Beauty, Products

Revlon Colorstay Lipstick: The original long-wear lipstick, its impact—on Revlon’s sales and the industry overall—was equally as enduring.

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Revlon Inc. reported a slight increase in net sales for the first quarter, impacted negatively from foreign currency exchange rates.

Revlon’s Friday morning earnings call marked the first time that Revlon’s new chief executive officer, Fabian Garcia, and chief financial officer, Juan Figuereo, spoke publicly on behalf of the company. Both executives joined Revlon in April.

When prompted by a shareholder on the call, Garcia implied his approach towards investor engagement is likely to vary from his predecessor, Lorenzo Delpani. “My intention is to be as transparent as can be, and to engage with shareholders … the frequency will be different than what you have experienced more recently,” Garcia said.

The shareholder who posed the question noted that Revlon’s lack of participation in investor conferences and equity sell-side coverage could be holding the share price down.

Net income for the quarter was $11 million, or 21 cents a diluted share. For the prior-year quarter, Revlon reported a loss of $900,000, or a loss of 2 cents a diluted share. Net sales for the first quarter increased 0.3 percent year-over-year to $439.6 million. Revlon’s earnings before interest taxes depreciation and amortization decreased 5.3 percent to $67.5 million versus the prior-year period.

Revlon’s consumer segment’s net sales were down 1.3 percent, to $320 million from $324.3 million, driven by higher sales of Revlon ColorSilk hair color, which expanded in France and Australia, Garcia said, as well as Cutex nail products and SinfulColors cosmetics. Those sales were offset by decreases in Revlon color cosmetics, which the company said was mainly as a result of inventory reduction efforts by some U.S. customers. Consumer segment sales in the U.S. for the quarter decreased $1.1 million, about 0.5 percent, mainly because of lower Revlon sales, the company said. Revlon’s international consumer segment sales grew 7.5 percent in the quarter.

Professional segment sales were up 0.8 percent, to $115.1 million from $114.2 million, driven mostly by American Crew men’s grooming products and Creme of Nature hair products. Those figures were offset by lower net sales of CND nail products, mainly in Russia. In the U.S., professional segment net sales grew 10.3 percent to $4.4 million, which the company attributed to new merchandising initiatives for Creme of Nature and the new Elvis marketing campaign for American Crew. Internationally, professional segment sales decreased $1.3 million, about 1.8 percent, because of the CND nail sales decline.

Revlon is likely to focus its efforts on the hair-care segment, Garcia hinted. “We have a very strong business in the U.S., and it is one that remains underleveraged…this brand has a lot more value than we have been able to leverage so far,” he said.

In January, the company’s majority shareholder, MacAndrews & Forbes Inc., said it was considering strategic alternatives for the business. Delpani resigned shortly after, effective March 1, for “personal reasons.”

Revlon, which drew about 43 percent of its net sales from international markets for the first quarter, is looking to expand globally — a realm that draws on Garcia’s previous experience. When he was brought on board, Revlon chairman Ronald Perelman said: “Fabian’s deep experience and expertise in global consumer product sales will not only help enhance the growth in sales that Revlon has seen over the past year but also drive expansion into new markets across the globe.”

Garcia echoed the sentiment on Friday’s call, saying, “We continue to be very interested in expanding out business internationally.”


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