North America drags down slipping sales at Revlon
Currently reviewing the possibility of a sale, Revlon, Inc. announced declining revenues and widening losses for the third quarter on Friday, as weaknesses in its North American business took their toll on the New York-based cosmetics company’s top line.
In the third quarter ended September 30, 2019, Revlon achieved net sales of $596.8 million, down 8.9% (7.1% in constant currencies) from the $655.4 million reported by the company in the prior-year period.
By segment, the biggest sales declines came from the Revlon namesake brand, which posted revenues of $217.3 million, down 12.9% from $249.5 million, and the portfolio segment, where sales tumbled 14.6%, from $138.4 million to $118.2 million.
Revlon’s portfolio segment includes color cosmetcs brands Almay and SinfulColors, men’s grooming label American Crew, and nail polish brands, such as CND and Pure Ice, among others.
Revlon’s fragrances segment also saw a 5% decline in sales, which fell 5% from $145.4 million to $138.1 million.
Indeed, the only one of the company’s segments to post an increase in Q3 sales was the Elizabeth Arden brand. Even here, however, a rise of 14.5% in international sales of $93.7 million was offset by a 26.8% decrease in North American sales, making for an ultimately fairly minor total-segment sales increase of 0.9%, from $122.1 million to $123.2 million.
Revlon’s total third-quarter net loss came to $44.7 million, increasing significantly from a loss of $11.1 million in the same period in the previous year. Diluted loss per share was $0.84, compared to $0.21.
According to the company, its bottom line was negatively impacted by a $36.6 million decrease in its benefit from income taxes. This was related to a one-time non-cash true-up associated to the U.S. 2017 Tax Act made in the prior-year period.
“While we were disappointed with the negative results in the North America business, we remain pleased with the momentum and strong growth we are achieving in Elizabeth Arden and the expansion of our businesses in China, travel retail and e-commerce,” said Revlon President and CEO Debra Perelman in a release.
“Despite top-line softness, we saw growth in profitability across three of our four segments, as well as improved cash flow usage resulting from our cost optimization program which remains on track to deliver the previously-announced cost reductions,” she added.
Year to date, Revlon’s sales totaled $1.72 billion, down from $1.82 billion in the first nine months of fiscal 2018. The company’s net loss for the period was $183.5 million, improving from $233.9 million, while loss per diluted share was $3.46, compared to $4.24.
In August it was announced by MacAndrews and Forbes, Revlon’s largest shareholder, that the company would be exploring its options. Goldman Sachs Group was reportedly hired to help the company in its reflections.
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