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Favorable Revlon results clouded by concern in overseas markets… again

By Andrew MCDOUGALL , 29-Oct-2012
Last updated on 03-May-2013 at 10:34 GMT

Cosmetics maker Revlon has announced its third quarter results but despite a growth in revenue, it seems to have lost ground to its competitors in Europe, the Middle East and Africa.

The New York-based firm posted a three percent growth in revenues to $347 million for the third quarter. Excluding unfavorable foreign currency fluctuations of $6.4 million, net sales increased by $16.2 million, or 4.8 percent, thanks in part to its color cosmetics business.

Revlon president and CEO, Alan T. Ennis, said, “In the third quarter, we continued to execute our strategy of profitably growing our business as we grew net sales by 4.8 percent, maintained competitive operating income margins, and improved free cash flow.”

“In the quarter, we also announced actions to drive operating efficiencies, which, once fully implemented, are expected to generate annualized cost reductions of approximately $10 million. These actions are further enabling us to invest in the execution of our strategy while maintaining highly competitive margins.”

Decline in EMEA

However, a closer look at the results reveals that although the Americas drove growth for the company, it is still losing ground in Europe, the Middle East and Africa.

The ongoing situation in Europe is taking its toll on Revlon and is clouding what wold otherwise be a quarter of growth; with sales declining by 14 percent in EMEA.

This has meant turnover has down and restricted the company’s marketing and R&D strategy, which has seen it lose market share to the likes of rival firms L’Oréal and Estée Lauder.

Growth in Americas

Closer to home it is a much more positive story though for the beauty company. In particular, the US market, that accounts for more than half of Revlon's sales, grew by 4 percent.

The results were supported by growth in Latin American and Canadian markets where sales grew by about 20 percent and 11 percent, respectively.

Color Cosmetics continued to be a major contributor to overall growth, and it makes up 60 percent of Revlon's stock value by our estimates.

This announcement is almost a carbon copy of Revlon's second quarter results ; which struggled under the weight of charges, currency translations and falling sales in Europe and Asia, but once again, strong results in the Americas helped to fend off bigger losses.

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