Revlon announced its third quarter 2020 results that showed net sales were $477.1 million, compared to $596.8 million during the prior-year period, a decline of 20%. Nine-month sales for 2020 totaled $1,277.7 million, compared to $1,720.2 million in 2019. Its nine-month net loss widened year-over-year, totaling $385.2 million in 2020, compared to a loss of $183.5 in 2019.
Previously: Revlon Announces Results of Exchange Offer
E-commerce net sales for the third quarter reportedly increased approximately 13% versus the prior-year. The e-commerce sales represented approximately 12% of third quarter 2020 net sales, as compared to 9% in the prior-year period.
Revlon reported a third quarter gross profit of $242.8 million as compared to $327.8 million in the prior-year period.
Reporting operating loss was $9.7 million, as compared to $16.7 million of operating income during the prior-year period. The decline was driven primarily by lower net sales and lower gross profit margin as a result of the pandemic.
The negative impacts were reportedly partially offset by $54.7 million in lower selling, general and administrative expenses, driven in part by cost reductions associated with the company's restructuring programs and additional actions specifically implemented to mitigate the adverse impact of the COVID-19 pandemic on the company's operating results.
Adjusted operating income in the third quarter of 2020 decreased by $11.3 million to $14.3 million from $25.6 million in the prior-year period.
Revlon reported a net loss of $44.5 million in the third quarter of 2020, compared to a $44.7 million net loss in the prior-year. The lower loss was driven by a $31.2 million gain on the early extinguishment of product's corporation's 5.75% senior notes as a result of the company's repurchase and cancellation of approximately $44.4 million in principal face amount of senior notes during the third quarter of 2020, as well as a $17.4 million favorable foreign currency impact versus the prior-year period.
These impacts were partially offset by the higher operating loss described above and $18.5 million in higher interest expense.
As of September 30, 2020, the company had total liquidity of $340.4 million.
Net cash used in operating activities in the first nine months of 2020 was $256.9 million, compared to $166.8 million in the prior-year period. Free cash flow used in the first nine months of 2020 was $264.3 million, compared to $186.8 million used in the prior-year period.
In the third quarter, Revlon North American net sales were reportedly $86.4 million as compared to $100 million in the prior-year period. Revlon International net sales reported $79.6 million as compared to $117.3 million in the prior-year period.
In the third quarter, lower net sales in North America were primarily driven by lower net sales of Revlon color cosmetics and Revlon ColorSilk hair care products, due to the continuing effects of COVID-19 on the mass retail channel, partially offset by higher net sales of Revlon-branded beauty tools and hair care products.
Lower international net sales in the third quarter were driven primarily by lower net sales of Revlon color cosmetics and Revlon-branded professional hair care products, partially offset by higher net sales of Revlon ColorSilk hair color products, within the company's Latin America region and growth in e-commerce net sales.
Debra Perelman, Revlon's president and chief executive officer, said: “While COVID-19 continues to have a significant impact on both the beauty industry overall as well as on our business, I am pleased that our third quarter 2020 results reflected a sequential improvement in our net sales decline versus the prior quarter. We remain diligent in managing our cost base to reduce COVID-19's impact on our profitability. During the third quarter, the company made further progress in expanding its e-commerce business, which now represents approximately 12% of the company’s total net sales exceeding our expectations"
She added, "Also, based on the aggregate principal amount of 5.75% senior notes tendered into the company’s pending exchange offer, the company expects to close that transaction later this week, giving us the additional runway needed to further execute on our business strategy, including investing in the brands and markets where we have scale, and growing our e-commerce business. We would like to thank all of our stakeholders for their support during the transaction. While we still have challenges to face—namely the ongoing impact of the COVID-19 pandemic—we believe we have the right long-term strategy in place and will continue to execute against it."