Parlux Fragrances Shareholder Nussdorf Challenges Perry Ellis Sale

[Originally published on Sept. 27, 2006. Corrected mistake regarding sales of PARL stock that was actually a sale of ECMV stock.]

The saga continues with Parlux Fragrances (PARL). Today there was an SEC filing by major shareholder, Glenn H. Nussdorf. I believe this 13D filing is what moved the price of PARL up almost 10 percent this morning. I discovered the details of Nussdorf’s letter at 13D Tracker (hat tip goes to Geoff Gannon for emailing me this).

Mr. Nussdorf sent a letter to the Parlux Fragrances’ Board of Directors indicating that he did not believe that Victory International would be able to buy the Perry Ellis line from Parlux Fragrances. Glenn Nussdorf provided the following three reasons why the transaction would not likely occur:

  1. Victory International does not have the financial means to go through with the transaction.
  2. The licensor of Perry Ellis would not likely consent to the transaction.
  3. It is likely that this transaction would require shareholder approval and some large shareholders might not support the sale of Perry Ellis.

So who is this Glenn Nussdorf? He is the owner of over 1.9 million shares of PARL (10.5 percent stake) and has been authorized to acquire more than 15 percent of Parlux’s outstanding shares. Glenn Nussdorf and his brother Stephen Nussdorf own 37% of E Com Ventures, Inc. (ECMV). Perfumania Marketing, E Com Ventures wholly-owned subsidiary, is a leading specialty perfume discount retailer that I believe is largely dependent on Parlux Fragrances products, and in particular, the Perry Ellis line. Mr. Nussdorf is no ordinary shareholder. He appears to bring a unique set of interests to this Parlux Fragrances roller coaster.

It appears that Parlux Fragrances has been disposing of its shares of E Com Ventures. I got this mixed up when I originally posted this article. The sale of E Com Ventures stock is likely helping Parlux deal with its cash needs.

Meanwhile, Parlux Fragrances CEO and Chairman, Ilia Leckach has been unloading a large percentage of his shares. Ilia Leckach holdings of PARL are down dramatically from the shares he and his family reported owning directly and indirectly on August 21, 2006. Mr. Leckach has sold 993,574 shares of PARL since August 21 according to filings. It appears Mr. Leckach has lost faith in his company. Maybe this also indicates that he might not put up a fight against Nussdorf.

It will be interesting to see if Glenn Nussdorf can wrestle control of Parlux Fragrances from Ilia Leckach. If Mr. Nussdorf is successful and can turn this company around, there could be some nice recovery for Parlux shareholders.

Disclosure: My family still owns shares of Parlux Fragrances. My hope is to get off this roller coast at the top of the next loop.

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