Shares of Revlon Inc. slumped nearly 17 per-cent, and hit a new 52-week low, following its disclosure Thursday of a 72.3 percent drop in fourth-quarter profits, but the cosmetics firm, boosted by a one-time gain from the sale of an asset, managed to finish the year in the black.
For the three months ended Dec. 31, Revlon’s profit was $11.3 million, or 22 cents a diluted share, versus $40.8 million, or 80 cents, in the year-ago period. Per share amounts have been adjusted to reflect the firm’s 1-for-10 reverse stock split of Class A and Class B common stock in September 2008. Operating income fell to $44 million from $79.3 million, with the decline driven by increased advertising costs to support new product launches.
Sales for the quarter fell 10.5 percent to $334.2 million from $373.3 million. In the U.S., sales fell 7.5 percent to $199.6 million from $215.8 million. Gross margin declined 40 basis points to 62.2 percent of sales from 62.6 percent in the year-ago quarter.
International sales declined 14.5 percent to $134.6 million from $157.5 million, which the company said was “entirely due to unfavorable foreign currency fluctuations.” Excluding the currency impact, sales outside the U.S. were essentially flat, inching up 0.2 percent as higher sales for Revlon and Almay color cosmetics were offset by declines in hair care and fragrance.
Shares of Revlon finished the New York Stock Exchange session at $3.75, off 76 cents, or 16.9 percent. Before the close, they set a new 52-week low of $3.70. Their 52-week high, set two weeks after the reverse split on Sept. 30, was $14.85.
For the year, profit was $57.6 million, or $1.13 a diluted share, against a loss of $16.1 million, or 32 cents, in 2007. Results in 2008 includes a $45.2 million gain on the sale of discontinued operations. Sales were down 1.5 percent to $1.35 billion from $1.37 billion.
“Overall during the year, we improved our operating margins, generated positive free cash flow and net income from continuing operations and improved our capital structure by reducing debt by $110 million,” said David Kennedy, president and chief executive officer, during a conference call to Wall Street analysts.
He also noted growth in the Revlon brand in the face segment was driven by three product launches in 2008: Revlon ColorStay Mineral Foundation, Revlon Custom Creations Foundation and Revlon Beyond Natural Makeup.
Alan Ennis, chief financial officer, noted that “increased net sales of Revlon brand color cosmetics were offset by declines in net sales of Almay.”
Kennedy told WWD that “Almay, overall, is a healthy brand,” and will have product launches in the face and eye segments during 2009.
“If we cut through all of the things that cloud the results, mass market color is still growing,” said Connie Maneaty, analyst at BMO Capital Markets. “Sales at mass are better than at department stores or even at direct [to consumer]. Revlon gained market share in categories where they put advertising money, such as face, which rose nicely. The brand is holding its own and gaining where they have a story to tell and tell the story. As for Almay, it is a profitable brand.”
The company had an $168.6 million borrowing capacity at the end of last year, comprising $126.8 million available under its revolving multicurrency facility and $41.8 million of cash and cash equivalents. Revlon does not have any debt maturing in 2009.
Ennis did note on the call that cash contributions to the pension and post-retirement plans in the new year will be $25 million to $30 million, compared with $12.8 million in 2008, with the impact due in part to the declines last year in the financial markets in the U.S. and around the world.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast