Revlon increases reliance on non-US markets
Mixed third quarter results
In comparison to the same quarter 2009, net sales for the American beauty giant Revlon decreased globally by 2.2%, from $326.2mn to $319mn. Lower net sales in the US were offset by higher net sales in the Europe, Middle East and Africa regions and in Latin America. The US was the only region to have reported a decrease in net sales during this period, and was down 9.3% to $166.7m. The decrease was reportedly due to the poor performance of the Revlon and Almay colour cosmetics brands.
Revlon’s remaining regions all reported an increase in net sales. Canada increased by 4.1%, Asia Pacific by 5.4%, EMEA by 13.5% and Latin America by 31.7%. Approximately half of Latin America’s net sales came from Venezula where market conditions and inflation have contributed to the sales of both Revlon Colour Cosmetics and Revlon ColourSilk hair colour.
Despite investing in a higher advertising spend, Revlon’s operating income in the third quarter was $39.3m compared to $50.3m in the same period last year. The higher advertising expense was partially offset by a number of factors: lower material costs as a result of purchasing initiatives, savings from restructuring actions that occurred in 2009 and lower pension expense in 2010.
Net income in the third quarter was $12.5m compared to $23.1m in the same period last year and net cash provided by operating activities was $9.5m compared to $59.2m. Ultimately, cash flow was impacted by a lower operating income and higher interest paid during the 2010 period.
Revlon president and chief executive officer, Alan T Ennis, said: “In 2010, we continue to generate strong cash flow and have maintained highly competitive operating income margins while increasing brand investment.” The company has recently hired Julia Goldin, previously with Coca-Cola, as its new global chief marketing officer.