Color Cosmetics On the Rise for Revlon


Posted on February 12, 2009 @ 08:12 am



Revlon, Inc. posted favorable results for the year ended Dec. 31, 2008. Net sales increased 9% to $1.3 billion compared to the year prior.  According to the company, higher net sales of color cosmetics were offset by lower net sales of beauty care and unfavorable foreign currency fluctuations.

Commenting on the  announcement, Revlon President and Chief Executive Officer David Kennedy said, “During the year, net sales growth in Revlon brand color cosmetics, which was driven by strong new product introductions and a more focused allocation of advertising and promotional expenditures, along with continued rigorous cost control, resulted in significantly improved financial performance. Specifically, and as we forecasted, the Company improved operating margins, profitability and generated positive free cash flow and net income. In addition, during 2008, we reduced debt by $110 million, improving our capital structure.”

Mr. Kennedy continued, "While we expect economic conditions and the retail sales environment to remain uncertain around the world, we believe we are better positioned than in many years to maximize our business results in light of these conditions. Specifically, we have strong global brands, a highly capable organization, a sustainable, reduced cost structure and an improved capital structure. We are encouraged by the continued growth in mass channel color cosmetic consumption in the U.S. and in key markets around the world throughout 2008, despite the uncertain economic conditions. We are also encouraged that, in January 2009, according to ACNielsen, the U.S. mass retail color cosmetics category expanded 3.6% and Revlon brand color cosmetics gained 0.7 percentage points, growing faster than the category, for a dollar share of 13.3%.

"We are continuing to execute our strategy and manage our business while maintaining flexibility to adapt to changes in business conditions. We are also continuing our intense focus on the key growth drivers of our business, including innovative, high-quality, consumer-preferred products, effective integrated brand communication, appropriate levels of advertising and promotion, and superb execution with our retail partners, along with disciplined spending and rigorous cost control. Over time, we believe that with this focus we will generate profitable net sales growth and sustainable positive free cash flow."

However, in tune with the current U.S. economic status, net sales in 2008 dropped 2.7% to $782.6 million. Higher net sales of Revlon brand color cosmetics were offset by lower net sales of Almay, fragrance and beauty care products. In 2008, higher net sales of Revlon ColorSilk and Revlon beauty tools were offset by cycling the 2007 launches of Revlon Colorist hair color, Revlon Flair fragrance and more.

In the company’s international operations, net sales increased 0.2% to $564.2 million. Higher net sales in the Asia Pacific and Latin America regions were partially offset by lower net sales in the Europe region.

Net sales in the fourth quarter of 2008 dropped 10.5% to $334.2 million. Excluding foreign currency fluctuations, increased net sales of Revlon brand color cosmetics (favorable product returns, partially offset by lower shipments and higher promotional allowances), were offset by decreased net sales for Almay (higher shipments, offset by higher product returns and higher promotional allowances), and decreased net sales for beauty care brands.

In the U.S., net sales in the fourth quarter slipped 7.5% to $199.6 million. Increased Revlon brand color cosmetics net sales, were offset by declines in Almay and declines in certain beauty care brands. In the company’s international operations, net sales decreased 14.5% to $134.6 million. Higher net sales in the Asia Pacific and Latin America regions were offset by lower net sales in the Europe region.

For the four week period ended Jan. 24, 2009, according to ACNielsen, the U.S. mass retail color cosmetics category grew by 3.6% compared to the year-ago period. For this period, the Revlon brand color cosmetics dollar volume grew 9.7%, resulting in a retail dollar share of 13.3%, up 0.7 percentage points, compared to the year-ago period. Following 14.1% growth in the fourth quarter of 2008, dollar volume for the Almay brand decreased 3% in January 2009, resulting in a retail dollar share of 5.7%, down 0.4 percentage points, compared to the year-ago period.

According to ACNielsen, the U.S. mass retail color cosmetics category grew 3.4% in the fourth quarter of 2008 compared to the year-ago period, and grew 3.8% in 2008 versus the prior year.

The Revlon brand dollar volume grew 2.5% in the fourth quarter of 2008 and 2.1% in 2008, compared to the same periods in 2007. This growth was driven by strength in the face segment throughout the year, with dollar volume up 12.6% in the fourth quarter and up 12.2% in the year, compared to same periods in 2007. According to ACNielsen, Almay dollar volume grew 14.1% in the fourth quarter of 2008 and 2.2% in 2008, compared to the same periods in 2007. This performance was driven by growth in the eye and face segments of 25.6% and 14.0%, respectively, in the fourth quarter 2008 and 9.4% and 9.2%, respectively, in 2008.

Following the success of the company’s 2008 new product introductions, for each of the first and second half of 2009 the Company is introducing extensive new product lineups for Revlon and Almay color cosmetics and Revlon beauty tools. These product launches include unique offerings for the mass channel, innovations in products and packaging and extensions within the Revlon and Almay franchises.