Revlon reports Q3 loss, impacted by U.S. retail decline

U.S. cosmetics brand Revlon has seen its sales slump continue into the third quarter, ended September 30. A shift in consumer preferences towards prestige beauty has seen sales dwindle across multiple beauty and fragrance categories in Revlon Inc’s mass market segment, particularly in North America, where the continued nationwide retail slump has further exacerbated losses.  


North American sales declined by 25.3% in the consumer segment - Photo: Elizabeth Arden

EBITDA plummeted by 52.5% to $53.6 million, down from the previous year’s $112.9 million, while the group's net loss stood at $32.4 million on total revenues of $666.5 million.
 
“Although we continue to achieve strong sales growth for our core brands internationally, our overall results, which continue to be impacted by the Company’s performance in the U.S., were disappointing,” conceded Fabian Garcia, Revlon President and Chief Executive Officer.
 
Overall sales performance at the Revlon brand also suffered, decreasing 10.5% to $306.7 million, down from $342 million in the previous year. In North America, the decline deepened to 18.5%, and to 25.3% in the consumer segment. The Professional division also lost ground, sinking by 9.9% to $107 million, with nail brand CND and men’s grooming products brand American Crew also registering sales declines.

Internationally, the company fared a little better, with Revlon’s colour cosmetics unit boosting consumer segment net sales by 13% to $149.2 million. The business also benefitted from a strong appetite for Elizabeth Arden products in China and higher sales of Christina Aguilera perfumes in Germany.

However, it wasn’t enough to offset the sharp swing towards an operational loss.  Operating income disappeared: from a net income of $41.7million in 2016 to a net loss of $5.5 million in the third quarter of 2017, caused by the ongoing costs of restructuring related to the 2016 acquisition of Elizabeth Arden. The company has been mired in debt since the acquisition, which it anticipated would boost its prospects in the luxury skincare market.

Revlon is hoping that an innovative online approach will be the key to a turnaround, counting on increased digital engagement and an e-commerce push. “Our long-term transformation initiatives are designed to restore topline growth in the U.S. and support our plans for profitable, global expansion and ensure that we have the ability to successfully compete in a digitally-driven landscape, strengthen social media engagement and align technology platforms to support our strategy,” Garcia added.
 

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