By and  on September 26, 2006

NEW YORK — Another shoe has dropped at Revlon — with a mighty thud.

One week into the job, the struggling beauty firm's newly installed president and chief executive officer, David Kennedy, has lowered its 2006 earnings outlook and has taken swift action to cut costs, which includes jettisoning 250 employees and axing its newest brand, Vital Radiance.

The incisive actions will result in third-quarter charges approaching $94 million. As a result, Revlon projects a third-quarter loss of $135 million on net sales in the range of $280 million to $290 million. The news of the layoffs and departure of more top executives confirms a report that appeared in WWD last Tuesday.

During a conference call Monday morning, Kennedy acknowledged that some may find the news "unsettling," but declared, "I want to reassure you that I firmly believe in the company's future and our ability to unlock the value of our terrific brands."

The ceo added, "We will continue to innovate and be leaders in the beauty business, but we'll do so prudently and in a way that leverages our strong, established brand equities."

As a result of the layoffs, Revlon's second round this year, key positions have been dissolved, including the roles of executive vice president and chief marketing officer Stephanie Klein Peponis and executive vice president and chief creative officer Rochelle Udell. Revlon

no longer has an internal public relations team, and industry sources said its entire creative team has been dismantled, as well.

Under the new structure, Elizabeth Crystal, head of the color cosmetics brand group; Robin Wood, chief of personal care; Carolyn Holba, leader of category development, and media buyer Kiki Rees will report directly to Kennedy, the ceo explained to WWD.

"The organization is very much in place to deliver what we need to," Kennedy added.

Peponis and Udell were two of the most ardent proponents of Vital Radiance, Revlon's failed attempt to court older women with premium-priced cosmetics, according to several sources close to the situation.

Earlier this year, retailers also championed the concept until its hefty price tags — which are on par with Clinique, a department store brand — and advertising campaign featuring older women, wrinkles and all, failed to generate sales. The company expects to record a charge of approximately $63 million in the third quarter related to discontinuing the Vital Radiance brand.

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