Beauty & Balance

Revlon Loses Billion-Dollar Brand Status

The Revlon brand is out of the billion-dollar club.
The flagship line of Revlon Inc., which includes makeup, hair color and beauty tools, declined to $998.3 million in net sales for 2018, according to the company's latest earnings report. For 2017, the segment posted $1.09 billion in sales. Before that, the company was organized differently and Revlon brand sales were not broken out on their own.
The company said Revlon's struggles were in part due to declines in the North American mass market makeup category — a pain point for other mass beauty companies as well — combined with a shift in timing of customer resets for the fourth quarter of 2018.
"The mass category for color cosmetics ended the year down about 1.5 percent in 2018, fourth quarter the decline accelerated to be 4.5 percent and we’re seeing that the decline in the first two months of the year in the category is about 5 percent — there are challenges with regard to the category, which is impacting our results," said Revlon chief executive officer and president Debbie Perelman on the company's earnings call Monday.
For the year, Elizabeth Arden was the only Revlon Inc. segment that grew, due to increases in e-commerce, travel retail and China that put the division up 13 percent to $490.2 million in net sales. Perelman noted on the company's earnings call that this is the first time Arden has approached the half-billion sales mark since Revlon acquired it in 2016. Skin care did well for the brand, she added, growing 40 percent at Arden in the fourth quarter.
The Fragrance division declined 11.5 percent from the prior-year period, to $511.4 million in net sales, and the Portfolio segment dipped 4.7 percent to $564.6 million. Fragrance sales dipped in part due to the expiration of several licenses, the company said. While Perelman did not say which ones expired, she did note the company is "always exploring new businesses and new licenses to sign."
Overall, the business posted net sales of $2.56 billion for 2018, down 4.8 percent from the prior year. For the full year, Revlon posted a net loss of $294.2 million, a significant widening from the $183.2 million loss for 2017. The company said the loss was due to operating loss associated with problems at the company's Oxford, N.C., manufacturing facility.
For the quarter ended Dec. 31, the company posted a 5.7 percent dip in net sales, to $741.6 million. The business was able to narrow its net loss for the quarter ended Dec. 31 by 8.6 percent year-over-year, to a loss of $70.3 million.
Revlon said Monday that it "identified a material weakness in its internal control over financial reporting" that is related to the "lack of design and maintenance of effective controls" and will file its 10-K with the Securities and Exchange Commission by March 29.
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