Revlon Swings to Profit on ‘Solid Start’ to 2016

Topline net sales increased by 3.6% in the first quarter, with growth in the international consumer and U.S. professional segments especially strong.
Katie Kuehner-HebertMay 6, 2016

Foreign currency impacts turned positive for Revlon in the first quarter, helping the beauty products maker swing to a profit on higher sales.

Revlon on Friday reported net income of $11 million, or 21 cents a share, compared with a loss of $900,000, or 2 cents a share, in the first quarter of 2015. Excluding non-operating and “unusual” items, adjusted net income was $13.1 million in the first quarter of 2016, an increase of $12.5 million over the prior year.

For the quarter, the company said it gained $3.4 million on foreign currency compared with a loss of $15.9 million in the year-ago quarter, helped by the revaluation of an intercompany loan.

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Revlon is off to “a solid start” for the year, with top line net sales increasing by 3.6%, excluding the impact of foreign currency adjustments (XFX), CEO Fabian Garcia said in a news release.

“Growth in international consumer and U.S. professional net sales was especially strong at 7.5%, on an XFX basis, and 10.3%, respectively,” Garcia said. “While U.S. consumer net sales decreased slightly by 0.5%, consumption remained strong and we gained share during the quarter.”

Overall sales in the consumer segment, excluding currency impacts, grew 2.5%, thanks to higher sales of Revlon hair and nail products as well as its Sinful Colors cosmetics. Sales in the professional segment were up 2.7%, in part due to sales increases in American Crew men’s grooming products.

Garcia, formerly Colgate-Palmolive’s chief operating officer, was hired in March to head Revlon, replacing Lorenzo Delpani. Controlling shareholder and Chairman Ronald O. Perelman disclosed in January he was exploring strategic alternatives for the company, according to The Wall Street Journal.

“The company’s strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and expanding profit margins,” TheStreet wrote. “We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.”

Revlon’s shares, which have risen 28% in the last three months, were down about 1%, at $35.80, in trading Friday.