Jack Stahl’s departure from Revlon on Monday, the latest move in the revolving-door history of the last 21 years, has left many chain buyers and industry insiders wondering where the beleaguered company is going.
Stahl, who became chief executive officer in 2002, was replaced by David Kennedy, who originally headed Revlon’s international business but took on the role of executive vice president, chief financial officer and treasurer in January. According to company documents, Kennedy is receiving a base salary of $1.3 million.
Stahl had actually put Kennedy into that role when he tapped him from Coca-Cola. Stahl was the most recent in a string of top executives Revlon’s owner, Ronald Perelman, had hoped would put the glimmer back in Revlon. Before him, Perelman, who bought Revlon in 1985 for $1.8 billion, had employed a string of ceo’s, starting with Sol Levine, then proceeding through Jerry Levin, George Fellows and Jeff Nugent.
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The frustration felt by retailers over the latest change was illustrated when one top retailer disparagingly questioned whether someone with a financial background is up to the huge task ahead. Most observers think his appointment to the top job signals the likelihood of more departures ahead. Indeed, Revlon’s public relations department, an engine of any beauty company, has collapsed to two from six in the last few months. Industry sources said layoffs are expected early next week with Revlon hoping to accomplish the cost-cutting before third-quarter results, which are expected to be what one source called “abysmal.”
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The most recent vacating of the top corporate seat raises questions as to whether Perelman will finally decide it is time to cash out on Revlon. Some industry experts think Coty could be interested in the Revlon nameplate. Coty, in fact, did once make overtures toward Revlon. Buyers also said Johnson & Johnson could be a snug fit with Almay and others speculate that Church and Dwight could pick up small brands, such as Mitchum. But other industry executives wonder if there is enough equity left in Revlon brands to generate interest.
Outside of the retail community, there are those who know Perelman better and don’t think he’ll part with the glamour still associated with the Revlon nameplate no matter how much money the company bleeds. “In the end, it is all about Perelman’s colossal ego. Revlon has been his social platform,” said one industry source.
Industry consultant Allan Mottus disagreed. “Perelman has his own ties to the entertainment industry and doesn’t need Revlon for that,” said Mottus. “But he doesn’t want to go down as a raider who destroyed Revlon.”
There are signs that Revlon plans to try to reinvigorate its business rather than sell. The most dramatic move is the renaming of Vital Radiance to Vital Radiance by Revlon. Retailers had recommended the Revlon name be part of the product right from the start. The other major move is a price reduction of 12.5 percent, bringing items down to what retailers think will be a more “palatable” price.
Many buyers thought Vital Radiance was slow out of the gates because of price points that were as high as $13.99 for an eye primer. “Adding the Revlon name can’t hurt,” said one mass merchandise buyer. She added that the product has responded well to a 50 percent-off advertisement. Another source said inventory is only turning 0.5 a year for Vital Radiance, but when the price-off ad is running, the inventory turns have bumped up to almost four times.
One point that emerges in conversations with retailers is that many think reports of Vital Radiance’s sluggish sales were based solely on big-box players who have the systems to know immediately how a line is doing. Several smaller drugstore chains said they have only just finished installing Vital Radiance in their stores and were willing to wait longer for Vital Radiance to perform. So Revlon may have cried wolf before Vital Radiance had a chance, some said.
Even if Vital Radiance had a slow but steady build at doors outside of Wal-Mart or Target, many think the concept was off base — despite the burgeoning population of mature women. Revlon and Almay already have mature shoppers, similar in age to the Vital Radiance target, and perhaps a third line was a duplication, buyers said.
According to A.C. Nielsen, Vital Radiance did $6 million in sales for the year through Aug. 12, while the core Revlon brand lost $5.9 million in the same period. “It is unfortunate Stahl ends up leaving during one of the biggest disasters in Revlon history,” Mottus added of Vital Radiance.
To top that off, many buyers said the traditional Revlon brand has been ignored this year with all the efforts to pump life into the new lines.
In the frenzy surrounding Stahl’s departure, it is easy to overlook the strides he made. Stahl joined Revlon at a time when retailers were miffed over loading of inventory and a lack of concern for small chains. Fixtures were breaking left and right and retailers felt there were not lines of communication. Stahl put Paul Murphy in place to handle sales because he knew many of the top brass from his days at Coke.
He quickly became an industry favorite and many buyers were left wondering why he departed in April. Stahl also addressed the fixturing problems — going out to Duane Reade’s to set up Revlon’s new and easier-to-use fixtures. “Jack is a great guy and I don’t just say that because he’s from Boston,” said Jack McAuliffe, publisher of Beauty Handbook. “He’ll have a bright future.”
But Stahl was perhaps too removed from the brutal world of beauty. “It looks easy on the outside but dangerous on the inside,” said Mottus, who added that bringing in consultants not familiar with beauty could have been a mistake. And, he added: “The company may have become so unattractive it may be impossible to find someone in the industry to run it.”