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| Revlon Expects Third Quarter and Full Year Earnings to Fall Short of Analysts' Expectations |
Company Cites Lower Than Anticipated Growth in U.S. Mass Market Color
Cosmetics Category and Continuing Retailer Inventory Reductions
Weak International Economy and Strength of Dollar Also Impacted Results
Company Announces Restructuring Plan
Fundamentals of the Company's Business Remain Strong
Revlon Brand Still Number One, Almay Still Fastest Growing Major Brand
In U.S. Mass Market Color Cosmetics
NEW YORK, Oct. 2 /PRNewswire/ -- Revlon, Inc. (NYSE: REV) today said that
it expects 1998 net sales and earnings from continuing operations will fall
below analysts' expectations.
"Our business in the U.S. has been affected by a number of factors," said
George Fellows, President and CEO. "Among them are a slowdown in the rate of
growth in the mass market color cosmetics category as well as a greater than
expected seasonal flattening of share caused by a shift in advertising and
promotional activity and delays in some product introductions. At the same
time, retailers, particularly chain drugstores, driven by recent
consolidation, are pursuing efficiencies by reducing inventory levels.
"Another factor impacting performance is the aggregate effect of the weak
international economic environment, which has hurt consumer and trade demand
outside the U.S., particularly in South America and the Far East as well as
Russia and other developing economies. The weakness in foreign currencies
against the dollar has also hurt our results. Positive results from
operations in other areas were not strong enough to outweigh these negatives."
For these reasons, results for the third quarter are expected to be lower
than in the same period last year. The Company anticipates third quarter
earnings from continuing operations to be approximately $.22 per diluted
share, including a gain on the sale of a small non-core business of $.15. Net
sales are expected to be approximately $540 million for the third quarter and
operating income is expected to be approximately $45 million (including the
non-recurring gain).
Based on the expectation that these conditions will continue, the business
plan for the fourth quarter has been revised. Net sales for the fourth
quarter are expected to be in the range of $630 million to $650 million,
operating income is expected to be in the range of $43 million to $46 million
and earnings from continuing operations are expected to be in the range of
$.10 to $.15 per diluted share. These are before restructuring costs
estimated at $50 million.
This restructuring will include the closing of three international plants,
a reorganization of the Company's workforce principally outside the U.S., and
other actions designed to reduce costs. The resulting efficiencies are
intended to enhance the Company's competitive position and result in estimated
annual benefits in the range of $25 million to $30 million.
"While the anticipated results for the second half of the year are very
disappointing, the longer-term outlook for our Company continues to be
extremely positive, despite significant challenges in the marketplace," said
Mr. Fellows. "The business fundamentals of our Company are strong. The
Revlon brand is number one in color cosmetics in the U.S. mass market with a
market share of 21.8% year to date through August while retail consumption is
up 12.4%. Almay leads the mass market color cosmetics category in growth at
44% with an 8% share year to date through August. Our program to broaden
distribution of our Ultima II line is showing significant strength.
Additionally, we expect that as retail inventories are stabilized, our growth
will again outpace category growth."
Fellows Reaffirms Company's Business Strategy
"We are addressing the challenges Revlon currently faces by pursuing the
successful business strategy that has spurred the growth of this Company --
from a combined U.S. mass market color cosmetics share of 21.2% in 1993 to
29.8% year to date through August. Based on the Company's fundamental
strengths and its plans to adjust to changing market conditions, the Company
anticipates earnings from continuing operations in 1999 to be in the range of
$1.80 to $2.00 per diluted share, including restructuring benefits of
approximately $.25 per diluted share. Despite the challenges we now face, we
are confident that our long-term outlook remains positive and we intend to
pursue the fundamental business strategy that fueled our success to date,"
Fellows concluded.
Revlon is a worldwide leader in cosmetics, skin care, fragrance, personal
care and professional products. Revlon's vision is to provide glamour,
excitement and innovation through quality products at affordable prices.
Revlon's brands include Revlon(R), ColorStay(R), Revlon Age Defying(R),
Almay(R), Ultima II(R), Charlie(R) and Flex(R), and Creme of Nature(R) and are
sold in approximately 175 countries and territories.
Information in this press release includes forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such statements include, without limitation, (i) the
Company's expected net sales, operating income and earnings per share from
continuing operations for the third and fourth quarters of 1998; (ii) the
Company's estimate of restructuring activities, costs and benefits; (iii) the
Company's expectation of earnings per diluted share in 1999; and (iv) the
Company's expectation that once retailer efficiencies have been achieved,
growth will outpace category growth. In addition to the factors that are
described in the Company's SEC filings, including its quarterly reports on
Form 10-Q and annual reports on Form 10-K, the following factors could cause
actual results to differ materially from those expressed in the
forward-looking statements: (i) lower than expected net sales, operating
income and earnings from continuing operations in 1998; (ii) difficulties or
delays in or unexpected costs or lower than expected benefits from the
restructuring; (iii) lower than expected earnings per diluted share in 1999;
(iv) less than expected growth after retailer efficiencies have been realized;
and (v) actions by competitors including business combinations, technological
breakthroughs, new product offerings and marketing and promotional successes.
The Company assumes no responsibility to update forward-looking information
contained herein.
SOURCE Revlon, Inc.
back to topRelated links:
Company News On-Call:
fax, 800-758-5804, ext. 110701
CONTACT:
Walter Montgomery, media, 212-527-5791, or
Deena Fishman, investors, 212-527-5230, both of Revlon
