Revlon Inc. is kicking off 2017 with restructuring moves.
As part of the company’s acquisition of Elizabeth Arden, which closed in September, Revlon is cutting jobs and streamlining certain operations as part of the integration. Revlon expects to cut 350 positions globally and projects integration-related restructuring activities will cost between $65 million and $75 million by 2020, according to a filing with the U.S. Securities and Exchange Commission.
The costs break down into an estimated $40 million to $50 million in employee-related expenses — including severance, retention and other contractual termination benefits, $15 million in lease termination costs and $10 million in other charges. Revlon anticipates it will record an estimated pre-tax restructuring charge of about $30 million for 2016, with between $30 million and $40 million in restructuring charges for 2017, and that the remainder will be paid by 2020. The company said it will start notifying affected employees Jan. 3.
Revlon said the restructuring should help the business realize “significantly” more than the previously announced $140 million in annualized synergies and cost reductions.
A Revlon spokeswoman said in a statement: “Today Revlon Inc. filed with the SEC a Form 8-K disclosing required information related to implementing certain restructuring activities associated with integrating the Elizabeth Arden and Revlon organizations. The filing discloses the expected charges associated with these restructuring activities and the number of employees that are expected to be affected by the integration plan over the next [three] years. The 8-K also discloses certain information regarding the previously disclosed expected realization of synergies and cost reductions. Among other things, the company disclosed that it expects to significantly exceed the previously disclosed $140 million in annualized synergies and cost reductions.”
Revlon’s acquisition of Arden creates a beauty company that operates across the mass and prestige spectrums, with a larger, global stage.
“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,” said Fabian Garcia, Revlon chief executive officer, when the deal was announced. “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.” Combined, the business was initially projected to have annual sales of around $3 billion.
The company has made a handful of moves since the deal was announced, including the Revlon brand announcing Gwen Stefani as its latest celebrity ambassador. She follows Ciara, who was appointed in late 2015 and existing ambassadors Olivia Wilde, Alejandra Espinoza and Halle Berry. At Cutex, which Revlon acquired the rest of in June, the focus of launches is on nail care, in line with several other brands in the market.
For its third fiscal quarter — the group’s first time reporting numbers since the Arden deal closed — Revlon reported a 28 percent gain in net sales to $604.8 million, coupled with a net loss of $4.7 million (that number includes some acquisition and integration costs). In its consumer division, sales were driven by Revlon beauty tools and color cosmetics, but offset by lower sales of Sinful Colors. Professional division sales were driven by American Crew men’s grooming products as well as the launch of Revlon Professional Be Fabulous, dampened by lower sales of CND nail products. At Arden for the quarter, numbers were bolstered by fragrance sales of Juicy Couture, John Varvatos, Britney Spears and Curve, as well as higher sales of color cosmetics.