REVLON PLANS TO GET OUT OF RETAILING
Byline: Catherine Curan
NEW YORK — Revlon Inc. said Monday it is exiting the retail business and will take a second-quarter charge of up to $15 million to dispose of its 85 percent stake in Cosmetic Center.
When it acquired the stake in Cosmetic Center in April 1997 for $27.9 million, Revlon said it planned to consolidate that business with its retail arm, Prestige Fragrance & Cosmetics Inc. (PFC) and then bow out of the retail business altogether.
Revlon executives did not say how the disposition may be completed.
But Wall Street reacted well to the news, which was expected as part of Revlon’s long-range plan of focusing on its core cosmetics and personal care products business. Revlon rose 11/16 to 53 13/16 Monday on the New York Stock Exchange, while Cosmetic Center rose 1 1/8 to 3 5/8 in over-the-counter trading.
Cosmetic Center executives declined to comment on the chain’s future without Revlon, saying they are “exploring strategic alternatives.”
In a statement, Jerry Levin, chairman of Cosmetic Center, as well as Revlon, said he was “disappointed in the financial results and the progress that we have made to date in integrating the company with Prestige Fragrance.” To strengthen the business, the company appointed Betsy Burton president and chief executive officer and plans to upgrade its stores. As of March 28, the company operated 60 retail and 190 outlet stores in the U.S.
Cosmetic Center, which includes Cosmetic Center and PFC stores, reported a net loss of $5.8 million on sales of $37.9 million for the first quarter ended March 28.
In the first quarter ended March 31, Revlon’s operating income jumped 42.4 percent to $24.5 million, but after a $38.2 million special charge for early extinguishment of debt, the company lost $58.1 million.
In other moves Monday, Revlon announced two acquisitions: the Cutex trademarks for nail products for certain international markets, mainly in South America, Spain and Africa from Unilver NV, and AP Products Ltd., a New York marketer of hair care and related products.