Revlon Stems the Tide: Beauty Firm Returns to Black in 4th Quarter

Revlon Inc. found find its way back to positive quarterly earnings territory for the first time in six years, after reining in costs.

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For example, Revlon ditched Age Defying’s black packaging for red, updated its wrinkle-fighting formula with Botafirm and recruited actress Susan Sarandon to appear in TV and print ads.

Stahl said the company had initiated national advertising for its new products 45 days earlier in the first quarter. “That will not only help our consumption in the first quarter, but obviously it does shift our spending pattern somewhat,” said Stahl. “Now, we think that makes sense because as certain retailers move their resets up earlier, it gives us the ability to drive sales off of greater physical availability in the store.”

Last spring, the beauty company made a bold strategic shift on the advertising front. Walking away from ads that simply shout out product benefits, Revlon unveiled the cinematic Bellissimo campaign in April 2004.

Fittingly, the campaign was released in movie theaters and featured the company’s stronghold of spokeswomen, including Halle Berry, Julianne Moore and Eva Mendes. The effort, which industry sources estimate cost between $80 million and $100 million, was sought to build an emotional connection with women.

With a more aggressive launch program planned for this year, Revlon has tweaked this year’s campaign to tout product benefits. The ads, which broke in January, also feature its newest Hollywood recruit, Kate Bosworth.

Revlon will begin talking with retailers about new products for 2006 this summer.

Management is also looking to get more from the U.S. market by devoting resources to products outside of color cosmetics.

According to Stahl, the company has a 25 percent share of the $270 million beauty tools segment. In antiperspirant and deodorant, a market estimated to be more than $1 billion, the company has a 6 percent share. And in hair color, also a more than $1 billion market, the company holds a 7 percent share.

“We do believe that we are taking the right action to drive growth and create long-term profitability and value, and that we are making significant progress,” concluded Stahl during the call. “We have confidence that as we move forward we will unleash untapped value across our portfolio.”
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