Revlon lifts debt but battles falling sales
per cent for its third quarter. As well as trying to trying to
refinance its growing debts, the company is also struggling to hold
on to its costumers.
The maker of hair and skin care products, said it lost $91.6 million during the quarter, compared to a loss of $54.7 million in the corresponding quarter for 2003. This result was bought about by sales slipping to $294.4 million, compared to $316.5 million for the corresponding quarter in 2003, reflecting higher costs for returns, combined with allowances and discounts.
A major part of the allowances was attributable to debt reduction, the company said, pointing out that it had successfully carried out a debt refinancing scheme that delayed some of its repayments until 2010, that otherwise should have been paid next year.
Revlon CEO Jack Stahl said that productivity initiatives started in 2003 were starting to reap dividends and that the company would continue to strengthen the balance sheet.
"In 2005, to further accelerate our progress and the creation of long-term value, we plan to invest much, if not all, of the expected margin benefits from our productivity initiatives back into our brands to drive long-term growth. We believe that doing so at this stage of our turnaround is the right course of action and one that will result in long-term value creation."
Breaking the sales down, like most cosmetic companies releasing financial results recently, the North American market continues to be slow, reflecting the slow consumer market there. Sales for the quarter fell 10 per cent to $192 million, compared to $212 million in the corresponding period.
International sales fell by 2 per cent, down from $105 million in the third quarter of 2003, to $102 million. However, this figure was positively impacted by foreign currency translation and like-for-like sales were down 8 per cent compared to a year ago.
According to ACNielsen figures, the colour cosmetics category declined 3.1 per cent during the quarter, a result that would have been disappointing for the company given that it has made a concerted effort to push its major brands in the face of growing competition from rivals such as L'Oreal and Maybelline.
The company also said that it had gained share in hair colour and beauty tools, but lost ground in anti-perspirants and deodorants.
For the full nine month period of 2004, the company recorded a loss of $188.7 million, compared to $141.2 million for the previous year.