“I am encouraged by the progress we have made since the acquisition of Elizabeth Arden, and enthusiastic about the opportunities presented by our newly combined company’s enhanced portfolio of brands, size, scale, profitability and international growth momentum,” Revlon president and CEO Fabian Garcia said. “On a pro forma, XFX basis, our company grew net sales 1.4% for 2016 and increased pro forma adjusted EBITDA 9.7% over last year. These promising results were achieved despite foreign currency and macroeconomic challenges, and while managing significant organizational change.”
According to Garcia, all of Revlon’s segments posted robust International constant currency net sales growth in 2016. He added, “while we faced some specific challenges in North America, as U.S. mass retailers were impacted by beauty consumption shifting to specialty and online channels, particularly during the year-end holiday season. Our strategy to drive long-term growth continues to focus on strengthening our iconic brands, continuing to build distribution in high growth channels, accelerating innovation and enhancing our digital capabilities.”
Garcia said the integration of the two companies, with a new organizational structure and leadership team, better aligns his company and resources in support of its strategy and long-term growth ambitions.
“As we reported, focused efforts and careful planning by our integration teams have resulted in significant increases to our previously-announced estimated annualized synergies and cost reductions from $140 million to approximately $190 million, which we plan to realize on an accelerated timetable. In addition to capturing more cost synergies sooner, we have also begun to explore, with some of our key customers, opportunities to accelerate top line growth by leveraging the power of our larger, combined portfolio of beauty brands.”
In January, Revlon announced that it had begun the process of implementing certain integration activities, including consolidating offices, eliminating certain duplicative functions and streamlining back-office support, in connection with integrating the Elizabeth Arden and Revlon organizations; the company expects to recognize approximately $65 million to $75 million of total pre-tax restructuring and related charges.
As a result of the "EA Integration Restructuring Program," as well as other actions related to integrating Arden, Revlon has identified increased annualized synergies and cost reductions of approximately $190 million. The $190 million of expected annualized synergies and cost reductions are expected to be generated over a multi-year period. For 2016, the company realized approximately $3 million of these cost-reductions, which primarily benefited the Elizabeth Arden segment results.
Revlon said its consumer segment net sales in 2016 increased by 0.7% compared to 2015, primarily as a result of incremental net sales from the company’s global consolidation of the Cutex nail care brand, which was completed with two separate acquisitions that closed for the US in October 2015 and for the U.K., Australia and certain other International territories in May 2016, as well as higher net sales of Revlon beauty tools and Mitchum anti-perspirant deodorants, mostly offset by lower net sales of Almay color cosmetics. Net sales of Revlon color cosmetics were essentially flat, as a result of strong sales growth internationally, offset by lower net sales in North America due to softening trade conditions in core cosmetics categories.
Revlon’s professional segment net sales in 2016 increased by 2.4% compared to 2015, primarily due to higher net sales of American Crew men’s grooming products as a result of the Elvis Presley branded marketing campaign and Revlon Professional hair products in part due to the launch of Revlon Professional Be Fabulous and Revlonissimo Colorsmetique. These increases were partially offset by lower net sales of CND nail products, said the firm.
Elizabeth Arden segment pro forma net sales in 2016 increased by 1.8% compared to 2015, primarily driven by increased net sales of Elizabeth Arden skin care and color cosmetics, partially offset by lower net sales of celebrity fragrances.
In Revlon’s “other” segment, which primarily includes the operating results of the CBB fragrance business, sales increased by 4.9% compared to 2015, primarily due to net sales associated with newly-acquired distribution rights in Europe.