This morning, we released our latest report to premium members, detailing why we believe shares of Elizabeth Arden (RDEN) could have 52% downside from today’s levels near $10. In our full report, we touch on the following red flags about the embattled cosmetics and fragrance company:

• RDEN’s dependence on celebrity fragrances comes at a terrible time, when the over-saturated fragrance industry is shifting to designer brands and quality over celebrity names.
• We believe that many of the licenses that RDEN owns for fragrances are for celebrities and designers whose peak fame is years behind them.
• Removing the value of questionable intangible assets on the company’s balance sheet reveals it may be much closer to an insolvency scenario than the numbers make it look.
• Recent filings and an S&P downgrade of the company’s debt could be forecasting more tumultuous results when RDEN reports in mid-August.
• Based on the average of numerous valuation scenarios, we believe RDEN shares could have 52% downside, alongside risk of a bankruptcy/insolvency scenario.
• The company claims in its 10-Q that its intangible assets are “fully impaired” despite stating in the 10-Q that “net sales of Justin Bieber and Nicki Minaj fragrances fell significantly below expectations” and that there is an “expectation for a continued decline of sales in future periods.”

For the official GeoInvesting write-up in its entirety, click here.

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