18 January 1999 00:00 [Source: ICB Americas]By Helena Harvilicz
Revlon, the US's largest cosmetics manufacturer, is expanding the restructuring program it announced in October. The company expects the changes, which include manufacturing reconfigurations, layoffs, divestments of real estate and other cost-saving measures, to provide an annualized cost savings of $30 million to $40 million. Revlon will take a charge of about $80 million, half in the fourth quarter of 1998 and half in 1999.
According to reports, Revlon president and CEO George Fellows says the restructuring will include the elimination or transfer of about 1,000 to 1,200 jobs worldwide. The company's current workforce totals about 14,000.
Revlon is facing declining sales. Internationally, the company's net sales decreased 5.6 percent (3.5 percent adjusted for negative foreign currency translation) in the third quarter of 1998 relative to the same quarter of 1997. Net sales were down $32.4 million in 1998's third quarter to $548.6 million. US net sales decreased 3.9 percent from 1997's third quarter to 1998's, falling from $346.5 million to $332.9 million.
Revlon attributes the decline to an unfavorable international economic climate. It blames declining US sales on "a slowdown in the rate of growth in the mass-market color cosmetics category, a seasonal flattening of share and delays in some product introductions." The company also cites reduced retailer inventories resulting from mergers and changes in inventory systems, especially among drugstore chains.
"We are taking major steps to reengineer the company," Mr. Fellows says. "By realigning our resources to more closely match the changing needs of our customers, we are building our business for the future. We are confident in the long-term strength of the mass color cosmetics markets, and we will stay focused on strategic initiatives designed to continue our industry leadership position."
Revlon expects improved growth in the second half of 1999 after customer inventories return to traditional levels and new products are launched in the first half of the year.
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.