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Sales Slow at Revlon for Q3 2013

Posted: October 24, 2013

Revlon, Inc. announced results for the third quarter ended September 30, 2013. For third quarter 2013 results compared to third quarter 2012, net sales were $339.4 million compared to $347 million, a decrease of 2.2%. Excluding unfavorable foreign currency fluctuations of $11.4 million, third quarter 2013 net sales increased 1.1%; and net income was $9.5 million, or $0.18 per diluted share, compared to net loss of $15 million, or $0.29 per diluted share.

Commenting on the announcement, Revlon vice chairman and interim CEO David L. Kennedy, commented, “Our net sales during the third quarter increased modestly year-over-year as we grew in each of our international regions, offsetting lower net sales in the U.S. We maintained strong operating margins, which in part benefited from the execution of our 2012 restructuring plans. We will continue our intense focus on building our brands through innovative, high-quality new products, effective brand communication, appropriate levels of advertising and promotion, and superb execution in all aspects of our business.”

Kennedy continued, “The recently announced acquisition of The Colomer Group represents a significant, strategic step forward for the company. The Colomer Group primarily markets and sells professional products to salons and other professional channels, complementing Revlon’s primarily mass-channel business. The combination provides us with a strong platform on which to generate profitable growth. Further, the combination will provide enhanced product innovation and marketing capabilities, and will broaden the Company’s scale, brand and geographic scope. We expect the acquisition to provide cost synergies and that it will be accretive to cash flow and earnings in the first year. Over the coming months our focus will be to ensure the success of the combined business.”

Revlon expects to achieve approximately $25 million of annualized cost synergies by the end of year two as a result of combining the Revlon and The Colomer Group businesses. Costs to integrate and achieve the targeted cost synergies over this two-year period are expected to be approximately $40 million. The acquired business’ results of operations will be included in the company’s consolidated financial statements commencing on October 9, 2013, the date of acquisition.

Net sales in the third quarter of 2013 were $339.4 million, a decrease of $7.6 million, or 2.2%, compared to $347 million in the same period last year. Excluding unfavorable foreign currency fluctuations of $11.4 million, net sales increased by $3.8 million, or 1.1%. The increase was primarily driven by higher net sales of Revlon color cosmetics, Revlon ColorSilk hair color and Revlon Beauty Tools. These increases were partially offset by lower net sales in Venezuela and lower net sales of other beauty care products.

In the U.S., net sales in the third quarter of 2013 were $185.8 million, a decrease of $6.2 million, or 3.2%, compared to $192.0 million in the same period last year. The decrease was primarily driven by lower net sales of Revlon and Almay color cosmetics, partially offset by higher net sales of Revlon Colorsilk hair color.

In Asia Pacific, net sales in the third quarter of 2013 were $58.9 million, a decrease of $2 million, or 3.3%, compared to $60.9 million in the same period last year. Excluding the unfavorable impact of foreign currency fluctuations, net sales increased $2.9 million, or 4.8%, primarily due to higher net sales of Revlon color cosmetics throughout most of the region, partially offset by lower net sales of other beauty care products in Hong Kong.

In Europe, Middle East and Africa, net sales in the third quarter of 2013 were $46 million, an increase of $2.2 million, or 5%, compared to $43.8 million in the same period last year. Excluding the unfavorable impact of foreign currency fluctuations, net sales increased $6.1 million, or 13.9%, primarily due to higher net sales of Revlon color cosmetics in the U.K. and in certain distributor territories, as well as higher net sales of fragrances in Italy and South Africa. Net sales in the third quarter of 2012 included the negative impact of a returns accrual of $1.6 million associated with the September 2012 restructuring and related actions in France and Italy.

In Latin America and Canada, net sales in the third quarter of 2013 were $48.7 million, a decrease of $1.6 million, or 3.2%, compared to$50.3 million in the same period last year. Excluding the unfavorable impact of foreign currency fluctuations, net sales increased $1 million, or 2%. Net sales in the region were negatively impacted by $2.6 million of lower net sales in Venezuela primarily due to the impact of business conditions in the country, including Venezuela’s currency restrictions. Excluding Venezuela, the increase was primarily due to higher net sales of Revlon color cosmetics in Argentina, Mexico and certain distributor territories, as well as other beauty care products in Argentina and certain distributor territories. Net sales in Argentina benefited from higher selling prices resulting from market conditions and inflation. These increases were partially offset by lower net sales of Revlon color cosmetics in Canada.

More details on this financial report from Revlon, including nine month 2013 results, are available here.