Revlon Reports Q3 2019 Results

Revlon Inc. today announced its results for the quarter ended September 30, 2019.
 
Net sales for the third quarter of 2019 were $596.8 million, compared to $655.4 million during the prior-year period, a decline of 8.9%. Revlon segment net sales declines were primarily driven by retailers reducing inventory and overall category declines.
 
Operating income improved to $16.7 million in the third quarter of 2019, compared to $2.3 million during the prior-year period. The higher operating income was driven primarily by cost reductions related to the company's cost optimization initiatives and improved gross profit margin.
 
“While we were disappointed with the negative results in the North America business, we remain pleased with the momentum and strong growth we are achieving in Elizabeth Arden and the expansion of our businesses in China, travel retail and e-commerce. The Revlon brand continued to be impacted by overall category declines as well as customer inventory reductions and the planned management of trade inventory levels. Despite top-line softness, we saw growth in profitability across three of our four segments, as well as improved cash flow usage resulting from our cost optimization program which remains on track to deliver the previously-announced cost reductions,” said Debra Perelman, president and CEO of Revlon.
 
Segment Results
 
The Company operates in four reporting segments: Revlon; Elizabeth Arden; Portfolio; and Fragrances:
 
Revlon
The Revlon segment is comprised of the company's flagship Revlon brands. Net sales in the third quarter of 2019 were $217.3 million, a 12.9% decrease compared to the prior-year period, driven primarily by lower net sales of Revlon color cosmetics due to retailer inventory management and overall category declines, combined with increased promotionality, primarily in North America.
 
Revlon segment profit in the third quarter of 2019 was $7.3 million, compared to $36.8 million in the prior-year period, driven primarily by the segment's lower net sales, lower gross profit margin and higher brand support.
 
Elizabeth Arden 
The Elizabeth Arden segment is comprised of the company's Elizabeth Arden branded products. This segment markets, distributes and sells fragrances, skin care and color cosmetics. Segment net sales in the third quarter of 2019 were $123.2 million, a 0.9% increase compared to the prior-year period, driven by higher net sales of Elizabeth Arden skin care products, including Ceramide and Prevage, primarily internationally.
 
Elizabeth Arden segment profit in the third quarter of 2019 was $12.5 million, compared to $6.6 million in the prior-year period, primarily due to the segment's higher net sales and improved gross profit margin.
 
Portfolio
The company’s Portfolio segment markets, distributes and sells a line of premium, specialty and mass products primarily to the mass retail channel, hair and nail salons and professional salon distributors in the U.S. and internationally.
 
Segment net sales of $118.2 million in the third quarter of 2019 decreased by 14.6% compared to the prior-year period, driven primarily by the segment's lower net sales of Almay color cosmetics due to category declines and increased promotionality.
 
Portfolio segment profit in the third quarter of 2019 was $14.4 million, compared to $2.1 million in the prior-year period, primarily as a result of lower brand support and distribution expenses, partially offset by the segment's lower net sales.
 
Fragrances
The Fragrances segment includes the development, marketing and distribution of certain owned and licensed fragrances, as well as the distribution of prestige fragrance brands owned by third parties. Segment net sales of $138.1 million in the third quarter of 2019 decreased by 5.0% compared to the prior-year period, driven primarily by the segment's lower net sales of Juicy Couture and Britney Spears branded fragrances due to timing of innovation, partially offset by higher net sales of Curve branded fragrances.
 
Fragrances segment profit in the third quarter of 2019 was $34.2 million, compared to $26.9 million in the prior-year period, primarily as a result of improved gross profit margin and lower overhead expenses, brand support and distribution costs, partially offset by the segment's lower net sales.
 
2018 Optimization Program
According to the company, Revlon remains on track to deliver annualized cost reductions of between $125 million and $150 million as a result of the Company's 2018 Optimization Program, and now expects to realize between $90 million and $95 million of in-year cost reductions during 2019, of which approximately $65 million had been realized as of September 30, 2019.