Revlons 3Q results drop on investments

By Simon Pitman

- Last updated on GMT

Related tags Net sales New product development Revlon

Revlon's ambition to inject greater dynamism in its brand portfolio
has resulted in a drop in its third quarter sales. A heavy
investment in the Almay brand combined with a fall in product
shipping in the US market adds to the company extended loss-making

Net sales declined 6 per cent to reach $275, compared to the corresponding third quarter of 2004.However, the company is showing signs of edging out of the red, having announced a net loss of $65.4 million for the quarter, against a net loss of $91.6 million in the third quarter of 2004, when the figure was impacted by a $59 million bill for expenses.

Net sales in the first nine months of 2005 were $895 million, compared with net sales of $919 million in the first nine months of 2004, the company said.

Sales had been impacted by $32 million which has been spent to try and inject new life into the Almay brand, which the company says will build on the brand's existing heritage.

Another initiative focuses on women over 50 years old and involves the launch of a complete line of cosmetics under a new brand name. The line will aims to target what is a growing demographic group with increasingly high spending power.

Confirming the tough retails condition in the North American market, the company said that net sales for the quarter declined approximately 17 per cent to $159 million, compared to $192 million in the third quarter of 2004.

Revlon stressed that the majority of the $32 million provisions for re-branding had impacted sales within that region, but likewise lower returns in the market had also taken their toll.

A ray of light was provided by the company's international sales results for the quarter, which rose 14 per cent compared to the previous year to reach $117 million, compared to the $102 million in 2004. The driving force behind this result was the Asia Pacific and Latin American regions.

Revlon​ CEO Jack Stahl said of the results, "Our financial performance does not yet reflect all the progress we are making in the marketplace, where our new and restaged products are performing very well. Certain of our base products continue to be soft, where they have yet to benefit from our planned actions to re-energize important franchises.

"As we move into 2006, we intend to continue to leverage our new product development capability to strengthen our important base franchises in order to drive their growth."

Looking to the future, the company believes that the initiatives it is undertaking now to re-build its brand portfolio should start to pay dividends next year.

Further to this the company believes that its color cosmetic sales should increase by around 25 per cent during the course of 2006, while this year the initiatives should drive full 2005 sales by $30 - 40 million.

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