Revlon Aims for $5 Billion in Sales With Revitalized Brandsby
‘Brands don’t get old, marketers get lazy,’ CEO Garcia says
Goal is to climb to top 10 among beauty companies globally
Revlon Inc., the beauty giant that bought Elizabeth Arden Inc. last year, aims to reach $5 billion in sales within five years by reinvigorating brands and stepping up marketing.
Chief Executive Officer Fabian Garcia, speaking to employees in a video memo, said Revlon would become a top 10 global beauty brand by hitting that target. Including Elizabeth Arden, the company generates $3 billion in a year in sales. Prior to the combination, Revlon ranked 22nd, according to Women’s Wear Daily.
“Brands don’t get old, marketers get lazy,” Garcia said in an interview. “Instead of going out and paying outrageous valuations for new brands, we need to spend that money rebuilding and revitalizing our iconic brands.”
As part of a reorganization plan, four teams will be created to focus on the Revlon brand, Elizabeth Arden products, fragrances and the company’s other labels, including Almay.
The company’s $419 million purchase of the unprofitable Elizabeth Arden was seen as a surprise by investors who speculated Revlon was an acquisition target rather than a buyer. A year ago, the investment firm led by Ron Perelman -- which owns 77 percent of Revlon -- said it was considering “strategic alternatives” for the business. Now, the premium brand is expanding Revlon’s product categories and geographical footprint.
Revlon’s approach veers from its competitors, which have been buying up independent brands to drive growth and attract millennials. Estee Lauder Cos. recently snapped up Too Faced, and L’Oreal SA acquired IT Cosmetics -- with both deals topping $1 billion.
Each Revlon team will make a three-year growth plan and set priorities and strategies for their labels, said Garcia, 57, who joined the company in April. The new structure will help Revlon identify investment areas quicker and let it react faster to consumer needs domestically and abroad, he said.
North America makes up almost 60 percent of revenue. The company aims to beef up sales in China, South Korea, Japan and Taiwan, Garcia said. Across the industry, Asia accounted for 37 percent of retail beauty sales in 2015, the biggest region, according to data from Euromonitor.
Today’s beauty shopper buys multiple brands at different price points and wants them accessible from both brick-and-mortar and online retailers, Garcia said. The company has enlisted singers Gwen Stefani and Ciara as its new global brand ambassadors to capture younger consumers, who increasingly turn to social media for makeup and shopping advice. Revlon plans to announce a new ambassador and advertising campaign for Elizabeth Arden in the spring, Garcia said.
“We need to get our brands in the hand of the consumer whenever and however they decide to shop,” the former Colgate-Palmolive Co. executive said from his downtown Manhattan office, which peers out at the Statue of Liberty.
As part of its restructuring plan, Revlon said earlier this month it will eliminate 350 jobs and more than $140 million in costs. The company is consolidating offices and eliminating duplicate activities with Elizabeth Arden.
“As we realize those savings more quickly, there will be more money to invest” in marketing, Garcia said in the interview. He said he doesn’t expect further job cuts.
Revlon has worked to revive growth after demand slowed and its shares tumbled 19 percent in 2015. Sales gained in the three quarters prior to the Elizabeth Arden acquisition. Revlon shares rose as much as 8.2 percent to $34.80 in New York trading Tuesday, the biggest intraday gain since July.
Moving forward, Revlon will be more selective in choosing celebrities to develop fragrances to avoid missteps like its partnerships with Justin Bieber and Taylor Swift, Garcia said. While the celebrity fragrance market overall has been hit by a drop in demand, Elizabeth Arden has had success with its Britney Spears and Elizabeth Taylor scents, he said.
The company needs to be mindful on how it “can sustain the growth and make a business model that’s more profitable for both parties,” Garcia said.