Revlon switches CEO as pressure mounts over performance
executive Jack Stahl will be leaving the company to be replaced by
CFO David Kennedy, as the company struggles with lackluster sales
and mounting debts.
Stahl, who was a leading executive with the Coca-Cola company before he took up the position in February 2002, will stay for a period of one month on a consultation basis.
His departure comes as the company struggles to come to terms with a market share that has declined by 80 per cent in the past three years, compounded by the recent disastrous launch of its Vital Radiance cosmetics and skin care range.
Aimed at women over 45, the line hit distribution problems, with the largest drug store in the US, CVS, not stocking it.
Many critics have also said that the line just simply did not cut it in what is now an ultra competitive field. Compared to many of the leading lines currently being marketed by the likes of P&G and L'Oreal to women in this age group, the Vital Radiance line appears to lack technology and functionality.
Products in this category make significant claims about reducing wrinkles and preventing them as well as many make-up products that claim to reduce the appearance of wrinkles. Vital Radiance, the critics say, did not appear to have the type of functionality that many women in this category are now looking for.
Stahl was originally brought in to turn around the company, which at that point was already facing significant market loss. But to his credit, there have been a number of successes during his tenure, including the successful repositioning of the Almay brand and a recent upturn in North American sales of late.
"In order to pursue other interests, I've come to the decision that it is time to pass the baton to a new leader," Stahl said in a statement. "David and I have worked together for 20 years, and I couldn't be leaving the company in better hands."
In the second week of July the company announced that sales for its second quarter were well below par, mainly due to the failure of the Vital Radiance line.
The company said that it incurred losses of $95m for that quarter, as opposed to losses of $35m in the corresponding quarter last year.
Most of this rise was attributable to a $20m bill for sales returns from the Vital Radiance cosmetics line in the US. The company said that half the returns related to space reductions by large format retail customers.
With share prices remaining historically low, the company says that to maintain financial flexibility it is still considering amending its current bank credit agreement, by adding $75m to its loan facility. It also plans to issue a further $75m in equity towards the end of the year or beginning of 2007.
Looking ahead to the full year 2006, the company said that the adjusted EBITDA would be below the $167m it achieved in 2005.
