Revlon has the look of a leader in the US mass-market cosmetics business, alongside L'Oréal's Maybelline and Procter & Gamble's Cover Girl. In addition to its Almay and Revlon brand makeup and beauty tools, the company makes Revlon ColorSilk hair color, Mitchum antiperspirants and deodorants, Charlie and Jean Naté fragrances, and Ultima II and Gatineau skincare products. Its beauty aids are distributed in more than 100 countries, though the US is its largest market, generating about 55% of sales. Revlon products are primarily sold by mass merchandisers and drugstores such as CVS, Target, Shoppers Drug Mart, A.S. Watson, Boots, and Wal-Mart (its biggest single customer, accounting for some 22% of sales).
What started as a company that marketed nail polish has become nails on a chalkboard to some investors. Revlon's sales have trended downward in two of the past three years, driven by weak demand for its core Revlon and Almay cosmetics in the US and Europe (especially the UK), which have struggled through economic downturns. The results are disappointing to Revlon, which has focused its strategy on building the mainstay brands, and run counter to the belief that cosmetics are recession-proof products. (Proposed by Estée Lauder chairman Leonard Lauder, the Lipstick Effect theory dictates that during tough economic times women will opt for inexpensive "luxuries," like lipstick or mascara, to lift their spirits.) All the same, Revlon has seen an uptick in demand from Venezuela, South Africa, and Australia, where the company has worked to build its brand. Indeed, in 2010 Revlon logged a 2% gain in net sales vs. 2009, as higher sales in its Latin America, Europe, Middle East and Africa, Asia/Pacific and Canada regions were offset by lower sales in the US. (Net income soared more than 500% due largely to a one-time cash benefit of about $260 million.)
To oversee and steer its strategy, the company established an "office of the vice chairman" executive structure in mid-2009. The structure comprises three executives. CEO David Kennedy was promoted to vice chairman and tapped as EVP at MacAndrews & Forbes, Revlon's largest shareholder. Alan Ennis took the CEO title, and Chris Elshaw, the US region's EVP and general manager, was elected EVP and COO. Ennis joined Revlon in 2005 as an executive in internal audit; he came from Ingersoll-Rand. Both Kennedy and Elshaw joined the company in 2002.
The revised executive arrangement complements a global restructuring also implemented that year, expected to save Revlon $30 million. Dubbed a right-sizing, the restructuring streamlined support functions, consolidated office facilities, and reduced layers of management. About 400 jobs were also cut, including 75 unfilled positions. Revlon's latest undertaking follows other moves in years past to improve its stubbornly poor financial performance. In 2008 the company sold its non-core brands in Brazil, including its men's skin care brand Bozzano, for nearly $110 million to Hypermarcas. The company applied a majority of the proceeds toward a $170 million loan from MacAndrews & Forbes. Revlon consolidated facilities in 2007 to cut costs, after announcing it would cut about 10% of its workforce and cancel its newly developed Vital Radiance line of cosmetics. A couple of years earlier, a debt-for-equity swap deal with Fidelity Management & Research Co. and Mafco Holdings was necessary to help reduce some $780 million of the company's debt.
The New York socialite, financier and chairman of Revlon, Ron Perelman, owns about 78% of the combined voting power of Revlon's voting capital stock, through holding companies, including MacAndrews & Forbes.