Revlon Inc. is taking another stab at cutting costs.
After a two-year effort to rein in spending, which included shrinking its workforce, Revlon said it will eliminate 400 positions and flatten its management structure as part of a newly announced restructuring plan, effective immediately.
“Over the past two years, we’ve built improved and more efficient processes and workflows, which now allow us to take this step to reduce annualized costs by approximately $30 million,” stated newly installed president and chief executive officer Alan Ennis.
The plan involves consolidating certain functions, reducing layers of management, streamlining support functions and further consolidating Revlon’s office facilities in New Jersey. To complete these actions, Revlon expects to take a $20 million charge, which includes $17 million related to severance and other termination benefits and $3 million related to the consolidation of the New Jersey facility.
The restructuring marks Ennis’ first major undertaking since taking the helm in late April from David Kennedy, who moved up to the role of vice chairman, and will also serve as a senior executive vice president at MacAndrews & Forbes Holdings Inc., Revlon’s largest shareholder and the investment firm owned by Ronald O. Perelman.
Ennis’ early efforts are reminiscent of Kennedy’s when he became ceo in September 2006 after a management shake-up. At the time, Kennedy took swift action to change the company’s course, including reducing head count and focusing the bulk of the firm’s attention on its $1 billion global flagship brand, Revlon, and setting financial benchmarks.
Revlon is also gearing up for a challenging second half, as the recession lingers and mass retailers continue to scale back inventory.
“As a result of these factors, combined with the unfavorable impact of foreign currency fluctuations and pension expense, not including charges related to our organizational restructuring actions, we anticipate significant negative impact on net sales and profitability in our second quarter 2009 results as compared to the second quarter 2008,” said Ennis.