Effects of Covid-19 have further hindered the decline of the legacy brand's colour cosmetics business
Beauty giant and brand owner Revlon is reeling from the effects of Covid-19 with a 21% decline in sales for 2020.
Compared with its 2019 results, the Elizabeth Arden owner reported sales of US$1.9bn, down $515m for the year, which it blames primarily on the ongoing and prolonged impacts of the pandemic.
E-commerce sales were able to partially offset some of the financial damage caused by store closures and reduced interest in make-up over the last 12 months.
Sales online now represent 16% of Revlon’s net sales for the year, compared with just 9% in 2019, but sales were not able to balance the books as its operating loss for 2020 stands at $226m compared with a $60.7m increase in income the year before.
Revlon said its higher net loss was driven by the $144m non-cash intangible impairment charges, along with costs associated with its debts and refinancing activities.
In the latter half of 2020, Revlon began scurrying for bondholders to turn in their 5.7% senior notes, despite not being due until this year in order to pay its creditors.
The make-up group had until mid-November to complete a $343m bond swap or eliminate their lender notes, which would have triggered a $1bn loan repayment, a sum the group reportedly could not cough up.
Revlon was able to satisfy creditors by paying off almost 70% of its outstanding debt by the deadline.
Meanwhile, for the three months ended 31 December net sales for Revlon’s make-up segment were down almost 11% compared with results in the previous year.
An up from its disastrous Q3 results, reporting a 20% downturn for the three month period, the group has been facing an increasingly difficult market as legacy make-up brands fall out of favour with consumers.
Revlon’s fall from grace has been heavily documented, along with L’Oréal Paris, MaxFactor and Rimmel, as the rise of indie brands, such as Glossier, Pat McGrath Labs and Huda Beauty, take control of the arena.
However, Elizabeth Arden’s portfolio of skin care skus were able to better weather the storm of the pandemic than its owner.
Internationally, the brand’s net sales for Q4 increased 9.2% compared with the same period in 2019, while in North America it reported a 2.7% uptick on 2019’s results.
“We are seeing signs of broader positive momentum in the business, and with several major 2020 challenges behind us we believe we are well positioned to capture the re-emerging opportunities in the beauty industry,” said Debra Perelman, Revlon’s CEO and daughter of the company’s billionaire Board chairman Reonald Perelman.
“We continue to execute against the key pillars of our strategy, including driving growth in our iconic brands of Revlon and Elizabeth Arden, key markets such as China, and accelerating our e-commerce business.
“This remained our focus throughout 2020 and we are committed to delivering against these plans in 2021.”
As part of Revlon's 2020 Restructuring Program, by the end of 2022, the group expects to have reduced its annual costs of between $200m and $230m by the end of 2022.
Upon the company's announcement in March last year, Perelman also said she intends to build "stronger global business operations model" for the group and improve its operating margin.