Revlon Rises After CEO Says Third Quarter Has Been Encouraging
Revlon Inc. rose as much as 6.2 percent after Chief Executive Officer Fabian Garcia said he’s encouraged by a strong performance in the third quarter so far and confident that the company can meet its profit targets.
Revlon, which agreed to acquire Elizabeth Arden Inc. last month, plans to introduce more new products later this year, Garcia said Friday on a conference call with analysts. The company will roll out lower-priced nail products under the professional CND brand to compete at nail salons and it also plans innovation in its hair-color segment, Garcia said.
“As we are well into the third quarter already, we are encouraged by our continuous recent strong performance, optimistic of our future and excited about the growth potential from the acquisition of Elizabeth Arden,” Garcia said. The executive said he feels “positive” in affirming the company’s guidance for earnings before interest, taxes, depreciation and amortization.
The shares climbed as high as $35.33 in New York. Revlon already had gained 19 percent this year through Thursday.
Second-quarter sales rose 1.3 percent to $488.9 million, the New York based company said in a statement Friday. That marks the third-straight quarterly gain. Net income fell 68 percent to $8.3 million, hurt by items such as acquisition and integration costs as well as foreign-currency losses on intercompany loans.
Revlon, controlled by billionaire Ron Perelman, aims to reinvigorate Elizabeth Arden, an unprofitable company whose celebrity-branded fragrances had lost favor with consumers. Revlon has kicked off integration planning with Arden’s management team in the past two weeks to work on the future operating model of the combined company, Garcia said. The deal is expected to close at the end of this year.
The merger of the 106-year-old Arden business with 84-year-old Revlon is a bet that a combined distribution network and marketing strategy can broaden their appeal. Garcia said Revlon will present joint business plans with some retailers in due course.
Revlon aims to appeal to the younger generation and is focused on developing its digital strategy.
“We are working to make our name more relevant to younger consumers,” Garcia said. “It’s priority for our business.”
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