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Charges Hit Revlon Earnings

Sales rise 2.9 percent, but restructuring prompts third-quarter loss for cosmetics maker.

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Restructuring charges at Revlon Inc. led to a third-quarter loss.

The beauty firm on Thursday reported comprehensive losses for the quarter totaled $15.1 million, or 29 cents a share, and included $23.1 million in aftertax restructuring charges and another charge of $2.2 million related to litigation. A year ago, losses totaled $7.9 million.

Net sales for the three months ended Sept. 30 gained 2.9 percent to $347 million, from $337.2 million in the year-ago period, boosted in part by the July acquisition of Pure Ice. Excluding the negative impact of foreign currency exchanges, sales rose 4.8 percent.

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On a year-to-date basis, the company’s net sales have gained 3.2 percent, Revlon president and chief executive officer Alan Ennis told analysts during the company’s earnings call. “From a regional perspective, we grew net sales in the U.S., Canada, Asia-Pacific and Latin America. However, we continue to experience softness in continental Europe and consumer uncertainties persist in several other countries outside of Europe, including China and Australia.”

Referring to the slowdown in China’s economy, Chris Elshaw, executive vice president and chief operating officer, told WWD, “Foot traffic has decelerated throughout the year, so we are focused on selling more to each consumer and making sure we have the right portfolio.”

Ennis said for China and Europe, “It’s about staying in lockstep with the retailers, watching the consumer behavior and making sure we respond very quickly.”

The company also remains focused on reigniting growth of its Almay brand.

“We are advertising more [Almay] products than in the past and increasing our advertising spending,” Elshaw said. “At the same time, we’ve increased our promotional support.” As for the impact that spokeswoman Kate Hudson has had on the brand, Julia Goldin, the company’s global chief marketing officer, said, “She’s very relevant to our consumers. She’s someone they can connect with, but also who they see as aspirational. She’s not just an actress, she’s a lifestyle icon.” Goldin said Almay intends to leverage that lifestyle role in the coming year, and promised the brand has “great innovation coming for 2013.”

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