What To Watch For In Revlon’s Q4 2016 Earnings Results?

by Trefis Team
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Revlon is slated to release its Q4 2016 results on March 3rd. 2016 had been a year of recovery for the company. While 2015 was a bleak year for the beauty seller forcing its largest shareholder to think of strategic alternatives for the company, things started improving post Revlon’s change of CEO in March 2016. Under the governance of its newly elected executives such as Fabian T. Garcia, its President and CEO, and Juan R. Figuereo, its Executive Vice President and Chief Financial Officer, the company started making strategic investments. In June 2016, Revlon acquired the Cutex International business that operated in the U.K. and Australia, from Coty, thus completing the global consolidation of Cutex’s worldwide operations under its own brand portfolio. Shortly thereafter, Revlon decided to acquire premium beauty company, Elizabeth Arden. The company is currently engaged in integrating Elizabeth Arden into its own business while streamlining operations. The integration activities, planned to be completed by 2020, might result in around $65 to $75 million of total pre-tax restructuring and related charges. Revlon’s current focus area is to become a $5 billion dollar company by the next five years and towards that end the company is focusing on: setting four teams in charge of different portfolios; reinvigorating some of its erstwhile popular brands; expanding in more profitable markets; and engaging in more marketing activities in social media. It is noteworthy to mention that after an eventful year in 2016 where it acquired several entities, Revlon is currently not looking for any further acquisitions. Rather, the company wants to grow the market demand and popularity of the brands already under its umbrella.

Revlon’s Way Forward

  • In January of this year, Mr. Garcia announced that the company aims at reaching a $5 billion sales target over the next five years. This will be done through the revival of some of its old brands and with the help of effective marketing. The company is keen to revive the in-house brands whose popularity had been lately declining.
  • Revlon’s brands have been reorganized under four teams where each team focuses on one of the segments, namely, the Revlon brand; Elizabeth Arden’s products; fragrances; and the rest of the brands belonging to Revlon (Almay and others).
  • The four global teams are responsible for chalking out their three-year growth plan for their respective brands. The advantage of the specialized teams is that they can react and adapt to changing market demands faster than the whole company could have done as a single entity.
  • Revlon has its eye set on expanding beyond the North American market (that currently accounts for roughly 60% of its sales) to growing beauty markets such as China, South Korea, Japan, and Taiwan. Elizabeth Arden, with its strong international presence, is expected to help Revlon achieve this goal.
  • The company is trying to follow in the footsteps of its peers and increase its social media engagement in order to attract younger customers. Last year, it brought in singers Gwen Stefani and Ciara as brand ambassadors 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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