Revlon Inc. is back on the sales growth track in 2012, with U.S. sales advancing 4.6 percent and overall revenues up 1.7 percent in the second quarter.
This story first appeared in the August 1, 2012 issue of WWD. Subscribe Today.
“We’re focused on driving profitable growth, and that’s a combination of organic growth and acquisitions,” Alan Ennis, Revlon’s president and chief executive officer, told WWD following the company’s earnings conference call on Tuesday. “We’ve done some small deals that fit into Revlon’s sweet spot.” Ennis said the company will continue to look for opportunities to expand its portfolio and distribution — potentially beyond the mass market into the specialty channel.
On July 2, several days after the end of its second quarter, Revlon completed the acquisition of Pure Ice, a nail enamel brand, and Bon Bon cosmetics. The acquisition followed the purchase of the value-priced nail line Sinful Colors in 2011.
Ennis said nail care tends to be a higher margin business for Revlon, but added that the company also invests heavily in new innovation and packaging.
Both Revlon and Almay’s sales grew in the quarter, but the company continues to keep close watch over the Almay brand. “We are dissatisfied with the market performance of the brand,” said Chris Elshaw, Revlon’s executive vice president and chief operating officer. “We are very focused on improving all aspects of Almay’s marketing mix….We really want to improve our market share performance.” He said the company has been making changes to Almay’s advertising and promotional plans, in-store merchandising and innovation pipeline. He pointed to the launch of the Almay Wake-up makeup franchise as an example.
Ennis said, “We can bring great innovation to the marketplace, and we fully expect to be successful with the Almay brand.”
During the second quarter, net income was $11.1 million, or 21 cents a diluted share, compared to net income of $6.5 million, or 12 cents a diluted share in the same period last year.
Net income in the second quarter of 2012 included a charge of $6.7 million, before and after tax, related to estimated costs of resolving litigation related to the company’s 2009 exchange offer. Net income in the second quarter of 2011 included $11.3 million of charges, $6.9 million after tax, related to the 2011 refinancing of Revlon’s bank credit facilities.
For the three months ended June 30, sales were $357.1 million, compared with $351.2 million in the year-ago period. Excluding unfavorable foreign currency fluctuations, net sales increased 4.2 percent, driven by higher sales of Revlon and Almay cosmetics and Revlon ColorSilk hair care.
The overall net sales gain marks a bounceback since the company’s top line slid 0.8 percent in the first quarter.
For the first half, net income gained 16 percent to $19.6 million, or 37 cents a diluted share, compared to $16.9 million, or 32 cents a share. Sales during the six month period ticked up 0.5 percent to $687.8 million, or 2.4 percent excluding unfavorable foreign currency exchange fluctuations.
By region, quarterly net sales rose in three of Revlon’s five markets. Sales in the U.S., net sales gained 4.6 percent to $203.9 million, in Latin American sales rose 22.8 percent to $32.3 million, and in Canada sales increased 6.2 percent to $20.7 million. The company’s sales in the Asia-Pacific region declined 4.6 percent to $55.8 million, and in Europe, the Middle East and Africa sales decreased 14.6 percent to $44.4 million.