Revlon has the look of a leader in the US mass-market cosmetics business, alongside L'Oréal's Maybelline and Procter & Gamble's Cover Girl. Aside from its Almay and Revlon brands of makeup and beauty tools, the company makes Revlon ColorSilk hair color, Mitchum antiperspirants and deodorants, Charlie and Jean Naté fragrances, and Ultima II and Gatineau skincare products. Its beauty aids are distributed in more than 100 countries, though the US is its largest market, generating about 55% of sales. Revlon products are primarily sold by mass merchandisers and drugstores such as CVS, Target, Shoppers Drug Mart, A.S. Watson, Boots, and Wal-Mart (its biggest single customer, accounting for some 22% of sales).
Revlon is one of the world's top cosmetics makers across the mass retail channel, known for its color cosmetics in the face, lip, eye, and nail categories, as well as women's hair color and beauty tools. It has built a big business selling cosmetics and beauty products in the US to mass-market retailers and chain drug and food stores, collectively known as the mass retail channel. It also sells its products overseas through department stores and specialty shops such as perfumeries. It also markets its beauty products to US military exchanges and commissaries, including the Army and Air Force Exchange Service, and operates a business that licenses its top brand names to third parties for beauty products and accessories for royalty income.
Sales and Marketing
The beauty giant has spent an average of $255.7 million on TV ad production costs and air-time costs, print advertising costs, promotional displays, and consumer promotions during the past three years. Expenses rose from $230.5 million in 2009 to $271.4 million in 2011 as the cosmetics giant worked to build its brand and entice consumers to purchase its products despite the economic downturn.
Revlon enjoys a global reach and boasts leading positions in several product categories in certain foreign countries such as Australia, Canada, and South Africa.
Revlon's 2011 net sales increased more than 4% (or $60 million) as compared to 2010. The company points to the addition of Sinful Colors sales beginning in March of that year and higher sales of both Revlon and Almay color cosmetics and Revlon ColorSilk hair color. The unfortunate mid-2011 fire at Revlon Venezuela, which had generated 3% of sales in 2010, pulled down sales of its beauty tools and other beauty care items. Revlon saw a greatly reduced net income (by 84%) in 2011, attributable to a $247 million benefit for income taxes in 2010 compared with a nearly $37 million provision for income taxes in 2011 and high general and administrative expenses in 2011 to boost sales. Revlon's sales had been trending downward, driven by weak demand for its core Revlon and Almay cosmetics in the US and Europe (especially the UK).
The company implemented a global restructuring in 2009 and revised its executive structure to ride out the recession. The effort was expected to save Revlon $30 million. Dubbed a right-sizing, the restructuring streamlined support functions, consolidated office facilities, and reduced layers of management. About 400 jobs were also cut, including 75 unfilled positions. Revlon's latest undertaking follows other moves in years past to improve its stubbornly poor financial performance. In 2008 the company sold its non-core brands in Brazil, including its men's skin care brand Bozzano, for nearly $110 million to Hypermarcas. The company applied a majority of the proceeds toward a $170 million loan from MacAndrews & Forbes. Revlon consolidated facilities in 2007 to cut costs, after announcing it would cut about 10% of its workforce and cancel its newly developed Vital Radiance line of cosmetics. A couple of years earlier, a debt-for-equity swap deal with Fidelity Management & Research Co. and Mafco Holdings was necessary to help reduce some $780 million of the company's debt.
The New York socialite, financier and chairman of Revlon, Ron Perelman, owns about 76% of the combined voting power of Revlon's voting capital stock, through holding companies, including MacAndrews & Forbes. – less