Markets

Key Takeaways From Revlon's Third Quarter 2016 Earnings Results

Revlon released its Q3 2016 results on November 4th. On a pro forma basis, after taking the combined entity into account, and in terms of constant currency, the company's net sales rose by 2.5%. All the segments, namely Consumer, Professional, Elizabeth Arden, and Color displayed growth in constant currency terms.

Guidance

For the full year 2016, Revlon's standalone business is expected to generate net sales of around $2 billion to $2.1 billion and adjusted EBITDA to the tune of $400 million to $420 million. The company aims to generate at least $140 million of synergies and cost reduction through the integration of Elizabeth Arden.

Elizabeth Arden's Growth

Revlon completed its Elizabeth Arden acquisition at the end of September. Elizabeth Arden is known for its premium makeup, skincare, and a range of licensed prestige fragrances under names such as Elizabeth Taylor, Britney Spears, and Taylor Swift. Arden aided Revlon in entering the premium beauty space and it also helped in bolstering Revlon's presence in channels such as travel retail and in regions such as Asia Pacific where Arden has a better reach than Revlon.

Arden experienced its seventh consecutive quarter of net sales growth with its innovative launches and brand positioning. All the three categories of Arden, namely skincare, cosmetics, and fragrances witnessed pro forma growth with the cosmetics category witnessing double-digit growth on a year-on-year basis. The company's online business sales also witnessed a double-digit growth for the quarter and the fragrance segment grew significantly due to brands such as John Varvatos, White Diamonds, and Britney Spears fragrances.

Revlon's Standalone Growth

The standalone business for Revlon also witnessed promising growth with a sixth consecutive quarter of sales growth, mainly due to brands such as Revlon Ultra HD Matte Lipcolor, which has been the most successful new innovation in the U.S. mass color cosmetics category, so far in 2016.

Revlon's other successful brands included:Cutex, American Crew men's grooming products, and Revlon Professional Be Fabulous hair care collection. However, Revlon's Consumer business in North America didn't show significant growth mainly due to the slowdown of consumption in the U.S. mass retail channels.

Brand Revivals

Three of Revlon's erstwhile popular brands had been lagging behind over the last several quarters and the company is taking measures to improve their performance.

  • The brand, Revlon ColorSilk hair color, after receiving setbacks in the enterprise in-home hair color category, had started launching a new shampoo and conditioner for color protection and the early response has been encouraging.
  • The second brand, Almay, will also begin a brand repositioning in the second half of the next year, on the basis of an extensive research on over 1,700 consumers.
  • The third brand, CND's sales had been dampened by its competitors offering lower priced substitutes in the high-performance nail segment. Towards the beginning of 2016, Revlon launched CND Creative Play, a range of 80 shades in the value priced nail enamel category. The company also has an innovative pipeline expected to be launched in the latter half of 2017.

Growth Strategy

Revlon's three pillars of growth strategy currently includes: 1. Building a foundation of growth that surpasses the growth rate of the industry. Towards that end, the company will carry on focusing on the fast growing beauty segments, diversify the channels of distribution, and grow more rapidly in Asia. 2. Expanding the digital and multichannel reach while gaining a greater presence in the professional salon channel. 3. An efficient cost structure that ensures sound profitability along with greater investment opportunities.

Editor's Note: We care deeply about your inputs, and want to ensure our content is increasingly more useful to you. Please let us know what/why you liked or disliked in this article, and importantly, alternative analyses you want to see. Drop us a line atcontent@trefis.com

Have more questions on Revlon? See the links below.

  • What Is Revlon's Fundamental Value On The Basis Of Its Forecasted 2015 Results?
  • How Has Revlon's Revenue And EBITDA Composition Changed Over 2012-2016E?
  • What Is Revlon's Revenue And EBITDA Breakdown?
  • Revlon: 2015 Year In Review
  • What Is Revlon's Fundamental Value Based On 2016 Estimated Numbers?
  • How Has The TCG Acquisition Boosted Revlon's Growth?
  • How Did Revlon's Different Segments Perform Over The Last 5 Years?
  • Revlon's Q1 2016 Earnings Results
  • What Are The Implications Of Revlon's Acquisition Of Cutex International Business?
  • Revlon's Expected Revenue And EBITDA For 2016: Trefis Estimate
  • How Might The Acquisition Of Elizabeth Arden Help Revlon?
  • How Is Revlon's Revenue Composition Expected To Trend?
  • How Is Revlon Expecting To Benefit From The Elizabeth Arden Deal?
  • How Might Revlon's Valuation Change Post The Elizabeth Arden Deal?
  • How Do Revlon's Preliminary Q2 2016 Results Look?
  • Revlon Is Gearing Up For A Bigger Presence In The Beauty Arena With The Elizabeth Arden Deal
  • How Do We Expect Revlon's Hair Color Division To Trend?
  • How Is Revlon's Color Cosmetics Division Expected To Trend?
  • How Is Revlon's Antiperspirants, Deodorants, And Fragrances Division Expected To Trend?

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Revlon

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

REV EL

Other Topics

Stocks US Markets Investing

Latest Markets Videos

    Trefis

    Trefis is an interactive financial community structured around trends, forecasts and insights related to some of the most popular stocks in the US. Whereas most finance sites simply give you the facts about where a stock has been and what a company has done in the past, Trefis focuses entirely on the future.

    Learn More