Revlon’s Q1 2017 Earnings Might Be Positively Impacted By Its Host Of Growth Initiatives

by Trefis Team
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Revlon is slated to release its Q1 2017 earnings results on May 5th. After years of lukewarm performance, Revlon finally witnessed some revival last year after acquiring premium beauty brand, Elizabeth Arden. The greater scale and expanded footprints post the acquisition is helping the company to grow significantly. However, currently Revlon has decided not to acquire any more entities in the near future but to focus on the building and revival of its existing brands. Towards that end, Revlon is pursuing a three-pronged growth strategy, it has brought about a few important management changes, and it is increasing its digital focus while trying to increase the customer footfall in its brick and mortar stores. For 2016, Revlon recorded net sales of $2.3 billion reflecting around 21% y-o-y growth. However, the growth was mainly due to its acquisition of Arden. On a consolidated pro forma basis net sales grew by 1.4% after being adjusted for foreign currency. We expect Revlon’s performance to improve further in 2017. In January this year, Revlon’s CEO Fabian Garcia revealed the company’s vision of becoming a $5 billion enterprise over the next five years. Revlon also aspires to be among the top 10 beauty players in the future.

Three Pronged Growth Strategy And An Aim To Revive Retail Beauty Shopping

Revlon is currently pursuing a three-pronged growth strategy that includes: improving the relevance of its existing brands, expanding its presence in multiple channels and geographies, and optimizing its cost structures. Furthermore, 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.

Towards the end of 2016, Revlon’s sales witnessed a setback when a lot of consumers switched loyalties from mass cosmetic retailers to specialty beauty and online channels. Hence, the mid-tier departmental stores witnessed a setback in foot traffic. However, with its recent market share gain on account of the Elizabeth Arden acquisition, Revlon is confident that it will be able to positively influence the retail channels and pull back consumers once again. Along with its trade partners, Revlon is gearing up with better in-store experience, greater innovation, and robust digital marketing. Its iconic brand Almay will be re-launched with a new brand image towards the second half of this year.

Digital Focus

The company has realized the importance of digital initiatives and social media reach in order to attract the younger clientele and make its products relevant and attractive to them. Towards that end, it roped in young social media beauty influencers and popular celebrities like Gwen Stefani (with over 6 million followers in both Facebook and Instagram) to connect more with its millennial customers. During this year’s Academy Awards, Revlon debuted The Love Project, a multimedia campaign featuring Lady Gaga, Pharrell Williams, and Ellen DeGeneres. The campaign is targeted towards socially conscious millennials and it received a huge positive response from the viewers. The company also undertook a first-of-its-kind campaign with Amazon (also called the Love Project) where its name appeared in 10 million of Amazon’s shipping packages in an attempt to inspire more eCommerce shoppers to buy its products. It is currently planning on the second phase of this campaign along with a spring themed marketing plan for Elizabeth Arden.

Management Changes

Revlon made a few strategic management appointments this year that might help it further in achieving its goals.

  • In April, Christopher Peterson was announced as Revlon’s Chief Operating Officer, a new role created by the company. The role includes the overseeing of Revlon’s global supply chain, finance, and IT. Mr. Peterson, who will be reporting to Revlon’s President and CEO Fabian Garcia, held prior senior management positions at companies such as Ralph Lauren and Procter & Gamble. His extensive experience in two prominent retail corporations seem to make him a good choice for his current role at Revlon.
  • Also in April, Revlon announced Mr. Serge Jureidini as President for its Elizabeth Arden and Fragrances divisions. With around 25 years of experience in luxury beauty and fragrances and with leadership positions in companies like L’Oreal, he seems to be a good fit for the current role.
  • The company hired Linda Wells, the founding editor-in-chief of Allure — a leading women’s beauty magazine in the U.S. — as its chief Creative Officer. In her role, Ms. Wells is expected to give advice on the brand appeal of Revlon’s products, drawing upon her vast experience in the area of health and beauty.

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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
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
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