Lorenzo Delpani said he is seeing early signs that the repositioning of both the Revlon and Almay brands is beginning to work.
Delpani, Revlon’s president and chief executive officer, noted that the launch of Revlon’s “Love Is On” campaign in late 2014, followed by this year’s introduction of Almay’s new tag line Simply American are part of the company’s efforts to battle for lost market share and grow the company’s top and bottom lines.
During the firm’s earnings with Wall Street analysts call on Thursday, Revlon Delpani referred to 2014 as a year of “significant change and transformation.”
“We integrated [The Colomer Group] into the company and delivered the expected synergies and related cost reductions,” he said. “We redesigned our organization and significantly increased our investment to build and support our key brands. We launched our Revlon Love Is On campaign in November 2014 and our Almay Simply American Campaign in January 2015. Thanks to our strategy of value creation and the integration synergies, our 2014 financial performance was the best in many years.”
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In the fourth quarter ended Dec. 31, Revlon reported net income of $2.7 million, or 5 cents a diluted share, compared with a loss of 33.1 million, or 63 cents a share, in the prior-year period.
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Adjusted earnings before interest, taxes, depreciation and amortization rose 18.2 percent to $108.7 million from $92 million.
Total company net sales for the period gained 1.9 percent to $501 million from $491 million. Its consumer segment’s sales fell 1.8 percent to $383.3 million in the quarter while the professional segment of the business recorded a 17.1 percent sales increase to $117.7 million. Segment profit was up 8 percent to $115.6 million in the consumer business and more than tripled, to $16.3 million, in the professional group. Sales from Colomer’s retail brands are included in the consumer segment while those sold in professional channels are attributed to the professional segment.
While it’s early into both the Revlon and Almay repositioning efforts, Delpani said he was encouraged by initial market results.
The company’s stepped up marketing spending in 2014 by $38.1 million, representing a 10.8 percent increase over the prior year. Asked how he gauges success, he said, “I like to rely on a very simple measure: Are we growing market share?”
At the same time, the company will continue to focus on “fewer, better” product launches, as well as “fewer, better” people, Delpani said. “We want people who are achievers.”
Delpani said the company has extended the Love Is On campaign to its corporate culture, but clarified that “corporate love” is not interpersonal or unconditional. It does speak to the organization’s core beliefs, such as the desire to win, celebrate talent and promote diversity.
For the year, net income was $40.9 million, or 78 cents a diluted share, compared with a loss of $5.8 million, or 11 cents, in the year-ago period. Adjusted earnings before interest, taxes, depreciation and amortization rose 32.3 percent to $375.2 million from $283.7 million.
Sales for the year gained 30.2 percent to $1.94 billion, compared with $1.49 billion the prior year, boosted by the acquisition of TCG in October 2013.
On a pro forma basis — in which Colomer was accounted for as it had been part of Revlon one year ago — and excluding the impact of foreign currency, the company said sales gained 4.7 percent.
Delpani reiterated that integration of Colomer was on track to deliver annualized cost reduction of $30 million to $35 million by the end of 2015.