WWD.com/beauty-industry-news/beauty-features/beauty-beat-revlon-narrows-loss-in-qtr-575306/
government-trade
government-trade

Beauty Beat: Revlon Narrows Loss in Qtr.

Bit by bit, Revlon Inc.'s numbers are improving.

NEW YORK — Bit by bit, Revlon Inc.’s numbers are improving. And though the company reported a net loss for the first quarter, it was significantly narrower than the prior year’s.

Meanwhile, management at the beauty firm reminded Wall Street that it has worked on stabilizing sales while strengthening margins, adding that it would be making investments in its brands.

For the quarter ended March 31, Revlon posted a net loss of $46.8 million, or 13 cents per diluted share, which compares with a net loss of $58.2 million, or 63 cents, in the prior year, while net sales dropped to $301 million from $308 million.

Of note were international sales, which advanced 4 percent to $107 million, primarily due to gains in Asia. A reduction in interest expense to $29.7 million from $44.6 million was one of the factors that helped narrow the first-quarter loss.

On a conference call, Jack Stahl, president and chief executive officer, said the firm is making progress in its turnaround.

“If you look back at the things that we have focused on over the last three years, we talked about the ability to strengthen our margin structure, the ability to stabilize our revenue base, [the ability to fix] our relationships with our retail customers and the ability to fix the balance sheet,” said Stahl. “We have made real progress on each of those areas that we called out. While we are obviously not in a position to disclose everything that we are working on, we feel good that as we say that we are going to be bringing fresh thinking to the marketplace that we do indeed have the capacity to do that.”

Although Stahl did not disclose how much he expects to save in margin improvements, he reiterated that in 2005 those funds will be reinvested in the brands and advertising. Mitchum antiperspirant and deodorant will be one of the beneficiaries of that reinvestment. During the first quarter, the company spent roughly $12 million more in advertising and promotion — a 20 percent increase — compared with a year ago.

Executives emphasized the strength in the market of Revlon Age Defying With Botafirm, which was ranked the best new product in the first quarter. The company said it had six products in a list of 20 top sellers.

This story first appeared in the May 9, 2005 issue of WWD.  Subscribe Today.

“For 2005, we have indicated that we expected to begin to benefit this year from new products,” said Stahl. “We expect to begin to broaden our focus and thinking, not only on enhancing the color cosmetics category for us, but also to  focus on growth from other parts of our business.”

According to ACNielsen, the mass market color cosmetics category grew 1.4 percent against last year. The Revlon brand registered a share of 15.6 percent for the quarter, down from 16.4 percent, and Almay grew to 6.3 percent, up from 5.8 percent.