QUOTE AND NEWS
Reuters  Jul 11  Comment 
* Presentation- expects total costs of about $60 million over 4 yrs to realize synergies from deal
Motley Fool  Jul 6  Comment 
The beauty company jumped on a buyout by Revlon.
Automotive World  Jun 17  Comment 
Timothy Sullivan, president and CEO of REV Group Inc., will discuss trends in mergers and acquisitions at the Global Off-Highway Industry Dialogue October 5, 2016, at the Donald E. Stephens Convention Center in Rosemont, Illinois. The...
Motley Fool  Jun 17  Comment 
The beauty-products maker got bought out by Revlon.
New York Times  Jun 17  Comment 
The price of oil turned higher, helping lift energy stocks. Shares of Elizabeth Arden soared after Revlon said it would buy the company.
guardian.co.uk  Jun 17  Comment 
Elizabeth Arden is known for luxury skincare products, especially anti-ageing ranges, while Revlon is stronger in hair colour US cosmetics company Revlon has agreed to buy Elizabeth Arden in an $870m (£611m) deal, which will bring together...
New York Times  Jun 16  Comment 
Two cosmetic giants unite in a deal valued at $870 million, including debt, in which Revlon is paying $14 for each Elizabeth Arden share.
Wall Street Journal  Jun 16  Comment 
Forbes  May 11  Comment 
In the company’s recent earnings call, Revlon‘s CEO mentioned that its strong hair coloring business in the U.S. has remained under-leveraged and has a lot more value which the company has not been able to exploit so far. While the CEO did not...




 

Revlon (NYSE:REV) makes color cosmetics, fragrances, and anti-perspirants. The company sells its products to consumers through drug stores and mass market retailers such as Wal-Mart Stores (WMT). Sales to Wal-Mart accounts for 23% of the company's total sales.[1] The company earned $1.3 billion in sales and $950K in net income in 2009.[2]

Revlon's color cosmetics market share has been dropping since 1998, and the company has had only a single profitable quarter in the last 8 years. The company's profitability began to suffer in the late 90s when overall industry growth in color cosmetics sales to mass retailers began to decline and increasing competition and drugstore consolidation resulted in reduced shelf space for Revlon's products.[3] Since then, Revlon has struggled to keep up with major competitors as its slowing sales and large debt burden have constricted its ability to spend on either R&D or an effective turnaround strategy.[4]

Company Overview

Brands[5]

  • Revlon: The Revlon brand is used in the cosmetics, beauty tools, and hair categories.
  • Almay: The Almay brand is used in the cosmetics and anti-perspirant categories.
  • Revlon ColorSilk: hair
  • Charlie: fragrance
  • Jean Nate: fragrance
  • Mitchum: anti-perspirants
  • Gatineau: skincare
  • Ultima II: skincare

Business Growth

FY 2009 (ended December 31, 2009)[2]

  • Net sales fell 3.7% to $1.29 billion. Sales in the US fell 4.4% while sales internationall fell by 2.9%. The company attributes the loss to the weak global economy.
  • Net income fell 15% to $950K.

Trends and Forces

L'Oreal Dwarfs Revlon's R&D Spending

Revlon competes with several larger competitors that are able to invest much larger amounts in research and development. Over the last decade, Revelon's history of losses have left it with insufficient cash flow to invest sufficiently in R&D. In 2009, the company spent $23.9 million, or 1.8% of net sales on R&D.[6]

Revlon is Dependent Upon Wal-Mart for a Large Portion of Sales

Revlon's principal customers include large mass volume retailers and chain drug stores, including retailers like Wal-Mart Stores (WMT), Target (TGT), Sears Holdings (SHLD), Walgreen Company (WAG), Rite Aid (RAD), CVS (CVS), and Longs Drug Stores (LDG) in the U.S., Shoppers DrugMart in Canada, A.S. Watson & Co. retail chains in Asia Pacific and Europe, and Boots in the United Kingdom. Wal-Mart accounts for approximately 34% of Revlon’s worldwide sales.[1] In addition, WalMart's mass purchases give it significant negotiating power with regards to shelf placement, shelf space, and purchase price.

Competition

Revlon's primary competitors are Procter & Gamble Company (PG), L'oreal (LRLCY), Avon Products (AVP), and Estee Lauder Companies (EL). Revlon is smaller than both L'oreal and PG in terms of revenues and resources. However, Revlon has a more focused product offering than these companies and when one considers only color cosmetics sales they are much more comparable. Revlon is the second largest color cosmetics company in the US. Competitors Estee Lauder and Avon get the majority of their revenue outside the US.

References

  1. 1.0 1.1 REV 2009 10-K "Customers" pg. 7-8
  2. 2.0 2.1 REV 2009 10-K "Selected Financial Data" pg. 28
  3. Funding Universe, Revlon
  4. Wrinkles Under the Surface at Revlon
  5. REV 2009 10-K "Products" pg. 4-6
  6. REV 2009 10-K "Research and Development" pg. F-12
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