Elizabeth Arden learns the downside of Wal-Mart dependence

Bad news bears. (Google)
Bad news bears. (Google)

Elizabeth Arden had bad news for investors on Thursday: A $5 million loss for the quarter, on account of lower-than-expected sales. And it wasn't just because the mass perfume market hasn't been doing well since Justin Bieber's breakout "Girlfriend" scent in 2011. It was also, the Wall Street Journal reports, a big drop in orders from the company's biggest customer: Wal-Mart.

Placement in Wal-Mart's 4,690 stores throughout the U.S. is like crack for a brand of consumer goods: Instant access to millions of customers, with minimal distribution hassle. Elizabeth Arden, according to an SEC filing, got 13 percent of its $1.24 billion in sales last year through Wal-Mart, and a fifth of sales in North America. But the giant retailer has been adjusting its buying habits lately, keeping less on the shelves, stocking inventory closer to the holiday season when it expects to actually sell it. That may mean the perfume peddler will see higher-than-average sales next quarter. In the meantime, though, its stock tanked about 25 percent.

Of course, it's not as bad as having your entire business model depend on one point of sale--like, for example, Zynga's does on Facebook. When Facebook tweaked the news feed to show fewer Zynga games, the company took a huge beating, and still hasn't recovered. But as big-box retailers consolidate--and grocery stores, too--sudden purchasing decisions are something more brands will have to worry about.

Lydia DePillis is a reporter focusing on labor, business, and housing. She previously worked at The New Republic and the Washington City Paper. She's from Seattle.
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