By  on August 9, 2007

Revlon Inc. continued to reap the benefits of its restructuring plan, reporting a narrower quarterly loss and a solid sales gain.

The beauty firm's ongoing cost controls helped slim Revlon's loss during the second quarter to $11.3 million, or 2 cents a diluted share, from a loss of $87.1 million, or 20 cents a share, in the prior-year period. Revlon's sales for the quarter gained 8.8 percent to $349.2 million from $321.1 million in the year-earlier period.

The impact of Vital Radiance, which was discontinued last September, reduced second-quarter sales by approximately $14 million.

For the first half, the firm narrowed its loss to $46.5 million, or 9 cents a diluted share, from a loss of $145.3 million, or 36 cents a share, on sales that gained 4.8 percent to $677.8 million from $646.6 million in the year-ago period.

"We are executing our restructuring actions on schedule and we are benefiting from those actions," Revlon president and chief executive officer David Kennedy told analysts Wednesday. "We are right on track with our expectations."

In line with its strategy to contain costs, Revlon kept advertising spending stable during the quarter. Responding to one analyst who asked if Revlon would consider increasing advertising spending, as many of its competitors have done in recent quarters, to revive sales of the Revlon flagship brand, Kennedy said, "We are attempting to manage our key brand's profitably. We want to remain competitive, but we want to have profitable growth over time. Other companies might have other objectives." He added that the company's marketing efforts are focused on the effectiveness of brand communication and in-store execution.

Kennedy promised a full offering of new product introductions next year for both the Revlon and Almay brands across all categories, and upgrades to existing products. He clarified, however, that the emphasis remains managing the portfolio for profitable growth.

In the most recent quarter, Revlon's U.S. sales gained 13.4 percent to $204.2 million from $180 million in the year-earlier period, boosted by higher shipments of Almay products, and offset somewhat by lower shipments of Revlon color cosmetics. International sales gained 2.7 percent to $145 million from $141.1 million, driven by growth in the Asia-Pacific and Latin America regions, and partially offset by softness in Europe.Despite sales gains, Revlon's share of the U.S. color cosmetics market declined to 13.4 percent from 14.3 percent in the year-earlier period, and Almay's share dipped to 6.1 percent from 6.4 percent.

"So far Revlon has proved it can cut costs. I'd like to see if it can grow the business," said William Chappell, analyst with SunTrust Robinson Humphrey, noting that while sales increased 8.8 percent, the company's market share declined. "It's easy to lose market share, but it's difficult to win it back."

Commenting on the sluggishness of the Revlon brand, particularly in North America and Europe, Kennedy said that it was a result of actions in 2005 and 2006 to restage existing product franchises. He added that Revlon's renewed focus on building a strong product pipeline over the last nine months would improve performance over time.

Inter Parfums Profits and Guidance Up

NEW YORK — Inter Parfums Inc. posted second-quarter profits that rose 17.4 percent as the firm, based here, upped its diluted earnings per share guidance to $1.04 for the year.

Profits for the quarter ended June 30 were $3.7 million, or 18 cents a diluted share, compared with the $3.2 million, or 16 cents a share, Inter Parfums earned in the same period a year ago.

Russell Greenberg, the company's executive vice president and chief financial officer, attributed the higher EPS estimate in part to Inter Parfums' spring fragrance pact with women's wear retailer New York & Company Inc.

"It now appears very likely that the initial line of bath and body products for New York & Co. stores will be shipped in time for the 2007 holiday season," he said in a statement Wednesday afternoon. "The financial impact of shipping New York & Co. stores together with the financial effect of our acquisition of the Lanvin trademarks [last week] led us to increase our 2007 sales and earnings guidance."

First-half profits jumped 25.4 percent to $9.5 million, or 46 cents a diluted share, from $7.6 million, or 37 cents a share, in the first half of last year.

Looking ahead to the second half, Inter Parfums' chairman and chief executive officer, Jean Madar, noted in the statement, "The Gap bath and body product rollout to an additional 500 Gap stores is taking place during the third and fourth quarters. Similarly, this month, six new Gap eaux de toilettes are debuting at Gap Body stores with distribution to Gap stores continuing as the year progresses."Also this month," he added, "200 Gap stores will launch three men's fragrance collections and a complete grooming and skin care collection, followed by shipments to another 300 stores later in the fall." — Matthew W. Evans

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