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Beauty Beat: Revlon Loss Widens, Points to Stronger Sales Ahead

Although Revlon Inc.’s losses for the second quarter widened slightly as color cosmetics sales fell in North America, management told Wall Street analysts that fourth-quarter sales are expected to be strong.

NEW YORK — Although Revlon Inc.’s losses for the second quarter widened slightly as color cosmetics sales fell in North America, management told Wall Street analysts that fourth-quarter sales are expected to be strong.

For the quarter ended June 30, Revlon delivered international sales that jumped 12 percent to $109 million. In North America, sales declined 8 percent to $207 million from $225 million. In turn, total sales for the quarter showed a decline of 2 percent to $316 million from $322 million.

The cosmetics giant, working through a massive debt restructuring, posted a net loss of $38.9 million, or 11 cents a diluted share, which compares with a loss of $37.8 million, or 68 cents, a year ago.

Revlon president and chief executive officer Jack Stahl told investors during a conference call Tuesday that he believes the company strengthened its balance sheet during the quarter, and he predicted stronger growth in the fourth quarter as a new 2005 line gets ready to roll out in December.

“Our 2004 lineup was not developed with a benefit of our new product development process and the level of consumer insight that we now have,” Stahl said. “We are doing robust consumer research and we are connecting it now to the technology that we have in-house inside of our research and development labs.”

Citing weak demand for color cosmetics, Revlon in June revised its financial forecast for the year and secured $910 million in new financing that executives say will fuel a turnaround.

“We are well positioned financially to continue executing our plan going forward to drive top-line growth and margin improvement as we continue to build additional capability,” said Thomas McGuire, Revlon executive vice president and chief financial officer.

Operating loss for the quarter did narrow to $1.8 million, compared with $3.1 million in the year-ago period, reflecting higher licensing revenues and the absence of a $15 million growth plan.

For the first six months of the year, Revlon’s net loss was $97.1 million compared with $86.5 million a year ago. But net sales for this period advanced 2 percent to $625 million from $614 million.

“We do believe that we are making the right kind of progress to continue to build our business for the long-term,” Stahl told investors. “We’ve got a lot of work to do. We’re on it.”