Revlon Inc. continued to bolster its marketing spending in the third quarter, in a bid to gain ground.
During the company’s earnings call on Wednesday, Revlon’s president and chief executive officer Lorenzo Delpani, said, the firm spent an additional $4.7 million in brand support in the quarter compared to the year-ago period. “In the first nine months of 2015 we have been in investment mode, with an incremental $35.8 million of brand support versus prior-year. This confirms our commitment toward the growth of our brands and we are pleased with the results.”
Revlon reported that net income for the three-months ended Sept. 30 fell 57.5 percent to $6.2 million, or 12 cents a diluted share, compared with $14.6 million, or 28 cents a share, in the year-ago period. Adjusting for various charges and accounting changes, net income fell 30.8 percent to $10.8 million, compared with $15.6 million in the third quarter of 2014.
Net sales also declined, but much less sharply, falling to $471.5 million, from $472.3 million in the year-ago period.
Despite the profits decline, Delpani said, “This quarter’s results were very strong, with adjusted net sales growth of 6.8 percent and adjusted EBITDA growth of 8.7 percent, excluding the impact of foreign currency adjustments. During this quarter, we saw significant growth in consumer segment net sales and segment profit as a result of the continued execution of our Strategy of Value Creation, both in the U.S. and internationally.”
By segment, for the quarter consumer sales were essentially flat at $348.1 million, but gained 5.9 percent excluding the impact of foreign currency exchange rates. Professional sales declined 7.7 percent to $114.5 million, but ticked up 1 percent excluding foreign currency.
By region, sales in the U.S. gained 4.6 percent to $255 million, driven by sales of Revlon color cosmetics and ColorSilk hair color and offset somewhat by lower sales of Almay. International sales declined 5.3 percent to $216.5 million, but gained 8.6 percent excluding the impact of foreign currency.
Delpani re-emphasized his focus on “fewer, bigger, better” products and initiatives. When asked by an analyst about the importance of scale in the current mergers-and-acquisitions environment, Delpani said, “We need to have scale at the category and brand level.” He noted that scale can sometimes be a liability, pointing out that Procter & Gamble Co. had invested in scale across its assets, and decided to divest a number of those brands. Delpani said, “Buying a conglomerate of brands just for the stake of scale… is not necessarily a winning move.” He said that he is working to rationalize the current portfolio, and is not eager to add fragmentation or complexity to the business. He quickly added that he wishes his peers success in their M&A ventures. That said, P&G expects to complete the sale of 43 beauty brands to Coty Inc. in the second half of 2016.