Revlon to Exit Operations in China, Cut 1,100 Jobs

Revlon to Exit Operations in China, Cut 1,100 Jobs

Revlon Inc. (REV), the maker of cosmetics under its namesake and Almay brands, will cease operations in China and eliminate about 1,100 positions, including 940 beauty advisers, as it restructures its struggling business.China makes up about 2 percent of Revlon’s net sales, and the restructuring will result in about $22 million of pretax charges, the New York-based company said in a filing with the U.S. Securities and Exchange Commission. The changes are expected to reduce costs by about $11 million a year, Revlon said.

The company, which posted profit declines in 2011 and 2012, has been making acquisitions and introducing new products as sales in some of its larger brands slow. Earlier last year it bought Colomer Group, giving it Creative Nail professional and Shellac nail polishes, as well as American Crew men’s hair-care products.

“Revlon was unable to gain scale and relevance in the important Chinese beauty market,” Connie Maneaty, an analyst at BMO Capital Markets in New York, wrote in a note yesterday. She rates the shares market perform, the equivalent of a hold.

Colomer Chief Executive Officer Lorenzo Delpani took over as Revlon’s CEO in November, replacing interim chief David Kennedy. The reorganization isn’t related to the acquisition, Revlon said.

The addition of Colomer helps Revlon expand sales in the more-profitable salon sector, an aim shared by competitors such as Procter & Gamble Co. and Unilever.

Revlon rose 1.6 percent to $24.96 at the close in New York yesterday. The shares gained 72 percent in 2013, while the Standard & Poor’s 500 Index advanced 30 percent.

Chinese Market

China, where skin-care products are in particular demand, is an important yet challenging market for many Western beauty companies. In its third-quarter sales release on Oct. 30, L’Oreal SA called China’s market “slowing, although still dynamic” and said sales in the quarter grew 11 percent there. P&G said in May it’s been losing market-share in skin and oral care in China. Avon Products Inc. said in October that possible fines related to foreign bribery probes in China and elsewhere may materially hurt profit.

In 2012, 44 percent of Revlon’s revenue came from outside the U.S.

To contact the reporters on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net; Lauren Coleman-Lochner in New York at llochner@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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