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Revlon Takes a Price Cut

NEW YORK — Its not just Wal-Mart anymore — now Revlon is rolling back prices.<br><br>Beginning Feb. 1, Revlon is adjusting the suggested retail prices of several cosmetics items with cuts ranging from 7.5 to 20 percent. The biggest...

NEW YORK — Its not just Wal-Mart anymore — now Revlon is rolling back prices.

This story first appeared in the January 24, 2003 issue of WWD.  Subscribe Today.

Beginning Feb. 1, Revlon is adjusting the suggested retail prices of several cosmetics items with cuts ranging from 7.5 to 20 percent. The biggest reduction is being taken against its longtime best-selling lipstick — Super Lustrous — which will be slashed from $8.75 to $6.99, according to retailer sources. A Revlon spokeswoman acknowledged that pricing adjustments were one of a number of initiatives outlined by the company in a December 18 news release, but declined to elaborate further.

The action is expected to make Revlon more competitive against category leaders Maybelline and Cover Girl, both of which have gained share at Revlon’s expense over the past three years. It is not generally viewed as a symptom of deflation, but rather a strategic move.

Other items to be marked down include Revlon ColorStay Lash Extension mascara and Revlon High Dimension mascara — both of which will be reduced from $7.50 to $6. Revlon Top Speed nail polish is being cut from $5.14 to $4.75. Under Revlon’s Almay brand, Kinetin Lip Vitality lip color will drop from $8.75 to $7.25, according to sources.

Retailers told WWD Revlon is issuing rebates on existing inventory of the reduced items, and that they had received letters from Revlon president and chief executive officer Jack Stahl and former executive vice president of North American sales Larry Aronson touting the new program. Aronson was replaced last week by former Coca-Cola sales executive Paul Murphy.

Stahl, who took the reins at Revlon in January, has said he intends to recapture a leadership position in the cosmetics market, and has outlined a lofty sales goal of 10 to 12 percent growth this year. Having battled Pepsi year in and year out during his 22 years at Coca-Cola, Stahl has now fired a salvo that could escalate an already intense market-share war in cosmetics.

In December, Revlon announced a new $150 million credit facility provided through owner Ronald Perelman via his MacAndrews and Forbes holding company. At the time, Revlon said the money would be used to fund “pricing adjustments.”

Revlon also said it would accelerate certain elements of its previously announced growth plan, including advertising spending and strengthening of the firm’s in-store merchandising and marketing presence.

Industry consultant and one-time Revlon executive Suzanne Grayson thinks Revlon’s latest action “is a very smart move.” Reducing prices is better, she said, “than couponing products to death, which trains people to buy in a promotional way, not in a basic business way.”

As Revlon institutes the cuts, it is also rolling out its biggest lipstick first-half launch — Moisturous, a lipcolor with a moisturizing formula. By taking a price cut on Super Lustrous, suggested Grayson, “Revlon may prevent cannibalization by the new brand.”

The mascara price decreases could help Revlon take a bite out of eye makeup leader Maybelline’s business, a brand that Cover Girl has also been fighting to get at. And the battle could be sharp this spring, as Cover Girl is introducing its most heralded mascara launch in years with a lash-building item called Multiplying.

Prices in the mass cosmetics market have been inching up in recent years, narrowing the gap between high-end mass brands like Revlon and L’Oréal and entry-level department store lines like Clinique. In the past year, brands such as Prestige Cosmetics, which has expanded its distribution, and a new line from Del Labs called Sally Hansen Healing Beauty, have also addressed the gap with more moderate prices.

As Grayson pointed out, budget lines like Wet ‘n’ Wild and NYC New York Color — priced 99 cents to $2.99 — have unit sales that far outpace the leading dollar share brands.

“The price decrease,” commented Medic Drug cosmetics buyer Sally Yanke, “is about time. Maybe others will follow.”

During the third quarter ended Sept. 30, the Revlon brand’s U.S. dollar market share in color cosmetics climbed 60 basis points from a year ago to 16.7 percent. On the other hand, the Almay brand’s share of the color cosmetics market dipped 20 basis points during the quarter to 5.5 percent. In the end, Revlon’s overall color cosmetics dollar market share during the third quarter stayed flat at 22.4 percent. The fourth quarter report has not been issued.