Revlon announces 400 job losses worldwide
The cuts come as Revlon struggles to protect its sales and profits in the economic gloom.
Weak sales prospects
“While the mass color cosmetics category in the US, according to ACNielson, continues to grow, the rate of growth has started to slow, and retailers are carefully examining and optimizing inventory levels,” said Revlon CEO Alan Ennis.
The company warned that in the coming second quarter lower demand and unfavorable exchange rate changes will have a “significant negative impact on net sales and profitability”.
By trimming the business, Revlon hopes to reduce annual costs by $30m and return the company to a sounder financial footing.
Revlon said the latest organizational changes will affect 325 current employees and 75 open positions. The company currently has about 5,600 employees, according to Thomson.
These job losses will reduce layers of management, which Revlon says will increase accountability and effectiveness. Support functions will also be reduced to reflect the new and smaller organizational structure.
The financial impact of these changes is expected to be felt in the 2009 results. Revlon said it expects $15m in savings in 2009 and $30m thereafter.
The overall cost of the restructuring is expected to be $20m; of which $17m will be accounted for in employee-related costs such as severance pay and $3m will be related to the consolidation of the company’s office facilities in New Jersey.
Recent struggles and events
Revlon said $17m is expected to be recognized in the second quarter results and the remainder in the second half of 2009. All the charges will be paid for over the 2009 to 2012 period.
Revlon has been facing a heavy debt load. In April, investment group MacAndrews & Forbes offered to write off $75m of a $107m outstanding loan in exchange for the shares it does not already own in the business.