Revlon shares tumbled to their lowest level since 2013 after the makeup company reported it swung to a loss in the first quarter amid the tough environment for malls and department stores in the U.S.
Revlon’s net loss was $37.4 million, or 71 cents per share, compared with income of $11.0 million, or 21 cents per share, in the year-ago period. Revenue rose 34.3% to $595 million, helped by the acquisition of Elizabeth Arden last year, but on a pro forma basis, sales dropped 5.8%.
The earnings were “the latest example of the troubling retail environment facing brick-and-mortar stores as consumer tastes change and spending shifts to the internet,” Reuters said, noting that just over 13% of U.S. retailers are now at the distressed tier of Moody’s ratings spectrum, the highest percentage since the 2008-2009 recession.
Investors reacted by sending Revlon’s stock down 23.5% to $19.30 in trading Friday. The last time Revlon fell more than 23% in one day was 2008.
Revlon attributed the revenue decline to softening consumption in beauty categories across both mass retail and prestige channels, and fewer replenishment orders in the professional channel. “During the quarter and as widely reported, most of our U.S. retail partners experienced lesser foot traffic, store closures and shopper channel shifting to online and beauty specialty retailers,” CEO Fabian Garcia told analysts
“Although beauty remains a growth category in the U.S., where and how consumers shop for beauty is evolving,” he added.
After Friday’s drop, Revlon stock is now down around 45% over the past year. But Garcia expressed confidence in management’s ability to turn things around.
“We remain committed to our long-term strategy to restore brand growth in the U.S. by enhancing our brands’ relevance with differentiated innovation, elevating in-store and online experiences and digital-first engagements, and building our presence in fast growing channels, as well as accelerating our international expansion, with a focus on Asia and Latin America,” he said.