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The white-hot nail-care category added a glossy finish to Revlon Inc.’s fourth quarter, in which sales rose 8.8 percent.
This story first appeared in the February 6, 2013 issue of WWD. Subscribe Today.
The mass-market beauty firm’s net income for the quarter ended Dec. 31 was $46.5 million, or 89 cents a diluted share, compared with $36.4 million, or 70 cents a share, in the year-earlier period. The company’s net sales in the quarter were $391.3 million, compared to $359.8 million in the year-ago period, driven in part by Revlon cosmetics, SinfulColors nail polishes and the inclusion of the Pure Ice nail color brand, which the company acquired in July. Excluding the unfavorable impact of foreign currency translation, sales rose 9.3 percent.
Revlon president and chief executive officer Alan Ennis told analysts during the company’s earnings call on Tuesday that both SinfulColors, which the company acquired in 2011, and Pure Ice performed during the year. “We will continue to focus on opportunities to grow our existing brands as well as to acquire brands that complement our core business,” said Ennis.
When asked what categories pique Revlon’s interest when it comes to potential acquisitions, Ennis told WWD that Revlon has a disciplined approach focused on the company’s core competencies, such as color cosmetics, and on growing the business profitably.
“The nail trend continued to fire on all cylinders during the holiday,” said Chris Elshaw, Revlon’s executive vice president and chief operating officer. “We see that [trend] continuing for some time, which will benefit us.”
In the U.S., net sales in the quarter ended Dec. 31 increased 14.1 percent to $219.2 million, despite lower net sales of Almay. The Almay brand, fronted by actress Kate Hudson, has struggled to grow share for a number of years and, according to Revlon, its net sales decreased year over year.
As for how the company plans to fix Almay, Elshaw said, “What’s required is some refinements,” across advertising and in-store merchandising, as well as new packaging and products. He said the company will begin to introduce improvements on those fronts this year. “It will be an evolution over the long term,” said Elshaw of building the Almay business. The company also is increasing media and promotional support for Almay.
As for the remaining regions, during the quarter net sales in Asia-Pacific gained 3.6 percent to $66.1 million; sales in Latin America and Canada rose 14.6 percent to $55.6 million, while sales in Europe, Middle East and Africa declined 9.8 percent to $50.4 million.
For the year, Revlon’s net income declined 4.3 percent to $51.1 million, or 98 cents a diluted share, compared to $53.4 million, or $1.02 a share, in the prior year. The results included $24.1 million in restructuring charges and a net charge of $8.9 million related to a previously disclosed shareholder litigation settlement. Sales for the year increased 3.2 percent to $1.43 billion, up from $1.38 billion.