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Beauty Beat: Revlon’s 3Q Loss Widens As Sales Decline 7 Percent … Paris Court Nixes Suit Against L’Oréal

<B>Revlon’s 3Q Loss Widens As Sales Decline 7 Percent</B> <BR><BR>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. <BR><BR>For the three...

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.

This story first appeared in the November 11, 2004 issue of WWD.  Subscribe Today.

Meanwhile, the company continued to make progress in reducing its massive debt. The company finished the quarter with $1.32 billion in long-term debt, 29.5 percent less than the $1.87 billion figure with which it started the year.

“We recognize we’ve got a great deal of work to do, but nothing that we’ve seen over the last few years from our consumers or our retail customers diminishes our confidence in the absolute resiliency of our brands and the power of our strategy,” said Stahl. — Ross Tucker

Paris Court Nixes Suit Against L’Oréal

PARIS — France’s highest appeals court has stymied a long-standing case the daughter of German-Jewish deportees had filed against French cosmetics giant L’Oréal. At stake was a request for an investigation into a real estate transaction dating back to pre-World War II Germany.

In the decision handed down Tuesday, the appeals court ruled against pursuing a criminal investigation, citing issues such as a lack of jurisdiction and the amount of time that had lapsed since the transaction.

Edith Rosenfelder, 76, originally filed a criminal suit in 2001, claiming extortion and receiving of stolen property over the acquisition of her family homestead in Karlsruhe, Germany. The property in question was sold in 1938 to an insurance group, which in turn sold the property to L’Oréal in 1954.

Rosenfelder sought to open a criminal investigation into the conditions of the 1954 sale. This is the third time Rosenfelder’s case has been rejected by the French courts. The original suit was dismissed in April 2003 based on time restrictions and legal jurisdiction. Rosenfelder appealed that decision. In January 2004, the court upheld its ruling, effectively disassociating the charges of extortion and receiving of stolen property in its written decision.

It is the January 2004 decision that the plaintiff sought to overturn this week, arguing that the charges were indissociable. Since the Supreme Court of Appeals arbitrates strictly on points of law — rather than judging the merits of each side’s argument — this case is now closed with respect to Rosenfelder’s quest to initiate a criminal investigation here.

The plaintiff could pursue the case, however, either at the level of the European Court of Human Rights or by filing with the French Court of Human Rights, a process that could take five years or more. — Tina Isaac