driven by changes in our channel mix. DespiteWe thecontinue increase,to we are still seeingsee strong collection activity and do not anticipate any issues with collections of accounts receivable. From a cash flow perspective, inventory levels as of MarchJune 31,30, 2026 increased 7%9% from year end 2025.2025 driven by the seasonality of the business. Despite theforeign increase,exchange headwinds, our inventories are down significantly year over year with $376 million at June 30, 2026 compared to $425 million at June 30, 2025, translating to a reduction of 34 days inventory on hand as we continue to drive inventory efficiencies and work to increase conversion of raw materials into finished goods,goods. resultingOperating cash flow also benefited in finishedthe goodssix makingmonths upended 64%June 30 2026 from the receipt of our$8.7 inventorymillion levelsof IEEPA tariff refunds. The Company has paid an additional $8.9 million of IEEPA tariffs which were not yet refunded at MarchJune 31,30, 20262026, asof comparedwhich to 63% at March 31, 2025. Despite foreign exchange headwinds, our inventories are down significantly year over year with $370$8 million atwas Marchreceived 31,in 2026July compared to $396 million at March 31, 2025, translating to a reduction of 17 days inventory on hand.2026.

Cash flows used in investing activities in 2026 are comprised of the net effect of purchases and sales of short-term investments. These investments consist of certificates of deposit with maturities greater than six months, marketable equity securities and other contracts. In the first quarter of 2026, our strong cash flow position has enabled us to increase our short-term investments by $23 million compared to the year ended December 31, 2025.

In March 2025, the Company paid approximately $19.7 million for the purchase of the Annick Goutal trademark.

Our business is not capital intensive as we do not own any manufacturing facilities. On a full year basis, what we spend on tools and molds fluctuates depending on our new product development and is typically not material. Capital expenditures also include amounts for office fixtures, computer equipment, and industrial equipment needed at our distribution centers.

Our short-term financing requirements are expected to be met by available cash on hand at MarchJune 31,30, 2026, and by short-term credit lines provided by domestic and foreign banks. The principal credit facilities for 2026 consist of $45 million in unsecured revolving lines of credit provided by a consortium of domestic commercial banks and approximately $9.2$9.1 million (€8 million) in credit lines provided by a consortium of international financial institutions. There was $4.6$2.8 million of short-term borrowings outstanding pursuant to these facilities as of MarchJune 31,30, 2026 and $7.6$9.4 million outstanding as of MarchJune 31,30, 2025.

In February 2025, our Board of Directors authorized an annual dividend to $3.20 per share, and in 2026 our Board of Directors maintained the annual dividend at $3.20 per share. The next quarterly cash dividend of $0.80 per share is payable on JuneSeptember 30, 2026 to shareholders of record on JuneSeptember 15, 2026.

Inflation rates in the United States and foreign countries in which we operate did not have a significant impact on operating results for the threesix months ended MarchJune 31,30, 2026; however, we have already started to see the impacts of tariffs on our cost structure and had adjusted our pricing accordingly in 2025. We continue to monitor for potential inflationary impacts as our suppliers potentially adjust their pricing as well.