A Deeper Shade of Red: Revlon Losses Extend To 20 Straight Quarters

The financial crisis at Revlon Inc. continued as it posted a net loss of $54.7 million in the third quarter, bringing its losing streak to 20 straight quarters.

NEW YORK — The ongoing financial crisis at Revlon Inc. continued as the beauty giant again languished in the red during the third quarter.

In the three months ended Sept. 30, Revlon experienced a net loss of $54.7 million, or 78 cents a diluted share, extending its losing streak to 20 quarters in a row. This compares with a loss of $22.1 million, or 41 cents, in the same period last year.

Overall revenues in the quarter declined 2.1 percent to $316.5 million from $323.2 million in last year’s quarter, reflecting lower sales in North America that were only partially offset by favorable foreign currency translation. Excluding the positive exchange impact, sales declined about 5 percent.

The quarter’s results were hit by charges of $5 million associated with its growth plan, bringing the total anticipated charges for the year to $31 million. Last year, charges for the plan hit $104 million. An additional $25 million next year and after will lift the plan’s total bill to $160 million.

In addition, the company said it incurred charges totaling $600,000 for restructuring and additional consolidation costs, while the third quarter of 2002 included charges of $4.2 million.

At the same time, Revlon is burning cash even faster than anticipated and is expected to seek amendments or waivers from lenders to keep it from falling out of compliance with current credit agreements.

It’s already spent $248 million of a $250 million credit agreement, all of a $100 million term loan from its principal owner, Ronald Perelman’s MacAndrews & Forbes Holdings Inc., and $20 million of another $65 million M&F line of credit. At the end of the quarter, long-term debt stood at $1.86 billion, up from $1.75 billion at the end of December 2002.

Still, despite the declines in its liquidity, Jack Stahl, president and chief executive officer of Revlon, continued to express confidence about the brand and optimism about the future and its ability to attract more funding.

“We have a lot of work to do as we go forward and continue to transform our business model,” Stahl said on a morning conference call. “We are making good progress on building growth for the most important part of our business.”
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