Revlon narrows losses, despite falling sales

Revlon has reported that it has significantly narrowed its first
quarter losses despite a small fall in its revenue. Overall the
results were below expectations - a better performance being pinned
on a significant reduction of in interest expenses reports Simon
Pitman.

The company said that net sales were down 2 per cent to €301 million, compared to net sale of $308 million in the corresponding three months ending 31 March, 2004. However, a reduction in interest expenses, down from $44.6 million in the 2004, to $29.6 million for the last quarter, the company was able to cut its net losses from $58.2 million to $46.8 million.

The reduction in the company's debt came about from a refinancing that involved selling off bonds with high interest rates and buying them back at a significantly reduced interest rate. The transaction also extended the duration of the debt pay back date.

Revlon​ CEO Jack Stahl said, "Our results in the first quarter, as expected, are beginning to reflect the actions we took in 2003 adn 2004 to ratchet up our capability in the area of new products, while simultaneously increasing our investment spending behind our well-established franchises. At the same time we continue to manage our cost base, in order to create the necessary resources to invest in our brand to drive growth, and we expect these actions to benefit us as we move forward."

Excluding debt charges, the net loss amounted to 10 cents a share, which was below analysts expectations of 7 cents a share. Analylsts were said they were caught out by the drop in sales revenues.

The maker of brands such as Charlie perfume and Michum deodorants revealed a distinct difference between the performance of its North America and international divisions, with international sales benefitting from strong Asian sales and currency strengths, whereas the North America market was hit by weak consumer demand as well as lower licensing revenues.

In North America sales fell 6 per cent to reach $194 million, compared to $206 million in the previous quarter. International sales gained 4 per cent to reach $107 million, compared to $103 million in the corresponding quarter of 2004.

In terms of US marketplace performance, according to ACNielsen, the color cosmetics category grew 1.4 per cent versus year-ago in the first quarter. The company registered a share of 21.9 per cent for the quarter, down 0.2 share points versus the same period last year. The Revlon brand registered a share of 15.6 per cent for the quarter, compared with 16.4 per cent in the year-ago period, while the Almay brand advanced to 6.3 per cent for the quarter, up 0.5 points versus year-ago.

In other key categories, the company reported that it gained share in hair color, while market share declined in beauty tools and was essentially even for anti-perspirants/deodorants.

Revlon has also announded that the Arnell Group has been awarded all creative and media planning aspects for the advertising of its Almay cosmetics line. Arnell will act as a strategic partner for other aspects of the brand's marketing plan, including promotional, interactive and retailer programs.

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