Revlon profit turns to loss on costs and currency headwinds

By Simon Pitman

- Last updated on GMT

Revlon profit turns to loss on costs and currency headwinds

Related tags Reported basis United states dollar

Revlon posted flat sales and a net loss for its first quarter as costs attributable to branding and the negative impact of currency translations hit the business hard.

The results are a stark contrast to the first quarter for 2014, when the company had posted a profit of $5.5m on a reported basis, thanks to strong sales growth.

For the current quarter, the company posted a net loss of $900,000 on a reported basis, a figure that reflected increased expenditure on branding, as well as a significant impact from currency translations as the US dollar remains high against international currencies.

International business hit by currency translations

The EBITA came in at $70.8m on a reported basis, compared to $67.6m for the same quarter last year, though CEO Lorenzo Delpani did point out that on an adjusted basis, the EBITA result decreased by $11.7m on account of increased brand support.

Revlon executives pointed out that the reported net sales were negatively impacted by currency translations to a total of $31.0m, which also adjusted the EBITA figure by $1.8m.

Net sales for the first quarter were $324.3m on a reported basis, compared to a figure of $339.5m for the corresponding period last year, which Delpani said was essentially flat at a constant currencies rate, increasing by 1.4%.

Sales gains from Revlon color and Mitchum brand

The company said that sales gains came mainly from its Revlon color cosmetics range, as well as the Mitchum brand, but were offset by lower Almay color cosmetic sales.

The professional segment of the business also showed some weakness, with net sales for the period down from $130.3m in the first quarter of 2014, to $114.2m for the first quarter of 2015. Some of the fall in sales was partially offset by a favorable sales mix and lower sales costs.

On a geographic basis, US sales were down by 2.3% to $244.4m – mainly on account of the lower Almay sales, while international sales were down 11.6% to $194.1m. At constant currency comparisons, international sales were up by 2.5%.

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