By  on May 2, 2008

Revlon Inc. continued to whittle away at its debt, narrowing its first-quarter net loss to $2.5 million despite slowing sales.

Its pragmatic approach — which includes controlling costs and focusing on profitable sales growth — helped to close a net loss in the quarter ended March 31 to $2.5 million, or breakeven per share, compared with a loss of $35.2 million, or 7 cents a share, in the year-ago period, when losses related to the now-defunct Vital Radiance brand hampered results.

Sales dipped 2.5 percent to $320.4 million from $328.6 million.

U.S. sales for the company fell 8.3 percent to $177.2 million as international turnover rose 5.8 percent to $143.2 million.

During an earnings call Thursday, Revlon president and chief executive officer David Kennedy told analysts, "Our strong financial results for the first quarter of 2008 build upon our performance in 2007. These results validate our strategy, and we remain focused on increasing the value of our company by building the Revlon brand."

To encourage Revlon's revival, during the quarter Revlon signed model Elle Macpherson as a global spokesperson and recruited makeup artist Gucci Westman as global artistic director, a new position at the company. Prior to Revlon, Westman was linked with Lancôme, where she held the role of international artistic director from 2003 through December.

Kennedy said Westman will advise the brand on product innovation and shade development. "We are really out in front of what the trends are and in bringing them to the mass market," said Kennedy.

When asked if the sagging economy presents an opportunity for mass market brands, such as Revlon, at the expense of department stores, Kennedy said: "Companies in the mass channel are taking advantage of the trends in the marketplace as soon as or before prestige companies." He added that, in his view, strong research and development capabilities allow the firm to introduce innovations, such as Almay's shade-matching technology, before its peers upmarket.

After a quiet period, Revlon has had success on the new product front, particularly with two of its recent launches — namely Revlon Custom Creations foundation and Revlon ColorStay Mineral foundation. Both landed on ACNielsen's list of top 10 new products (ranked by retail dollar sales) in the first quarter.Despite recent strides, Revlon's share of mass market color cosmetics in the U.S. slipped 0.6 percentage points to 12.6 percent during the quarter, compared with the year-earlier period. Almay's share dipped 0.3 percentage points to 6.2 percent.

Referring to the share losses, Kennedy told WWD: "It is important to gain share. We want to gain market share on a profitable and sustainable basis." He noted that Revlon's traction in the second half of last year with products like Almay Smart Shade and 3D Extreme Mascara illustrate the success of its growth strategy.

"We clearly have reinvigorated the product pipeline," he said. Kennedy added that savings from ongoing cost controls have been funneled into enhanced marketing communication in the stores and in advertising efforts. He also attributed much of the brands' share erosion to the face category, and expects recent launches in the category, namely Revlon Custom Creations and Almay Smart Shade, to help reverse the share losses.

The company unveiled a more robust product lineup for the second half, which is slated to include Revlon Beyond Natural, a makeup collection that includes a primer, a concealer-highlighter compact, cream-to-powder shadows and cream lip gloss and lip tint; Revlon ColorStay Mineral Lipglaze, billed as an eight-hour, long-wearing gloss; Revlon Lash Fantasy Total Definition Mascara with pigment on one end and primer on the other, and this summer's collection, called Crush on Color. New introductions from Almay will include Bright Eyes Collection, Smart Shade Concealer and TLC Truly Lasting Color Pressed Powder.

Jessica Alba will appear in ads for Revlon Beyond Natural, and Elle Macpherson will begin gracing ads in the second half of this year, said Chris Elshaw, executive vice president and general manager of Revlon's U.S. region.

Kennedy reiterated Revlon's target of midsingle-digit sales growth.

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