Revlon struggles despite model support

- Last updated on GMT

Related tags: Revlon, Marketing

Halle Berry, Julianne Moore, Eva Mendes and Jaime King, all four
super models feature in a marketing campaign by US based cosmetic
group Revlon seeking to regain its balance in the mass cosmetic
market. However, the 2004 first half figures suggest the group may
still have a long way to go.

Heavy expenses ensured Revlon remained in the red with a net loss of $97 million up from $86,5 million in 2003. Sales showed a marginal 2 per cent improvement from $614,3 million to $624,5 million.

Revlon, a mixed house of cosmetics, fragrances and personal care, has been reeling in losses since 1999. The company has been unable to hold its ground in the face of tighter competition and it has suffered major blows in its core market North America where 70 per cent of total sales are generated. Its hold of the US colour cosmetic market declined from about 32 per cent in 1998 to about 22 per cent today.

The blows came from different directions. Global giants like L'Orëal, Procter and Gamble, Unilever and Estëe Lauder used their weight to increase their market share, while, small niche players launched mainly by renowned dermatologists have emerged and are claiming a significant stake in the market.

Despite a more aggressive marketing programme Revlon's North American first half sales declined 4 per cent to $413 million compared to $433 million in 2003. President and CEO Jack Stahl said the mass market continues to be challenging. "We are taking the appropriate steps to position Revlon to drive long-term category growth and improve our profit margins,"​ said Stahl.

As if the market pressures were not enough, Revlon has had to deal with life threatening financial structure issues caused by bubbling debt, which it recently addressed through a $960 million loan facility secured from a consortium of banks.

With this debt problem partly solved Revlon will find more time to deal with market and operational issues. Brand enhancement is high on the priority list. The group launched a range of new products under the ColorStay Franchise last year. New product development continued this year with the introduction of the Revlon Super Lustrous Lipgloss and the Revlon New Complexion product range was brought up-to-date.

The group may also derive comfort from operations outside North America which account for about 30 per cent of total income. These posted a 15% sales increase to $212 million in the first half. This growth reflected particular strength in the Far East region as well as favorable foreign currency translation which boosted sales by about 6 per cent.

Related topics: Business & Financial

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