Restructuring and higher sales lower Revlon losses

By Simon Pitman

- Last updated on GMT

Related tags: Vital radiance, Cosmetics, Revlon

New York-based cosmetic player Revlon said that a modest increase
in sales and lower costs attributed to restructuring had helped it
to narrow losses for its first quarter.

The company, which last year was hard hit by the failure of its Vital Radiance make-up line aimed at mature women, said that losses for the quarter narrowed from $58.2m last year to a figure of $35.2m for the corresponding quarter this year. Likewise the company announced a rise in its revenues of 1 per cent, to $328.6m, a figure that also bucked the general trend for last year when sales fell, after being heavily impacted by restructuring and the termination of Vital Radiance. The sales figures also showed a continuing polarity in the company's performance on a geographic basis, with sales slipping 2.5 per cent in its mainstay US market, but increasing 6.4 per cent in international markets. The company said that the lower performance in the US market was particularly exacerbated by lower shipments of color cosmetics, a situation that was partly offset by high shipments for its beauty care division. In the international markets improved results reflected increased shipments for all of its divisions in the three international markets, a figure that was also slightly impacted by positive foreign currency translations. Restructuring costs were also significantly down, largely on account of the fact that the costly discontinutiona of the Vital Radiance line has now been largely completed. This meant that restructuring costs fell from $9m in the same period last year, to reach $4.3m for the most recent quarter. Revlon CEO David Kennedy said he was particularly pleased by the positive operating income generated by the quarter's results and the fact that EBITDA more than doubled in the quarter, compared to last year. Adjusted EBITDA in the first quarter of 2007 was $32.3 million, compared to $15.3 million in the same period last year. "Our focus remains on building the Revlon brand, the Almay brand and our other key brands around the world, continuing to improve our execution by working with our retail customers and intensely controlling our costs,"​ he said. Following a difficult period for the company, Revlon is trying to re-strengthen its position by focusing on its core brands, launching a series of new related products, particularly relating to its Almay and Revlon brands. During the last few months new launches under the Revlon name have including ColorStay Soft & Smooth Lipcolor and Limited Edition Collection as well as that have included Smart Shade and Hydracolor Lipcolor under the Almay brand. The company said that these launches would be added to in the second half of 2007, with roll-outs including Revlon Renewist Lipcolor and 3D Extreme Mascara, as well as Almay Pure Blends Mineral Make-up. The company says that in view of the latest results it is sticking to its previously announced forecast of achieving adjusted EBITDA of $210m for the full financial year 2007, compared to the $78.2m achieved in 2006.

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