Revlon’s second quarter results struggled under the weight of charges, currency translations and falling sales in Europe and Asia, the Americas performance did help fend off bigger losses.
As a result Revlon announced actions to drive operating efficiencies, which will see it withdraw from some manufacturing facilities and cut its workforce.
Restructuring and rightsizing
The New York-based firm will be exiting its owned manufacturing facility in France and its leased manufacturing facility in Maryland, moving manufacturing from those facilities to other Revlon facilities and third parties.
It will also reduce the workforce at its French and Italian organizations and realign its operations in Latin America, including consolidating Latin America and Canada into a single region.
These actions will result in eliminating approximately 250 positions. Restructuring and related charges, which will be recognized in the third quarter of 2012, are expected to be approximately $25 million comprised of $19 million in employee-related costs and $6 million in other costs, including asset write-offs.
Part of the bigger picture
Of the total charge of $25 million, $23 million will be cash that will be paid out over the next twelve months.
Revlon President and CEO, Alan Ennis explains that it is all part of an overall strategy to grow the business profitably.
“These actions will enable us to continue to invest in the execution of our strategy while maintaining highly competitive margins,” he says.
In the second quarter, net sales for the period were $357.1m, compared to a figure of $351.2m in the corresponding period last year. This figure represented a 1.7 per cent increase in sales, accounting for a $9.0m hit from fluctuations that otherwise would have seen sales rise by 4.2 percent.
The company said that its operating income was hit by a $6.7m charge for a pending litigation, giving a final figure of $42.8m, compared to a figure of $47.8m in the corresponding period last year.