Revlon ends the year on a high note

By Simon Pitman

- Last updated on GMT

Related tags Vital radiance Revenue Net income

Revlon has reported a strong fourth quarter, with profits up an
impressive 38 per cent following strong sales of its Vital Radiance
line and a successful repositioning of its Almay brand.

The company has been struggling in the tough US retail environment, which has led it to make major investments in an effort to help spruce up its brands portfolio.

And the move appears to be working. After profits were hit by the heavy investments made in the third quarter, the fourth quarter results show a marked turn around in the company's fortunes as sales picked up.

Net earnings for the quarter were up from $46.2m in the corresponding three months in 2004, to reach $64.3m for the period ending 31 December, broadly in line with the expectations of financial analysts.

Likewise the jump in profits was also driven by a 16 per cent increase in sales for the quarter, which came in at $437.8m. In a marked turn around the company said that the main growth in sales came from its long-suffering North American operations, which were up 22 per cent to reach $306m.

However, unlike the profit growth, financial analysts at Thomson Financial said that the sales figures came in below expectations of $448m.

For the full year the company said that it reduced its on-going losses from $143m in 2004, to $84m in 2005. Likewise net sales grew 3 per cent to reach $1.33bn and EBITDA came in slightly below the company's predicted $170m, at $167m.

Revlon said that its improved performance in the final quarter had been brought about by the rollout of the Vital Radiance range and the retooling of the Vital Radiance line, both for the color cosmetics segment.

The Vital Radiance line is aimed at the 50-plus age group and first hit stores in December. Aimed at a new and growing niche, this line's continued success could spell a new direction for the company.

"Our strategy to re-energize important franchises, while simultaneously developing new products, is working,"​ said Revlon CEO Jack Stahl.

Stahl added that such initiatives will help to build on margin enhancement programs already implemented, and that will continue to improve on the bottom line throughout the course of 2006.

Revlon has been implementing cost cutting measures throughout the course of 2005 and is about to eliminate 165 jobs, or 2.5 per cent as part of this aim.

Looking ahead to 2006, Stahl said "We are confident that, by leveraging important consumer insights with our technology capabilities, we will continue to successfully bring innovation and excitement into the categories in which we compete."

In light of this ambition, the CEO said that the company would also be restaging the Revlon ColorStay range, a franchise that was developed during the 90s for the long-wear make-up segment.

He also said that the company would be re-entering the prestige fragrances segment during the second half of the year.

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