NEW YORK -- Revlon owner Ronald O. Perelman has shown he's willing to invest in Revlon's future. But what about the retailers? Can they afford to wait for the brand's return to glory?
Most think they don't have a choice. "We need Revlon to do well, because when they do, everyone does," said Jay Lawrence, a spokesman for Wal-Mart Stores in Bentonville, Ark.
But, several buyers said they are sweating it out waiting for Revlon to get back on track.
Perelman, however, doesn't appear to be blinking. Last week, he bought back $630 million worth of zero-coupon junk bonds that are secured in part by his stake in the company. According to reports, he paid as much as $250 million, or less than 50 cents on the dollar, for the bonds he bought back. By doing so, it proves he's betting shares of the cosmetics company will rebound.
It's a crucial time for Revlon since January is traditionally when merchants start reallocating manufacturer's real estate on peg walls for the new year. With eight consecutive quarters of loss and new trade terms that are still being digested, some accounts, such as Eckerd Corp., Happy Harry's and Duane Reade, are snipping at Revlon's footage.
For the 52-week period ended Nov. 5, Revlon's sales slipped almost 5 percent in food, drug and mass stores to $864.8 million, according to sales tracking firm Information Resources Inc. Its share declined from 24.9 percent of total sales in 1999 to 23.2 percent. Jeffrey Nugent, president and chief executive officer said that he knew Revlon's share would "compress" as his plan to transform Revlon from a "push" to a "pull" vendor unfurls. He added in an interview that in some cases where Revlon space is being slashed, his firm has actually made a suggestion to some accounts to trim space in order to rationalize Revlon's footage. In the end, Nugent said, the consumer will decide who deserves more selling space. "Our goal is to ship to consumption," he said.
Even those editing some Revlon space, however, are rooting for Revlon for a simple reason -- when Revlon prospers, so does the entire industry.
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