NEW YORK -- Although Revlon Inc.'s fourth-quarter losses narrowed, results were lower than expected and suggested a tough road ahead for newly named president and chief executive officer Jack Stahl.
Investors weren't spooked, however, and gave Revlon's new captain a vote of confidence by pushing up shares of the firm 50 cents, or 10.4 percent, to close Monday at $5.30 on the New York Stock Exchange.
Net losses for the quarter narrowed to $28.3 million, or 54 cents a share, against $51.3 million, or 98 cents, a year ago. The quarter's results were weighed down by a $3.6 million, or 7 cent, extraordinary item related to the early extinguishment of debt.
Losses from ongoing operations shrunk to $6.5 million, or 12 cents a share, from $29.2 million, or 56 cents, a year ago. This deficit, although smaller on a year-over-year basis, was twice that of Wall Street's expectations of 6 cents a share.
Sales for the quarter ended Dec. 31 increased 6 percent, to $332.5 million from $313.6 million, a year ago. Revenues from ongoing operations jumped 10.7 percent, to $332.5 million.
In a statement, executive vice president and chief financial officer Doug Greeff said: "While we made significant progress in 2001 with new products, we were disappointed with the overall level of consumption of our products. Improving customer take-away of our products is our primary goal for the 2002 and 2003 period."
Revlon brand market share of color cosmetics during the quarter totaled 15.7 percent, down from 16 percent in the preceding quarter and 17.1 percent a year ago.
Market share is not the top priority, however. Greeff, on a conference call, said Revlon was shooting for "profitable growth in consumption and market share, based on outstanding consumer-based marketing and strong execution."
Stahl, who is Revlon's third ceo in five years, hails from Coca-Cola and will spend the next three to four months closely studying the firm's business. At the end of that period he plans to emerge with a plan for the future.
"We will uncover significant, what I would call fertile, ground for growth in this business," he said. Stahl promised analysts he would be "very respectful of the differences" between Coke and Revlon. He described a brand as "a promise of what it is people want" from a product and noted that there are "differences in brands, but similarity in the way markets are built." Both the Coke and Revlon brands, he said, "deliver a little psychological boost" to the customer.Stahl said Wall Street should expect "an aggressive growth-orientated strategy" and a "really aggressive day-to-day management of the business" from him.
During the quarter, sales in the U.S. and Canada jumped 17.2 percent, to $220.8 million, on lower sales returns and allowances from revised trade terms with retailers. There was also a $14 million sales increase after two major U.S. retailers shifted the timing of plan-o-gram resets for 2002 new products. The company declined to identify the retailers.
International sales slid 0.3 percent to $111.7 million, but were up 5.5 percent on a constant U.S. dollar basis.
Although the bottom line improved over the quarter, losses for the full year widened to $153.7 million, or $2.94 a share, compared with 2000 losses of $129.7 million, or $2.49.
However, losses from ongoing operations narrowed to $51.4 million, or 98 cents a share, against $80.8 million, or $1.55, last year.
Sales for the 12 months slid 8.7 percent, to $1.32 billion from $1.45 billion last year. Revenues from ongoing operations inched up 0.1 percent, to $1.3 billion.
Earnings before interest, taxes, depreciation, amortization and restructuring costs in the first quarter are expected to be $10 million to $12 million below the prior year's. Included in the first quarter will be about $6 million to $7 million in executive severance payouts. As reported, Jeffrey Nugent left his post as Revlon's ceo last Monday and was followed a day later by Cheryl Vitali, executive vice president in charge of marketing the Revlon brand globally.
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