Revlon Inc. may move back into China.
“We see a great opportunity for growth in China with Elizabeth Arden based on their platform, [and] also for Revlon,” said Revlon president and chief executive officer Fabian Garcia on the company’s first earnings call as a combined business Friday morning. Revlon pulled out of China in 2014, but Arden is strong there.
“Asia and China in particular are important regions for Elizabeth Arden and for Revlon,” Garcia said, declining to lay out a specific timeline for growth in the region. “These geographies continue to provide significant growth opportunities for both brands in color cosmetics which is experiencing double-digit growth online and at retail. We have just begun a relationship with Revlon and Tmall, which is promising, but at this early stage, it’s premature to draw any meaningful conclusions or conclude next steps.”
Combining geographic strengths is one of the reasons Garcia cited for the acquisition when it was announced back in June, saying, “as we look at the synergies that we have, there are countries where we are both strong: the U.S., the U.K. and South Africa. Then you have a bucket of countries where Elizabeth Arden is strong and we are not as strong: South Korea and China. Then you have another bucket of countries where we are strong and they are not as strong: Japan.”
Arden opened a new counter in Shanghai recently with a new look, which signifies the renovation and revitalization of the brand in brick-and-mortar, Garcia said on the call.
Garcia also outlined plans to improve operations at three of Revlon’s struggling brands: ColorSilk hair color, Almay and CND. For ColorSilk, Revlon’s launched a new color protecting shampoo and product formula; Almay’s getting a new brand positioning; and CND is launching two new innovations, one of which is the lower-priced CND Creative Play nail collection, and the second of which will come in the latter half of 2017, Garcia said.
“Almay will begin a relaunch of the brand in the second half of 2017,” Garcia said. “Building on the brand’s core equities with a modern, relevant positioning.
“We have just completed extensive qualitative and quantitative research with more than 1,700 women to assess purchase interest and acceptance for the repositioned brand concept and the results were very positive,” Garcia said. “We expect to begin to present to some of our key trade partners toward the end of the year,” he added, declining to provide further details until that time frame.
Almay has been called out in recent quarters for its lagging sales, but Garcia said that the brand has seen improvements for the quarter, as had CND. Almay specifically saw improvements “driven by promotional activity, which held the brand flat for the quarter,” Garcia said.
Revlon’s acquisition for Elizabeth Arden officially closed on Sept. 7, and the combined companies reported a 28.3 percent increase in net sales to $604.8 million for the quarter. Earnings, pushed down by various charges, amounted in a loss of $4.7 million. The company recorded $33.5 million in acquisition and integration costs, it said, and without non-operating and unusual items, net income was $15.8 million.
Revlon’s consumer segment posted $342.8 million in net sales and an $81 million profit, driven by higher sales of Revlon beauty tools and color cosmetics that were offset by lower sales of Sinful Colors color cosmetics. The Elizabeth Arden division brought in $135.2 million in sales, posting a profit gain of 46.7 percent to $32.5 million because of higher sales and lower cost of goods, the company said. That division saw higher sales of color cosmetics, as well as fragrances from Juicy Couture, John Varvatos, Britney Spears (driven by the Private Show line) and Curve.
Revlon’s professional division posted $118.8 million in net sales with a $23.7 million profit, driven by Revlon Professional Be Fabulous and American Crew’s men’s grooming products, offset by lower CND sales. The “other” segment, which consists of the CBB fragrance business, had $8 million in net sales and a $100,000 loss.
For the moment, Revlon is focused on integrating Arden, and leveraging opportunities to “expand across categories, channels and geographies,” Garcia said — but that doesn’t rule out future acquisitions. “We are constantly evaluating other potential opportunities for growth,” Garcia said.