Revlon announces financial results

Revlon, Inc. announced its results for the quarter ended 30th September, 2020.

“During the third quarter, the Company made further progress in expanding its e-commerce business, which now represents approximately 12% of the Company’s total net sales exceeding our expectations. Also, based on the aggregate principal amount of 5.75% Senior Notes tendered into the Company’s pending Exchange Offer, the Company expects to close that transaction later this week, giving us the additional runway needed to further execute on our business strategy, including investing in the brands and markets where we have scale, and growing our e-commerce business,” said Debra Perelman, Revlon’s President and Chief Executive Officer.

The Company operates in four reporting segments: Revlon; Elizabeth Arden; Portfolio; and Fragrances.

Revlon segment net sales in the third quarter of 2020 were $166.0 million, a $51.3 million or 23.6% (23.9% XFX) decrease compared to the prior-year period, with the ongoing COVID-19 pandemic contributing an estimated $50 million ($50 million XFX) to the decrease. The segment’s lower net sales were driven primarily by Revlon color cosmetics, as well as lower international net sales of Revlon-branded professional products, due primarily to the ongoing effects of the COVID-19 pandemic on the mass retail channel and on salon activity. This decrease was partially offset by higher net sales of Revlon-branded beauty tools and hair color products in North America.

Revlon segment profit in the third quarter of 2020 was $13.5 million, compared to $7.3 million in the prior-year period, driven primarily by the segment’s lower brand support, partially offset by lower net sales and lower gross profit margin.

Elizabeth Arden segment net sales in the third quarter of 2020 were $106.3 million, a $16.9 million or 13.7% (14.9% XFX) decrease compared to the prior-year period, with the ongoing COVID-19 pandemic contributing an estimated $24 million ($25 million XFX) to the decrease. The lower net sales were driven by certain Elizabeth Arden-branded skin care products and color cosmetics in international regions as well as lower net sales of certain Elizabeth Arden-branded fragrances due, in part, to the continuing effects of COVID-19 on foot traffic at department stores and travel retail outlets, partially offset by higher net sales of Ceramide skin care products in North America and strong e-commerce growth.

Elizabeth Arden segment profit in the third quarter of 2020 was $3.4 million, compared to $12.5 million in the prior-year period, primarily due to the segment’s lower net sales and lower gross profit margin, partially offset by lower brand support.

Portfolio segment net sales of $99.6 million in the third quarter of 2020 decreased by $18.6 million, or 15.7% (16.2% XFX), compared to the prior-year period, with COVID-19 contributing an estimated $19 million ($19 million XFX) to the decrease. The decrease in segment net sales was driven primarily by Almay color cosmetics, CND nail products and American Crew men’s grooming products, primarily in North America, due, in part, to the continuing effects of COVID-19 on the mass retail channel and salons, partially offset by higher net sales of Creme of Nature hair care products and Mitchum anti-perspirant deodorants, primarily in North America.

Portfolio segment profit in the third quarter of 2020 was $12.2 million, compared to $14.4 million in the prior-year period, driven by the segment’s lower net sales and lower gross profit margin, partially offset by lower SG&A and brand support expenses as a result of cost reductions achieved through the Company’s initiatives designed to mitigate the adverse impact of COVID-19 on the Company’s operating results, as well as the Revlon 2020 Restructuring Program.

Fragrances segment net sales of $105.2 million in the third quarter of 2020 decreased by $32.9 million, or 23.8% (24.0% XFX), compared to the prior-year period, with COVID-19 contributing an estimated $25 million ($25 million XFX) to the decrease. The segment’s lower net sales were driven primarily by the continuing impacts from COVID-19, especially in the prestige channel, resulting in decreased foot traffic.

Fragrances segment profit in the third quarter of 2020 was $25.4 million, compared to $34.2 million in the prior-year period, primarily as a result of the segment’s lower net sales and lower gross profit margin, partially offset by lower SG&A and brand support expenses, driven by cost reductions achieved through the Company’s initiatives designed to mitigate the adverse impact of COVID-19 on the Company’s operating results, as well as the Revlon 2020 Restructuring Program.

Overall, as reported total net sales decreased by 20.1% (or 20.5% XFX) in the third quarter of 2020, compared to the prior-year period.

In North America, Revlon segment net sales of $86.4 million in the third quarter of 2020 decreased by $13.6 million, or 13.6% (13.7% XFX), compared to the prior-year period, with COVID-19 contributing an estimated $15 million ($15 million XFX) to the decrease. The segment’s lower net sales in North America were primarily driven by lower net sales of Revlon color cosmetics and Revlon ColorSilk hair care products, due to the continuing effects of COVID-19 on the mass retail channel, partially offset by higher net sales of Revlon-branded beauty tools and hair-care products.

In International, Revlon segment net sales of $79.6 million in the third quarter of 2020 decreased by $37.7 million, or 32.1% (32.6% XFX), compared to the prior-year period, with COVID-19 contributing an estimated $35 million ($35 million XFX) to the decrease. The segment’s lower International net sales were driven primarily by lower net sales of Revlon color cosmetics and Revlon-branded professional hair-care products, partially offset by higher net sales of Revlon ColorSilk hair color products, within the Company’s Latin America region and growth in e-commerce net sales.

In North America, Elizabeth Arden segment net sales were $30.5 million in the third quarter of 2020, an increase of $1.0 million, or 3.4% (3.7% XFX), compared to the prior-year period. COVID-19 impacted net sales by an estimated $1 million ($1 million XFX) versus the prior-year quarter. The improved North America net sales were driven by the segment’s higher net sales of Ceramide skin care products, partially offset by certain other Elizabeth Arden-branded skin care and fragrance products, due primarily to the continuing effects of COVID-19 on foot traffic at department stores and in other retail outlets.

In International, Elizabeth Arden segment net sales of $75.8 million in the third quarter of 2020 decreased by $17.9 million, or 19.1% (20.8% XFX), compared to the prior-year period, with COVID-19 contributing an estimated $23 million ($24 million XFX) to the decrease. The segment’s lower international net sales were driven by lower net sales of Elizabeth Arden-branded skin care products, certain Elizabeth Arden-branded fragrances, primarily within the Company’s EMEA region and continued COVID-19 impacts within the Travel Retail channel.

In North America, Portfolio segment net sales of $59.9 million in the third quarter of 2020 decreased by $11.5 million, or 16.1% (15.8% XFX), compared to the prior-year period, with COVID-19 contributing an estimated $14 million ($14 million XFX) to the decrease. The segment’s lower North America net sales were driven by Almay color cosmetics, CND nail products, American Crew men’s grooming products, driven, primarily, by the continuing effects of COVID-19 on the mass retail channel and on salons. This decrease was partially offset by higher net sales of Creme of Nature products, Mitchum antiperspirant deodorants and Cutex nail products.

In International, Portfolio segment net sales of $39.7 million in the third quarter of 2020 decreased by $7.1 million, or 15.2% (16.7% XFX), compared to the prior-year period, with COVID-19 contributing an estimated $5 million ($5 million XFX) to the decrease. The segment’s lower International net sales were driven primarily by lower net sales of local and regional brands, CND nail products, American Crew men’s grooming products and Almay color cosmetics, primarily in the Company’s EMEA region, largely attributable to COVID-19’s continuing adverse effects on consumer foot traffic in salons and in the mass retail channel.

In North America, Fragrances segment net sales of $79.2 million in the third quarter of 2020 decreased by $19.4 million, or 19.7% (19.6% XFX), compared to the prior-year period, with COVID-19 contributing an estimated $16 million ($16 million XFX) to the decrease. The segment’s lower net sales in North America compared to the prior year quarter were driven primarily by the continuing impacts from COVID-19, especially in the prestige channel, resulting in decreased foot traffic.

In International, Fragrances segment net sales of $26.0 million in the third quarter of 2020 decreased by $13.5 million, or 34.2% (or 34.9% XFX), compared to the prior-year period, with COVID-19 contributing an estimated $9 million ($9 million XFX) to the decrease. The segment’s lower international net sales were due to lower net sales of certain licensed fragrances primarily in the Company’s EMEA region, due to the continuing impacts from COVID-19, resulting in decreased foot traffic.