Revlon Putting Almay Brand Under Microscope

Slower sales of Almay hampered sales in the first quarter, which dipped 0.8 percent.

Revlon Inc. is taking a hard look at its Almay brand.

This story first appeared in the April 27, 2012 issue of WWD.  Subscribe Today.

“We are not satisfied with Almay’s U.S. performance and, as a result, we are reviewing all elements of Almay’s marketing mix,” Chris Elshaw, Revlon’s executive vice president and chief operating officer, told analysts during the company’s earnings call on Thursday. “It’s a well-defined brand with a loyal customer base amongst consumers with sensitive skin and eyes. We were working on refining the brand proposition to the consumer. We’re also improving the merchandise of the brand, which includes the in-store rollout as well as graphics and packaging.”

Following the call, Elshaw said the change in store for Almay “is a refinement. It’s not a wholesale revolution.” And it’s already under way. “The performance [of Almay] is not satisfactory, but it is not a surprise. This is something we’ve been working on for awhile,” said Alan Ennis, president and chief executive officer. Ennis and Elshaw said that upcoming products and communication around brand spokeswoman Kate Hudson will have a positive impact on Almay.

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Slower sales of Almay hampered sales in the first quarter, which dipped 0.8 percent to $330.7 million, from $333.2 in the year-ago period. Excluding the unfavorable impact of foreign currency fluctuations, net sales increased $1.5 million.

Net income for the quarter ended March 31 declined 18.3 percent to $8.5 million, or 16 cents a diluted share, compared to $10.4 million, or 20 cents a share.

Ennis told WWD, “Performance in the market — whether good or bad — can be misleading. It’s about success in the marketplace over time, and that’s fueled by innovation.” For example, he cited Revlon ColorBurst Lip Butter: “It’s a leading new product in the U.S. and every market where we have launched it. We can’t keep it in stock.”

By region, net sales declined across three of Revlon’s five markets. In the U.S., net declined 0.8 percent to $184.7 million; in Latin America, net sales were down 2.6 percent to $26.3 million, and in Europe, Middle East and Africa, net sales declined 7.8 percent to $45.8 million. In Asia-Pacific, net sales gained 5.6 percent to $56.1 million, and in Canada, net sales gained 3.5 percent to $17.8 million.