Revlon’s 3Q Loss Widens As Sales Decline 7 Percent

NEW YORK — Softening sales and the early retirement of debt pushed Revlon Inc. into deeper shades of red for the third-quarter and nine-month periods.

For the three months ended Sept. 30, the New York-based cosmetics giant saw losses widen to $91.6 million, or 25 cents a diluted share, compared with a loss of $54.7 million, or 78 cents, in the year-ago period. Debt refinancing measures, including the redemption of all of its 12 percent senior notes, resulted in a $59 million expense for the quarter.

Sales slid 7 percent for the quarter to $294.4 million compared with $316.5 million in the same period a year ago.

“There’s no question that the economic environment over the past couple of years, coupled with the recent run-up in oil prices has had a dampening effect on our category trends,” said Jack Stahl, president and chief executive officer, during the company conference call. “We also believe that the shopping experience for beauty products inside many mass retailers probably is not maximizing the potential for the excitement and the fun that shopping for cosmetics offers, and clearly this is something that we can help to address, and we’re very much focused on doing just that.”

North American sales fell 10 percent to $192 million from $212 million. Thomas McGuire, chief financial officer, said during the company conference call that the downturn was primarily due to “higher provisions for returns associated with our 2005 new-products launch.” In a statement, Stahl further noted weakness in the color cosmetics category in the U.S. mass retail channel.

International sales fell about 2 percent to $102 million from $105 million in the prior period. However, excluding the positive effects of currency fluctuation, sales were down 8 percent. Again, the firm attributed much of the decline to increases in returns, allowances and discounts.

For the nine months to date, losses expanded to $188.7 million, or 68 cents a diluted share, compared with losses of $141.2 million, or $2.36, in the same period a year ago.

Sales declined 1.3 percent to $918.9 million from $930.8 million. North American sales fell 6 percent to $605 million while international sales rose 9 percent to $314 million. Excluding the effects of favorable currency exchange, international sales rose 1 percent.

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