Revlon’s Third Quarter 2016 Earnings Preview

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Revlon’s Q3 2016 earnings are slated to be released on November 4th. Post certain changes in its higher management, the company made some strategic acquisitions that are expected to improve its performance significantly. The Elizabeth Arden deal is expected to provide a significant boost to the company’s brand image along with placing the combined entity among the top twenty global beauty companies. The deal is also expected to increase the importance of fragrance in Revlon’s product portfolio. The segment is expected to contribute almost 30% to Revlon’s category mix (up from the current 4%). The resultant increase in Revlon’s global market share in the fragrance segment might increase the valuation of the company significantly. Coupled with this, Revlon is focusing on innovation that resulted in the release of an upgraded product lineup in the second half of 2016. Revlon’s consumption grew by 3.9% in the U.S. for the first 8 months of 2016 and it surpassed the growth rate of the mass color cosmetics market.

Revlon’s Strategic Developments So Far In 2016

It has been a year full of strategic developments for Revlon in tune with the declaration made by Ron Perelman, Revlon’s largest controlling shareholder, towards the beginning of the year. In the first quarter, Fabian T. Garcia was appointed as Revlon’s new President and CEO. In April, Juan R. Figuereo was appointed as the new Executive Vice President and Chief Financial Officer. In June, Revlon acquired the nail brand, Cutex International business from Coty. Revlon already owned a part of Cutex and with this acquisition, Revlon completed the global consolidation of Cutex’s worldwide operations under its own brand portfolio. Soon after that, Revlon decided to acquire global prestige beauty company, Elizabeth Arden. The takeover is being regarded by industry experts as an attempt to revive both the beauty companies as they’d lately been suffering from setbacks. With the acquisition of Arden, Revlon will step into the premium beauty segment.

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Elizabeth Arden Will Expand Revlon’s Product Portfolio, Distribution Channels, And Geographic Presence

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. Currently, the global prestige beauty market is once again growing well after several years of lagging demand. Not only will Arden help in expanding Revlon’s portfolio, but it will also help Revlon in expanding its presence through luxury specific channels such as travel retail and in regions such as Asia Pacific where Arden has a better reach than Revlon.

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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