Here’s How Revlon Is Planning On Reaching Its $5 Billion Annual Sales Target Over The Next Five Years

Revlon’s CEO, Fabian Garcia, has recently announced that the company’s current goal is to reach a $5 billion sales target over the next five years through brand reinvigoration and more effective marketing. This, according to Garcia, will help the company in becoming one of the top 10 beauty players in the world. The company currently delivers $3 billion in annual sales after its acquisition of the premium beauty company, Elizabeth Arden. The acquisition has put Revlon among the top 20 beauty companies in the world. Garcia also mentioned that it is not the brands that grow old and unappealing, rather it is the laziness of the marketers who stop formulating innovative ways to promote the brand. Hence, the company will currently focus on revitalizing and upgrading its existent iconic brands rather than pay out huge sums to acquire new brands. The company will be reorganized under four teams where each team will focus on one of the four segments: the Revlon brand, Elizabeth Arden’s array of products, fragrances, and the rest of the brands belonging to Revlon, such as Almay and others.

Revlon’s Current Position

Revlon made a turnaround from its persistently weak performance in 2016. Towards the beginning of last year, Revlon’s largest shareholder, Ron Perelman, started looking for strategic alternatives for the company, however, things changed after Revlon’s former CEO stepped down in March and Fabian T. Garcia became the company’s new President and CEO. Soon afterwards, Juan R. Figuereo was announced as Revlon’s new Executive Vice President and Chief Financial Officer. The change in management brought about a shift in strategic focus. The company acquired Cutex International business, operating in the U.K. and Australia, from Coty in June. 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. Post that, Revlon made the decision to acquire premium beauty company, Elizabeth Arden.

The company is currently busy integrating Elizabeth Arden into its own business.  As a part of its integration related activities, Revlon has decided on consolidating the offices of the two entities, getting rid of duplicate activities, and streamlining operations. Towards the beginning of January, it released an SEC Filing  stating that it might layoff around 350 employees across the globe. The integration activities are planned to be completed by 2020. In the Filing, the company has also mentioned that it expects to incur around $65 to $75 million of total pre-tax restructuring and related charges due to its integration activities.

Why Will Revlon Not Follow The Footsteps Of Bigger Beauty Companies Of Growth Through Acquisitions?

Unlike Global Beauty Leaders, such as L’Oreal and Estee Lauder, Revlon will steer clear of the growth through acquisition strategy for the moment. Last year L’Oreal bought IT Cosmetics for $1.2 billion and Estee Lauder bought Too Faced for $1.45 billion, and these are only the big ticket acquisitions. Both the companies also made several smaller acquisitions. However, it makes sense for Revlon to not take over any more firms currently. Last year it bought Elizabeth Arden for $419 million. Revlon’s annual sales (before Arden) was around $2 billion. To put this in perspective, L’Oreal and Estee Lauder earns around $30 billion and $11 billion, respectively in annual sales. Revlon is a much smaller company and after acquiring Arden it had already stepped into the luxury cosmetics segment, expanded its portfolio, its geographic presence, and its distribution channels. It is indeed the right time for the company to focus on the existing brands and infuse them with renewed energy so that they become relevant and appealing to the contemporary beauty users.

What Are Its Current Focus Areas?

• Revlon’s four global teams will each make their three-year growth plan and formulate strategies for their respective brands. This will help the company to understand the areas that require more attention in terms of adapting to changing customer demands or increasing investments and hence help the company act faster to the market cues.
• Additionally, the company wants to spread its geographical reach by increasing sales in China, South Korea, Japan, and Taiwan. Unlike other beauty leaders who are increasingly taking advantage of the growth in emerging nations to generate revenues, so far North America (a mature market in terms of beauty demands) had been accounting for almost 60% of Revlon’s sales. Hence, diversifying its geographical reach is expected to help the company’s future growth. To put things into perspective, according to Euromonitor, in 2015, Asia accounted for around 37% of the retail beauty sales.
• Today’s millennial beauty users are always connected through social media and hence teaming up with social media influencers, who these users look up to, has become a proven way for beauty companies to grow their sales. Towards that end, the company has recently brought in singers Gwen Stefani and Ciara to reach out to its younger clients. The company also plans on launching a new advertising campaign and ambassador in the coming spring.

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Have more questions on Revlon? See the links below.

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