Revlon Achieves Highest First Quarter in Six Years
- Chaileedo Press
- May 6, 2022
- 4 min read
Revlon has announced Q1 reported net sales of $479.6 million, compared to $445.0 million during the prior-year period, an increase of $34.6 million, or 7.8 percent. The CEO of Revlon said that it is the highest first quarter as reported operating income in six years.
NEW YORK--(BUSINESS WIRE)--May 4, 2022-- Revlon, Inc. (NYSE: REV) (“Revlon” and together with its subsidiaries, the “Company”) announced its results for the quarter ended March 31, 2022.
As Reported net sales were $479.6 million in the first quarter of 2022, compared to $445.0 million during the prior-year period, an increase of $34.6 million, or 7.8%.
As Reported operating income was $23.7 million in the first quarter of 2022, compared to an operating loss of $12.7 million during the prior-year period, an improvement of $36.4 million. The higher operating income was driven primarily by higher As Reported net sales, a gross margin improvement of 190 basis points, $3.6 million in lower selling, general and administrative expenses (SG&A), and $3.5 million in lower restructuring charges. Adjusted operating income in the first quarter of 2022 increased by $27.2 million to $29.0 million from $1.8 million over the prior-year period.
As for segments, the Revlon segment is comprised of the Company's flagship Revlon brands. Revlon segment products are primarily marketed, distributed and sold in the mass retail channel, large volume retailers, chain drug and food stores, chemist shops, hypermarkets, general merchandise stores, e-commerce sites, television shopping, department stores, professional hair and nail salons, one-stop shopping beauty retailers and specialty cosmetic stores in the U.S. and internationally under brands such as Revlon in color cosmetics; Revlon ColorSilk and Revlon Professional in hair color; and Revlon in beauty tools.
The Elizabeth Arden segment is comprised of the Company's Elizabeth Arden branded products. The Elizabeth Arden segment markets, distributes and sells fragrances, skincare and color cosmetics primarily to prestige retailers, department and specialty stores, perfumeries, boutiques, e-commerce sites, the mass retail channel, travel retailers and distributors, as well as direct sales to consumers via its Elizabeth Arden branded retail stores and elizabetharden.com e-commerce website, in the U.S. and internationally, under brands such as Elizabeth Arden Ceramide, Prevage, Eight Hour, SUPERSTART, Visible Difference and Skin Illuminating in the Elizabeth Arden skincare brands; and Elizabeth Arden White Tea, Elizabeth Arden Red Door, Elizabeth Arden 5th Avenue and Elizabeth Arden Green Tea in Elizabeth Arden fragrances.
In fact, the parent company of the American makeup brand Revlon was facing a possible bankruptcy in 2020 due to debt problems.
For the past few years, poor performance has been the sword of Damocles hanging over Revlon's head. Revlon's 2019 annual report showed operating income of $2.420 billion, down 5.65% year-on-year, and net profit of $158 million, a loss that expanded 46.4%.
After a few days, Revlon then received enough support from bondholders to eliminate a key debt and avoid filing for bankruptcy.
Some banks that disagreed with Revlon's previous trading moves are no longer opposed and will support the company's continued debt swap, people familiar with the matter said. They added that Revlon may get enough support to avoid triggering a broader debt payoff.
Representatives of Revlon and MacAndrews & Forbes, the holding company of majority shareholder Ronald Perelman, declined to comment.
That was a series of plans by Revlon to reduce its debt load and buy more time to focus on recovering its business. Revlon has long faced stiff competition in a market that includes Estee Lauder Company, L'Oréal Group and a host of emerging beauty brands that use social media to attract customers. Revlon's products are sold in stores such as Walmart Inc., CVS Health Corp. and Macys Inc. but increasingly consumers are turning to specialty retailers such as Sephora USA Inc. and direct-to-consumer cosmetics brands such as Glossier. Furthermore, COVID-19 has added to the woes of its business, employees and supply chain.
However, the company highlighted a significant recovery for its brands in China in the third quarter of 2019, with increased consumer demand for Revlon branded beauty products as well as Elizabeth Arden skin care products.
It is worth noting that Revlon has had a bumpy road in the Chinese market. Although it was one of the first foreign beauty brands to enter China, having had a glorious time in the 1960s, opening more than 50 counters across the country, at the end of 2013, after suffering business losses in 2011 and 2012, Revlon announced that it would withdraw from the Chinese market, which employs 1,100 people. At the time, the China business accounted for only 2% of the Group's net sales in international operations.
Revlon then opened a Tmall overseas flagship store online in 2016, followed by the opening of a Tmall flagship store in 2019 as the brand returned to the Chinese market. In a departure from its previous marketing approach of sticking to US celebrity endorsements, the brand appointed Korean star Jessica Jung as its global brand ambassador and in China appointed Modern Brothers Liu Yuning as the brand spokesperson.
Instead, in late April 2019, Revlon's overseas flagship stores quietly ceased operations. By July, Revlon returned to the Chinese market again in the form of opening an official flagship store on Tmall, with the store operated by Liren Beauty on behalf of the brand.
Back in China, Revlon has chosen to invest in China and e-commerce to be the key to growth.
In 2020, according to Tmall data, Elizabeth Arden stormed into the TOP 10 in the first wave of Chinese Shopping Carnival Double 11 this year, and Jingdong data showed that Elizabeth Arden had grown 276% in the first 30 minutes of the opening on Double 11.
Debra Perelman, Revlon's President and Chief Executive Officer, stated in the performance of Q1 of 2022: “While the supply chain challenges continue to have an impact, our first quarter results were strong on both the top and bottom line. Each of our reporting segments grew over the prior year, and we experienced our best Q1 Adjusted EBITDA in six years.
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